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Blue sky thinking

Britons are escaping to foreign shores in their droves. Around 2.3 million British citizens over 50 plan to retire abroad in the next 10 years, according to an Alliance & Leicester International survey, and it is estimated a further four million will be living as expatriates by 2020.

In my experience, advisers working in this area often produce more business per case than an average UK adviser.

But there are few advisers in the UK trained and able to provide clients with financial guidance on issues such as UK and foreign local taxes and pensions.

There are many factors that have played a part in the mass move abroad, including the changing nature of families. Travel is cheaper and technology has made it easier to keep in touch with family and friends. Properties and land abroad are often cheaper than in the UK Not everyone will be moving abroad permanently as some may only go for a few months of the year, perhaps to escape the British winters. Others may buy a holiday home with a view to retiring there.

We have also seen a move towards SKI-ing (Spending the Kids&#39 Inheritance) and improving lifestyles rather than saving.

Whatever, the motivation or lifestyle decision, all these people need financial advice. Anyone moving abroad, even if buying a holiday home, will have UK tax implications as there are UK residence and domicile rules to be considered. There are also local tax implications in the overseas country.

Other issues which must be taken into consideration are:

•What happens to the UK pension?

•Do they still have access to UK healthcare?

•Do they have to review their protection cover?

•How does residence and domicile affect them?

•Are there local residence and domicile rules and, if so, do they apply to them?

•Where do they pay tax and, if so, how?

•What are succession laws and what do they mean if they have property?

•Is a UK pension lump sum tax-free overseas?

•What are local property taxes and who is liable?

•Can a UK pension be paid in other currencies such as dollars or euros?

•Where is the best place to invest capital?

•What should they do with existing UK investments?

•Are there double-taxation agreements in place and how do they apply?

For example, Mr Lambert is resident in France for six months of the year and is concerned about his UK pension.

Where will he pay tax on income, how can it be paid overseas and what can he do to reduce the currency risk?

He has heard about succession laws but does this affect him and, if so, what does he need to do to ensure the French property goes to his wife on his death? These needs are specific and complex and need an experienced adviser to guide clients.

Few companies in the UK offer this type of specialist advice and the current players are looking to expand their teams to cope with the exponential growth in the market.

Usually, the average case size is more than double the norm. But international offshore advisers need to take a longer-term view on business, accepting that it will take longer to close a case because the adviser needs to cover so many more issues.

Around 25 years ago, I switched from providing UK individual financial advice to working with expats when I set up the team at Towry Law.

The market for advising clients who move abroad is changing as EU passporting rules will require companies to apply for authorisations to enter some European countries to provide advice.

Only a division or company with authorisation will be able to visit overseas locations to meet their existing client bank regularly and to develop business opportunities.

Many advisers will choose not to enter this market but will continue to provide advice to their UK clients. But increasingly they will find that a percentage of their clients need additional advice in this area – perhaps they should consider linking up to a team who can cover this remit on their behalf.

This is the most exciting period of growth that I have witnessed and the sector represents a real opportunity for IFAs looking to branch out.


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