What Happens To My ISA Now I Live Abroad?
LEARNING OBJECTIVES
At The Wealth Genesis, we’re passionate about providing high quality, relevant and up-to-date financial advice to British Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How an ISA operates
The tax-treatment of an ISA when you leave the UK
What alternatives may provide more tax-efficiency
Other important financial planning considerations for Expats
If you are currently a British expat, or you are planning on moving overseas, you may be wondering what will happen to your Individual Savings Account (ISA).
Can I still access my ISA abroad?
Does the tax treatment remain the same as when I was in the UK?
Will it still be the most tax-efficient option for my savings?
Individual Savings Account
An ISA, or Individual Savings Account, is a tax efficient savings or investment account, which is available to all UK tax residents over the age of 18. These accounts protect your investments and savings from UK tax, including income taxes and capital gains tax.
You may only pay a certain amount per year into an ISA, up to an annual limit imposed by the Government (which currently stands at £20,000).
The various types of ISAs available include cash ISAs, Lifetime ISAs (with an annual limit of £4,000), stocks and shares ISAs, and innovative finance ISA. You may hold any combination of these accounts, so long as they do not exceed the annual limit.
Can I Keep My ISA If I Move Abroad?
Whilst it is possible to keep your ISA once you move, it may not be the most tax-efficient option, depending on your new country of residence.
ISAs only work as a tax-free wrapper for tax residents in the UK. Most other jurisdictions do not recognise their tax-free status and therefore view any withdrawals, profits, or gains from your ISAs as income, which will be taxed accordingly. If you move abroad, your ISA will essentially cease to be a tax-efficient savings and investment option.
Seek professional advice to ensure your ISAs won’t lead to any unwanted tax charges.
Can I Access My ISA Now That I Live Abroad?
You must notify your ISA provider once you stop being a UK resident, and although you may then keep the account open and continue to get tax relief on the funds or investments the account holds- you will not be permitted to deposit any more money into the account after the end of the tax year in which you moved.
What Are My Options?
The Wealth Genesis are specialists in helping British expats around the world with tax-efficient savings and investment strategies.
If you are planning to eventually return to the UK, you may be able to transfer your existing ISA to an ISA which is allowed to be managed by a regulated offshore adviser for the time you spend abroad. You will then be able to continue using the account once you become a resident in the UK in the future.
If you plan to stay abroad and want to avoid the potential tax penalties of holding onto your UK ISA, we could help you find a locally compliant investment solution, depending on where you are in the world. The French Assurance Vie, or the Portuguese or Spanish-compliant bonds, are just some examples of local financial products that are designed especially for expats and may offer benefits similar to what you would have received from your ISA as a UK resident.
Another option, if no local solutions are available in your new country of residence, is to move your money into an offshore investment platform. These are often located in jurisdictions that offer low tax rates or certain tax exemptions.
Offshore investment platforms can offer a range of investment options, such as bonds, property and equities. This offers the flexibility of tailoring your investments to suit your financial goals and attitude to risk.
What Next?
If you are a UK expat living abroad, holding onto your ISA may do more harm than good to your savings and investments. Our specialist cross-border advice team may be able to help you find a better solution.
The Wealth Genesis are experts at helping British people protect and grow their wealth when they move overseas. Book a call with one of our advisers to learn more today, or use the diary link below to schedule an initial consultation.
