Investment tips for expats: five things you need to know

Expat investments can be an effective way of helping fund a new life abroad and ensure you can make the most from living in a new country.

As an expat, you want to ensure your money works hard on your behalf wherever you choose to invest. However, there are many options to consider when investing. From differing investment vehicles to currency fluctuations and managing risk, it’s important to stay on top of the latest opportunities and legislation to maximise your returns. Doing so should ensure you can invest successfully and avoid losing money. Let’s explore the best options for investing for expats…

Where to start as an expat investor

Understanding the various options as an expat investor can initially be confusing. There are myriad different ways of investing your money and it’s important to remember that an investment does potentially put your finances at risk. So before investing as an expat, it’s a sensible precaution to set some capital aside just in case your plans do not turn as anticipated. You then need to calculate how much money you can afford to invest before doing your research and exploring your options.

Here are 5 things you need to know about the various available opportunities for you.

1. ISAs

For anyone looking to invest in the UK, Individual Savings Accounts (ISAs) can be an effective and convenient way of investing your funds.

However, as an expat you cannot usually open an ISA. If you are no longer considered a UK resident and have an ISA, it’s also unlikely that you will be allowed to continue investing funds into it. You should investigate if moving the funds from the ISA to a different investment vehicle in your new country of residence could lead to any tax benefits or breaks. If you are planning to return to the UK at some point, then you could always retain your ISA, then begin your payments when you come back.

2. Pensions

Utilising pensions can be a great way for expats to invest their money in their future. They come in a number of forms and investing in them can provide financial stability later in life.

Qualifying Recognised Overseas Pension Scheme (QROPS)

A Qualifying Recognised Overseas Pension Schemes, or QROPS, is an overseas pension scheme sometimes chosen as an option by expats. It is recognised by HMRC and is eligible to transfer funds to from registered pension schemes in the UK. Qualifying QROPS must meet requirements surrounding UK tax laws such as only being accessible to anyone aged over 55.

There are some widely perceived benefits to transferring money to a QROPS.

  • You can receive your pension in local currency to avoid any exchange rate fluctuations with the British Pound Sterling
  • It can simplify your finances and make it easier to track the impact of any local tax or financial regulation changes
  • Your pension will no longer be subject to income tax
  • You can avoid the Lifetime Allowance excess tax, levied on any UK pensions exceeding the Lifetime Allowance.

At the same time, there are potential negatives to transferring your pension.

From 9th March 2017, the UK government introduced legislation requiring a 25% tax on any QROPS transfers. There are some exceptions to this but it is worth researching whether this will impact you.

UK tax rules can also apply for 5 full tax years after you have transferred to a QROPS regardless of how long you have been non-resident.


Self Invested Personal Pensions or SIPPs have become increasingly popular among expats, particularly those who are confident with their money. These investment vehicles can offer you complete flexibility as to where you put your funds. As with other pensions, there are tax benefits to putting your money into a SIPP. Your investments will be able to grow without being hit by any outgoings for income or capital gains tax.

You can also benefit from tax relief on any SIPP contributions you make from the government. It is also important to remember there are different types of SIPPs available, some offering you complete financial freedom, others featuring support from financial advisers. These latter options will come with certain fees but may well be worth it if you are not confident in risking your money without any support to help you.

3. Property

Property is often seen as a worthwhile investment by many expats. This can sometimes be a primary residence expats stay in when they return to the UK, alongside any rental properties they may also own.

Once an expat has left the UK, it is often hard for them to invest in any new properties and usually only those who can pay for a house or flat in full are allowed to do so. If you are renting out a property in the UK, then you should also note that rental income will be subject to income tax. There are also other fees to consider, such as property managers or agency fees.

Previously, UK expats were able to sell any property they owned without incurring capital gains tax. This was changed by HMRC back in April 2015 and now means the tax rate is the same as for UK resident individuals and trusts (18% or 28% for individuals, 28% for trusts).

The tax rate for individuals depends on the amount of taxable UK income the person has.

4. Offshore investments

As an expat investor, you should be able to take advantage of offshore investment opportunities, typically available on the Isle of Man, Gibraltar or Jersey.

These investments can be a tax-efficient opportunity for an expat as they are not subject to capital gains tax or income tax. Even if an expat returns to the UK, the investment can continue to grow tax-free.

While this seems too good to be true, there are some important considerations to keep in mind with these investments. Often, you will have to pay annual fees and charges to maintain them and if you draw any income, you will be taxed in accordance with the tax rules in your new home.

Not all investment vehicles are the same and some will lead to charges when you set up or make an initial offshore investment. The minimum investment also varies, so it is essential you do your research before making any financial commitments that could impact your future.

5. International banks

Expats can invest their funds in international banks as a very helpful way of managing their money when living overseas. The services you receive will vary between providers as will the level of available advice. Again, you should do your research thoroughly into the products, any charges and fees and the kind of banking support available. When taking one of these accounts out, you should also look to seek some impartial advice from an independent wealth manager alongside the financial services provider you’re looking to work with.

With so many investment options now available, choosing the best ways to invest your money to effectively prepare for the future can be a challenge.

ExpatRoute is on hand to help provide you with the necessary information to invest effectively across a range of different platforms. Contact a financial adviser today for more information based on your personal circumstances.

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