This page gives some general guidelines of your obligatory commitments if you are a candidate from the UK, who is planning to work overseas. Please note that this does not constitute tax or legal advice and if you are concerned about any of the below, you should seek a professional opinion. If you are planning to become resident outside the UK, you should be considering the following.
You will still need to continue making your student loan payments whilst you are overseas if you are going to be abroad for more than 3 months. Payments have to be made directly to the Student Loans Company.
If you took out a student loan before 1 September 1998, then your loan is classed as “mortgage style”. You will need to make repayments for any earnings over GBP 28,775 in the country where you live.
If you took out a student loan while on a university or college course that began after 1 September 1998, then your student loan is classed as “income contingent”. There are two plans depending on whether you started your course before or after 1 September 2012 and the repayment requirements differ, but for the purposes of the below, we will assume that you fall within Plan 1.
You will need to complete an Overseas Income Assessment Form, which can be downloaded from the Student Loans Repayment website. In this form, you will provide details of your overseas prospective income. To support this, you will need to provide evidence of this income, so for example a copy of your signed employment contract may suffice.
The Student Loans Company will then send you a repayment schedule. You will start repaying your student loan, which is calculated based on 9% of salary, after you have passed the earnings threshold for your destination country.
If you go to live or work abroad and become classified as non resident in the UK, then you will not have to pay UK tax on your overseas income.
If you have left or are about to leave the UK, you will need to inform HMRC by filling in a P85 form. You can download this form from the HMRC website.
The ESC A11 will only apply if you are working abroad for at least a full tax year, so for example leaving September 2014 and coming back April 2016. In this scenario you will have been abroad during the tax year 2015/16 and by using the ESC, you will classed as non UK resident for your entire time abroad.
In some cases, you may end up paying tax on the same income twice for a period of time but the UK has double taxation agreements in place with many countries that determine which country should have taxing rights.
You will still continue to pay UK tax on any UK source income. So for example, if you rent your house out for the year whilst you are abroad and make a profit on this income, you will be liable to pay UK tax on this.
Please note that this does not constitute tax advice and should be used as a guide only. If you believe that your situation is complex, then you should consult a qualified tax advisor. Please contact us if you would like further information on people that may be able to help – email@example.com.
PROPERTY AND MORTGAGES
Depending on the length of time that you move away for (i.e. if it is for a a year rather than a permanent move), in most cases you will be keeping your UK bank account open. In this case, the direct debit for your mortgage can continue to come out of the same account. Obviously, you will have to make sure that your account is adequately funded to cover your outgoings.
Before you go, it is worth spending a little time researching international bank accounts, as these generally let you bank in different currencies. If you have a GBP account, you can therefore transfer money between your AUD (if for example you are working in Australia) and GBP account for no fee, to cover payments that you may need to make back in the UK.
What are you planning to do with your house during the time that you are away – leave it empty or rent it out?
In either case, you should contact your mortgage lender to let them know that you are going abroad for a period of time. If you are leaving the property vacant, your lender needs to be satisfied with this and if you are renting it out, you will need the lender’s permission to do so. A Consent to Let is determined on a case by case basis, so you shoud give your lender a ring to discuss this further.
If you are moving abroad indefinitely, then it may be best to switch to a Buy to Let mortgage.
If you have small loans and credit card debt, it is worth settling this if possible before leaving the UK.
For larger personal loans where it is not feasible to pay it off before leaving, it is sensible to set up a direct debit for the loan to continue being paid from your UK account whilst you are abroad. As mentioned in the mortgage section, it makes sense to also have an international bank account with different currency accounts, so that you can transfer money more easily into the UK if necessary.
You should always bear in mind currency fluctuations when moving abroad. If the GBP strengthens, it will make transferring money to the UK to cover your liabilities, such as a mortgage, more expensive. Although currency can fluctuate positively, the fact remains that movements are a risk to your spending power.
The risk can be reduced by shifting your money into the currency that you are more likely to need for the long term. This is another reason why it is good to have an international bank account with different currency accounts.
If you know you will be moving back to the UK in a year’s time, it may be worth putting a large chunk of your cash in GBP.
That said, although this approach reduces risk, it does not always mean you will be better off. If you follow currency movements and are prepared to take some risk, then you could always benefit from currency fluctuations. It all depends on your risk appetite.
Before you move overseas, you may want to talk to your pension provider and possibly a financial advisor to see how the move will affect your UK pension.
Check the contract with your new overseas employer, as it may prevent you from continuing to pay in to your UK pension. In some countries, you may also have to contribute to local pensions.
As long as you satisfy certain broad criteria, you can continue voluntarily paying National Insurance contributions when you move abroad, so that you can continue to contribute to your UK State Pension.
If you have a personal pension plan, then you can continue paying into this existing pension plan for a period of 5 years after leaving the UK.
If you do not have a personal plan and wish to continue making contributions to a UK pension, you should establish this before leaving the UK. After you have already left, you will probably not be able to establish a pension plan, as UK residence is usually a condition.
If you are considering moving overseas permanently, then you may want to consider a transfer of your UK plan to a suitable overseas pension scheme.