Each person should seek individual advice when it comes to financial planning but here, we touch on some commonly held UK assets and the main points that you should be aware of.
Can I keep my UK bank account and ISA?
By Spectrum IFA
This article is published on: 17th January 2023
Post-Brexit many UK banks have ceased services to non-UK residents forcing clients to seek out Sterling-based accounts elsewhere. The Channel Islands and Isle of Man are popular alternatives to the UK when it comes to banking, but these are considered ‘blacklisted jurisdictions’ by Portugal and interest is punitively taxed at 35%, rather than the usual 28% or 0% under NHR (Non-Habitual Residence).
ISAs do not retain the same tax exemptions when held by Portuguese residents and are treated in the same manner as standard investment portfolios. For NHRs, generally, interest and dividends are tax-exempt and realised gains are taxed at 28%, but if your ISA holds funds, based on the strict reading of the tax law, returns are classed as ‘other income’ and taxed at 28%. For non-NHRs, interest, dividends and gains are taxed at 28%.
Whether you retain or restructure your UK ISA will depend on your longer-term plans.
If your move to Portugal is short-term, or if you are not certain that it will be your long-term home, then there is a case for retaining your ISAs. Although you cannot add to them whilst non-UK resident you can continue to hold them, and once you return to the UK they resume their tax efficiency.
If you believe your move to Portugal is long-term (as a rule of thumb, 5 years or more) then restructuring and starting an investment vehicle that is suitable for residency in Portugal would make sense for greater tax efficiency, amongst other reasons.
A planning point you should consider is to ‘rebase’ your ISA prior to leaving the UK to ‘wash out’ any taxable gains accrued to the point of your departure. This way, if you decided to restructure, encash, or withdraw from the ISA as a Portuguese tax resident later, the capital gains tax liability should be much lower.
Investments with UK-based Advisers
Brexit brought an end to the passporting rights that allowed UK-based advisers to advise clients across the EU and vice versa. This means that many advisory firms may not have the right permissions to continue providing advice to clients living overseas. This can be worrying for those who have worked alongside their trusted adviser for many years and understandably, many UK advisers do not want to lose their clients. But good financial planning and structures for UK residents are unlikely to be effective for those living outside of the UK.
Whilst you can continue your relationship with your UK adviser and pay their fees, without the right permissions they cannot service your accounts e.g. provide investment advice for portfolio rebalancing/fund switches, and more importantly, you might not have proper recourse if anything were to go wrong. This could not only affect your investment performance, but you will end up paying for advice that you cannot (legally) take advantage of.
Lastly, there are practical implications. Does your UK adviser understand the rules in your new country of residence? We have seen many individuals miss out on substantial tax-saving opportunities because UK advisers were not aware of the local tax rules in Portugal or the implications of the planning in place.
With over 30 years of combined experience in the industry and over 15 in Portugal, we are best placed to provide expert, impartial and personalised advice to expatriates. Please contact us if you wish to discuss your position.
Do I need a different Will as an expat living in Italy?
By Gareth Horsfall
This article is published on: 24th November 2021
Here I am again after a recent trip to the UK. I am pretty sure the whole affair of travelling internationally with a family during Covid restrictions has taken 10 years off my life. What a nightmare! The evening before we flew to the UK I spent 5 hours in front of the computer trying to work out which forms were needed, for when, and which Covid tests would be required, and when. We also had to spend approx £150 on Covid tests to travel. I have spoken to many people who have had a similar experience. The whole process was not aided by the fact that we were diverted through Barcelona because the direct flight to London had been cancelled, and even transitioning means that the necessary Covid protocols must be adhered to in the transiting country as well. Despite the administrative and logistical headache of planning all this pre-journey, the actual trip itself went well.
So, after surviving that experience and deciding not to travel outside Italian borders again until it starts to eventually settle down, I got called to another meeting in Barcelona in December. I will have to go through it all over again!
Anyway, after all that I thought I would write about something which is ordinarily outside my field of expertise in this Ezine: making a will. I haven’t touched on this subject for some time, but recently we have teamed up with another International lawyer called Jessica Zama of Buckles solicitors. She is British/Italian and is well versed in the world of whether to make a will in Italy or not, and not just for Brits. I asked her to write a piece that I could share with you about the importance of making a will in Italy when you have assets in the country, i.e. a property in most cases, which I have copied below.
However, before I get into that I wanted to write about a couple of other things which may come in useful if you need to travel, post-Brexit banking arrangements in the UK and a new Italian website that might come in handy.
I myself used to have travel insurance through a UK firm, pre Covid, pre-Brexit. This firm no longer offers insurance to EU resident individuals due to Brexit so before my trip to the UK I needed to shop around to find a cost effective option. Unfortunately, it was quite difficult to find a solution that wasn’t going to cost the earth. The usual Italian market suspects (Generali, Allianz, Zurich, Unipol) etc were rather more than I wanted to pay. However, on doing some research I stumbled into my favourite comparison website: facile.it It was there that I discovered that they were offering travel insurance packages from a French firm ‘InterMutuelles Assistance’.
One of my colleagues in France informed me that MAIF, MACIF and MATMUT are big French insurers and this firm is a part of the group, so likely to be a solid firm.
The French company is merely using its European license to passport its services into other EU states, in much the way that the UK firm I used to buy travel insurance from used to do. So, I wanted to communicate that there are lower cost more competitive options in the market place. This is by no means the only option and I would urge you to do your own research if you require travel insurance, but if you are interested you can find them under their brand in Italy:
UK banking arrangements
A lot of my clients who are UK account holders with Natwest have now received a letter informing them that likely action to close their account will take place before the end of 2021, as a result of Brexit, and the fact that Italy has been very clear (as early as April 2020. See document HERE) that they do not want non-Italian, non-EU financial firms, advisories, or intermediaries operating on Italian soil or for Italian resident individuals. Italy, along with the Netherlands, seem to have the most strict measures in place, and it would appear that in both cases accounts of clients of Natwest are now being shut down, if they haven’t done so already.
This obviously leads to the question, what can you do for continuation of banking services in GBP? Thankfully in the last few years with the development of the Fintech industry, a myriad of options have arisen. The most popular seems to be Wise (formerly Transferwise) who are offering not just currency exchange services, but different currency accounts through which you can move money. Wise are not a bank, so you may be restricted on exactly what you can do and who can send money to that account, but it does work for some. I myself use Fineco bank in Italy and they provide current account holders with EUR, GBP and USD accounts, to which money can be sent, and then moving money between one and the other does not attract any currency conversion costs. There are also a number of online banks and services offering these options and so you shouldn’t be short of options.
The only problem
There is however one area which may still cause an issue if your UK account is closed down. UK direct debits. I myself have not been contacted yet to close my First Direct account in the UK, but should it happen it would cause a very big problem as I have a number of insurances which I took out years ago in the UK that provide protection for me and my family. However, they only accept payment through direct debit on a UK account. Should my banking services be pulled I may find myself losing my insurance. You may find yourself in a similar situation with UK direct debits. In this situation, there really is not a lot you can do about it, I am afraid.
But moving on from banking arrangements, I want to now lead into the idea of making a will in Italy. It still surprises me how many people have not done so yet. I understand it is one of those ‘to do’ list items, but the truth of the matter is that it shouldn’t be. It should be a priority item. To die, leaving an asset such as a property in Italy, without clear instructions as to how you want this asset to be treated, could create all sorts of complications for your family and/or beneficiaries. I made my will a few years ago now and whilst it probably needs updating again, I know that I have a valid Italian will in place in the event of my death.
So without further ado I am passing to the words of Jessica Zama, who wrote the following piece, and which I hope spurs you into making your own will if you have not already done so.
A very useful Italian website
From the 15th November a new Italian government website has been launched called ‘Anagrafe Nazionale Popolazione Residente’ https://www.anagrafenazionale.interno.it/servizi-al-cittadino/ (ANPR for short). It allows every Italian resident the ability to download all those certificates which traditionally you had to take an appointment at the comune, to attain. As anyone who has lived in Italy long enough, at some point or another you will need one of the certificates, mentioned below, and since they only have a 6 monthly validity the fact that you can now easily download them online is fantastic. Other services do exist, which I have used myself to avoid queuing at the comune offices, but they do charge a pretty penny for the service. For the moment they are also free of charge through this website, and it is expected that this will be the case until the end of 2022, at which point you may be expected to pay just the ‘bollo’ at the point of download. The certificates include:
- Anagrafico di nascita;
- Anagrafico di matrimonio;
- di Cittadinanza;
- di Esistenza in vita;
- di Residenza;
- di Stato civile;
- di Stato di famiglia;
- di Stato di famiglia e di stato civile;
- di Residenza in convivenza;
- di Stato di famiglia con rapporti di parentela;
- di Stato libero;
- Anagrafico di Unione Civile;
- di Contratto di Convivenza.
To enter in the website you will need a SPID or Carta d’Identità Elettronica.
If you hold assets located in Italy, it’s important to obtain legal advice to draw up a will that covers them, regardless of whether or not you live there.
There are several reasons for doing this. If you have any specific wishes relating to the distribution of your Italian assets following your death then you need to put them in writing, in a will that is considered legally valid in Italy. If you do not have a valid will in place, your Italian estate will pass to the beneficiaries set by Italian law (in most cases the spouse and children).
The validity of your will in Italy is crucial, particularly if it is drafted and/or signed abroad and is to cover all your Italian assets, both present and future. For example, if you were to specify in your Italian will that you wish to leave a specific property in Italy to your wife, but this is then sold during your lifetime, your Italian will would not cover the proceeds of sale held in an Italian bank account.
Your will must also take into consideration the Italian inheritance laws and succession procedures. In Italy certain relatives, such as the spouse and children, have a right to a percentage of the deceased’s estate regardless of the terms of the will. This is known as forced heirship and it must be taken into consideration when drafting a will relating to Italian assets, as it can somewhat limit your testamentary freedom.
However, there may be the possibility to avoid this restriction by electing for the law of your country of nationality to apply to the will and the succession (thereby allowing for more freedom in disposing of your assets) although you would need legal advice on whether this can be applied in your case and how to draft your will so that the Italian forced heirship rules are avoided.
It is also important to consider the wording of the will and the legal terminology used within. A will signed in another country may potentially cover all your worldwide assets, including your Italian assets, but its wording may cause issues regarding the administration of your Italian estate in the future. Therefore, once again it’s important to obtain legal advice on this subject.
When you also have a separate will which covers your assets in another country (even if this will excludes Italian assets), it’s important that your lawyer checks to ensure that there are no conflicts between the two wills which could render one or both invalid and thereby potentially leave your assets exposed in both countries.
New registration procedure for residents (TIE)
By Chris Webb
This article is published on: 6th October 2020
Well, summer is well and truly over. After a scorching few months, which at times was unbearable, we´re now being treated to what I always tell the kids is good old English weather. The heavens opened, the sky turned a miserable shade of grey and the temperature dropped from the mid 30´s to around 16 degrees in the space of 48 hours.
We had a little respite and it warmed up a bit, but as I´m writing this the rain is steadily falling again.
So far 2020 has been a strange year. We started off with Brexit at the forefront of our minds, but that quickly turned into a Covid 19 panic. Summer seemed more relaxed and it appeared we were through the worst but now Madrid is heading back into a type of lockdown, although not as severe as in March.
So what´s new? Well, the latest shock news to hit the front pages is the threat of UK banks closing down accounts for EU residents. On top of that there is the new registration procedure for residents (TIE) which came into force in July.
Do you have a bank account in the UK but live in Spain?
By now, I am sure you have all seen the headline news saying that a number of UK banks are writing to their clients living in the EU to close down their UK banks accounts.
The news is true, we have had clients that have already received notification, but this change affects different banks and different EU countries. You probably already know that the blame for this decision lies purely with Brexit!
Looking at the information available it seems that Spain may get off lightly with this as it doesn’t get a mention, but only time will tell whether we face the same issue.
Brexit has put these banks in a difficult position, leaving them to calculate the cost and inconvenience of managing EU resident clients. Once Britain is out of the EU marketplace, the banks will be forced to adhere to individual regulations which differ from country to country. If they want to continue to service clients in any EU state, they will need the relevant licences to do so. But if it is not viable for them to arrange this, it will lead to account closures.
This is going to cause all manner of problems for those that still rely on a UK bank account. It could be for rental income to be received, bills to be paid or just a spending account for when you visit family and friends. If you are affected by these closures there are no other UK options available to you, as you can´t open a new bank account if you´re not a resident there.
They may offer you an international bank account, but that is yet to be determined. If you find yourself in this position then get in touch; The Spectrum IFA Group have a great working relationship with Standard Bank who offer an international account in multiple currencies, which may be the ideal solution to your predicament.
There is a great article on Money Saving Expert that also has a useful graphic detailing the latest info from a number of banks. Click on this link to see more:
The second “new thing” for us is the registration procedure for a residence card in Spain. We are all used to the green A4 or credit card sized document, but now we have the new TIE for British national’s post Brexit. We are being advised that making the change is optional and the green cards remain valid, but in my opinion it is only a matter of time before it becomes mandatory.
You can apply for the new TIE by following these three links:
EX23 – TIE Application Form
Modelo 790-12 – Payment Form
I have already been through the process of changing to the TIE and I am happy to say it was the easiest piece of Spanish administration I have ever dealt with in nearly 8 years. If you want further information, I have a great article I can send on which was put together by CAB Spain and explains the exchange process as well as applying as a new resident.
Do I need to declare my UK bank accounts?
By Amanda Johnson
This article is published on: 10th March 2020
Yes, you do. In a drive to reduce tax evasion and ensure transparency as to where money comes from, banks are now required to share details of overseas accounts, if asked by another country’s tax authorities.
All UK bank and savings accounts need to be declared on your French Tax return. You also need to declare if you have opened or closed any accounts during the last tax year.
Any interest that you have received on these accounts must also be declared. The penalties if you are found to have not declared accounts are very stiff, at up to €1500 per account.
In France, there are tax efficient savings accounts called Livret A and you can save up to €22,950 per person. The interest is not subject to French income tax or social charges and it is a perfect account for an emergency fund because you have access to this savings account without a notice period. For money that you can put aside for a longer period, it is worth getting in touch with me to discuss whether an Assurance Vie would be suitable for your needs.
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Brexit uncertainty and much more…
By John Hayward
This article is published on: 19th September 2018
Brexit uncertainty, losing access to UK bank accounts, victims of mis-sold pension and investment plans, personal visits from HMRC, and kids (sort of) go back to school
Not for the first time, I was asked how Brexit would affect my work in Spain. My standard answer is I don´t know, in the same way I don´t know for sure what the weather is going to be like tomorrow, irrespective of the forecasts which are given. Based on warnings, especially from social media sources, the weekend should have seen us floating down to Masymas on a dinghy. As it turned out, we had a pretty heavy shower providing some surface water in which a toy dinghy would probably have avoided running aground. Of course, I understand that other parts of Spain have suffered; coastal areas have been hit with tornadoes and waterspouts. My point is, even if you have a good idea what is going to happen, it is rare that things will happen as predicted. In fact, I´m not sure that anyone actually predicted the tornadoes. This happens so often in the financial world. With Brexit, I do not know what will happen. Deal or no deal. Take the money or open the box. Perhaps just phone a friend when necessary. I will just continue to jump the hurdles as they are laid out and not base my actions, or those of my family, on media guesswork, which is often a mile off the result.
Losing access to UK bank accounts
Headlines, both in newspapers and on the television, gave a couple of elderly people a shock. They believed they would lose access to their UK bank accounts after a no deal Brexit. This story first appeared in August this year and was highlighted again this week on television. The fact is that there will be certain banking facilities which, if there is no deal, may or may not, be available for a person living outside the UK. This refers more to deposit and loan arrangements, not to the account itself. Receiving money in the form of a pension may also be an issue in that, according to those who appear to know, making a payment from a UK pension to an EU country will be illegal. The alternative will be to have the payment made to a UK bank account for onward transfer to, say, Spain. For those, especially pensioners, who do not have a UK bank account after moving to Spain, it would be a good idea to open one in readiness for what might happen.
Mis-sold pension and investment plans
Unfortunately, I am being asked to help more and more with people who are suffering from poor financial advice. They have savings and pension arrangements that contain investments which arguably are not suitable and, to make matters worse, have not performed leaving policyholders with significant losses. In some cases, there is little we can do. The damage has already been done. However, in other cases we can restructure without incurring additional large set up costs, which are often part of the reason why these plans have not performed. We are always willing to take a look at investments without charging anything. If there is something that we can do, it will be organised in a fair and equitable manner with the details, blood, guts, and all, explained before you commit.
HMRC comes to the Costa Blanca
There was a presentation in Moraira this week with representatives from Her Majesty´s Revenue and Customs focusing on the obligation for UK tax residents to declare income from assets they hold outside the UK such as rent from a property or interest (no joke intended) on bank deposits or gains on investments. People have up until 30th September 2018 to make this declaration. For more detail you can visit this page from the UK Government website: https://www.gov.uk/government/news/hmrc-warns-its-time-to-declare-offshore-assets
The concern for some people was that they, as Spanish residents, had to declare, having missed the point, understandably, that the declaration was to be made by UK residents for foreign assets outside the UK. We already have the asset declaration for Spanish tax residents in the form of the Modelo 720. At Spectrum we can show you ways to position money within investments in what will still be EU jurisdictions post Brexit so that a) you don´t have to worry about what happens once the UK leaves b) you don´t have to declare the investment separately as this is carried out on your behalf and c) the beneficial tax calculation will still apply.
Kids back to school
Friday 7th September was the last day of summer holidays for our children, although my son will argue that they will continue until Christmas when the festive season kicks in. Since they were last in school, what seems like 10 months ago, but is actually only (!) 10 weeks, it is guaranteed that there will be a book missing or a broken pink pencil, our daughter´s favourite. However, we cannot get too excited. For our daughter, September is only half days and so work/school juggling is still a skill we have to develop.
To find out how we can help you with our financial planning in a manner protecting you and your loved ones, contact me at email@example.com or call/WhatsApp 0034 618 204 731