How to get the most out of your foreign adventure
The Daily Telegraph, 20 January 2007
There are both advantages and pitfalls to working overseas, reports Harriet Meyer
If returning to work in January has left you dreaming of foreign climes, take time to plan your finances before packing up for a post abroad. Whether with one of the organisations offering projects or work placements overseas, or a move with your current employer, it is essential to organise your affairs before leaving the country for an extended stay.
Banking
Online banking is useful for those living abroad, who are working in a variety of time zones and need access to accounts 24 hours a day.
Chris Wicks, from independent financial advisers (IFAs) Alexander Beard Group, said: "From a practical point of view it may be a good idea to open a local bank account, which local wages can be paid into, and leave your UK bank accounts in place." Currency fluctuations should not be a big problem if you are only going away for a short time, or your salary will be paid in the local currency.
If you are transferring regular sums abroad, take advantage of a specialist currency exchange to avoid exorbitant exchange rates and transfer charges. HIFX allows you to fix an exchange rate for up to 24 months.
Insurance
If you are going to a country in the European Economic Area it is important to get a European Health Insurance Card (EHIC) by applying at your local post office.
Your EHIC entitles you to reduced cost, and sometimes free, state-provided medical treatment in European countries. However, Martin Wright, managing director of TL Risk Solutions, said: "This card has limitations. People may want to go private if the quality of treatment available is not the same as in the UK, or to be repatriated to the UK if they are very ill."
You will need to go through a broker to find providers offering cover for extended trips overseas of six months or more. Mr Wright said: "One insurer we use is PJ Hayman. It will cover everything a typical travel insurance policy would do for around £250 for six months. They also cover longer trips."
Pension
While you can pay voluntary National Insurance Contributions to keep your entitlement to the state pension topped-up in the UK, proposed reforms mean it may not be worthwhile.
Class 2 contributions, which you are entitled to make if you are working overseas, cost £2.10 a week.
However, the Government plans to reduce the number of qualifying contribution years needed to obtain a full basic state pension to 30 years for both men and women, who will reach their state pension age on or after 6 April, 2010. Previously, men needed 44 qualifying years, while women needed 39.T
hose who made voluntary contributions since the Government review of the state pension last May may now be eligible for a refund.
If you started to provide for yourself using a stakeholder pension before you left, you can contribute up to £3,600 gross a year for up to five years after moving abroad.
Property
If you have been renting, give ample notice and ensure that post is redirected to your next of kin, advises Jason Witcombe of IFAs Evolve Financial Planning.
If you own a property and are going away for a short period, make sure someone keeps an eye on it. Mr. Wicks said: "Renting out for a short period could be more trouble than it is worth."
Paying for storage, if you needed to vacate your property, is expensive, said Anna Sofat of IFA AJS Wealth Management. You can save substantial sums if you have relatives or friends with a place where you can leave things for free.
Tax
If you are to be treated as non-resident for UK income tax purposes, your contract of work will need to last a complete UK tax year.
Even if you leave paid employment in the UK part-way through a tax year, you will be entitled to the full personal allowance of £5,035, so you may be due a refund.
Jonathan Fry of IFAs Jonathan Fry and Co said: "Make sure HMR Revenue & Customs in the UK are up to date with what you are doing.
"You can apply to have interest paid gross on your savings accounts if you are going to be non-resident."
You will not be taxed twice on the same income if there is a double taxation treaty in place with the UK and the country you are in.
Useful contacts
Voluntary Services Overseas: www.vso.org.uk
Teaching & Projects Abroad: www.teaching-abroad.co.uk
Expat finance: www.telegraph.co.uk/money
HM Revenue & Customs: www.hmrc.gov.uk/international
International Pension Centre: www.thepensionservice.gov.uk
HiFX www.hifx.co.uk
www.telegraph.co.uk/comparetravelinsurance
In summary
Make use of internet banking
Open a local bank account
Get an extended travel insurance policy
Give notice if renting and re-direct post
If you own your property and are away for a short period, see if a friend can use it
Ask friends and relatives to store your possessions to save hefty storage costs
Review pension provision while you are away