British expats still have some crucial misunderstandings about their domicile status and tax position that could leave them and their loved ones financially exposed and even land them in trouble with HM Revenue & Customs, warns Rachael Griffin, financial planning expert at Old Mutual Wealth.

The research from Old Mutual International, part of OMW, shows that a lack of knowledge can lead to unexpected consequences.

Griffin said: “It is essential advisers understand the domicile status of their clients and their plans for the future.

“Inheritance tax will be a concern for many UK expats and appropriate planning needs to be in place to mitigate any on-going liability.”

Click through to find out what the common knowledge gaps were among UK expats currently living overseas.

British expats mistakenly believe they are no longer UK domiciled

OMI’s research shows 74% of UK expats who consider themselves no longer UK domiciled still hold assets in the UK, and 81% have not ruled out returning to the UK in the future.

This means HMRC is likely to still consider them to be deemed UK domiciled.

Griffin explained: “British expats are likely to have a UK domicile of origin, acquired at birth. They can try to acquire a new domicile (a domicile of choice) by settling in a new country with the intention of living there permanently.

“However, it is very difficult for someone to lose their UK domiciled status and acquire a new one.

“There are no fixed rules as to what is required to do this and the burden falls on the individual to prove they have acquired a new domicile, and often this isn’t finally decided by HMRC until someone passes away.”

She continued: “Living in another country for a long time, although an important factor, does not prove a new domicile has been acquired. Among the many conditions that HMRC list, it states that all links with the UK must be severed and they must have no intention of returning to the UK.”

British expats mistakenly believe they are only liable to UK inheritance tax (IHT) on their UK assets

A staggering 82% of UK expats do not realise that both their UK and world-wide assets could be subject to UK IHT, OMI found.

Griffin explained: “As most British expats will still be deemed UK domiciled on death, it is important that they understand that this means their worldwide assets will become subject to UK IHT.

“A common misconception is that just UK assets are caught. This lack of knowledge could have a profound impact on beneficiaries.

“Before probate can be granted, the probate fee and any inheritance tax due on an estate must be paid.

“With UK IHT currently set at 40%, there could be a significant bill for beneficiaries to pay before they can access their inheritance. Setting up a life insurance policy could help ensure beneficiaries have access to cash to pay the required fees.

“Advisers setting up policies specifically for this purpose must ensure they place the policy in trust to enable funds to be paid out instantly without the need for probate.”

British expats mistakenly believe they are no longer subject to UK taxes when they leave the UK

Research shows 11% of UK expats with UK property did not know that UK income tax may need to be paid if their property is rented out, and 27% were unaware that Capital Gains Tax may need to be paid if the property is sold.

Griffin explained: “All income and gains generated from UK assets or property continue to be subject to UK taxes.

“Some expats seem to think that just because they no longer live in the UK they don’t need to declare their income or capital gains from savings and investments or property held in the UK.

“By not declaring the correct taxes people can find they end up being investigated by HMRC, and the sanctions for non-disclosure are getting tougher.”

British expats mistakenly believe that their spouse can sign documents on their behalf should anything happen to them

OMI’s research shows 44% of UK expats wrongly believe their spouse will be able to sign on their behalf should they become mentally incapacitated.

Griffin explained: “The misconception that a spouse or child or a professional will be able to manage their affairs should they become mentally incapacitated is leading people to think they don’t need a power of attorney (POA) in place.

“This could result in families being left in a vulnerable position as their loved ones will not automatically be able to step in and act on their behalf.

“Instead, there will be a delay whilst they apply to the Court of Protection to obtain the necessary authority.

“This extra complication is all avoidable by completing a lasting POA form and registering it with the Court of Protection.”

British expats unsure if their will is automatically recognised in the country they have moved to

Half of UK expats do not know if a will or power of attorney (POA) is legally recognised in the country they have moved to, OMI found.

Griffin explained: “It is wrong to assume a will or POA document is automatically recognised in the country in which they move to.

“Often overseas law is driven by where the person is habitually resident, and the laws of that country will apply.

“Therefore, people may require a UK will and POA for their UK assets and a separate one covering their assets in the country they live.

“The wills also need to acknowledge each other so as not to supersede each other.”

This is the area we specialise in so I hope you find this informative, if you would like to learn more please contact me directly.

Have a great day

Stuart

CEO

Farringdon Group

+60 3 2026 0286

Source: International Adviser

Six million men and women will have to wait a year longer than they expected to get their state pension, the government has announced.

The rise in the pension age to 68 will now be phased in between 2037 and 2039, rather than from 2044 as was originally proposed.

Those affected are currently between the ages of 39 and 47.

The announcement was made in the Commons by the Secretary of State for Work and Pensions, David Gauke. He said the government had decided to accept the recommendations of the Cridland report, which proposed the change.

“As life expectancy continues to rise and the number of people in receipt of state pension increases, we need to ensure that we have a fair and sustainable system that is reflective of modern life and protected for future generations,” he told MPs.

• State pension age could be raised to 70
• A longer life means a longer wait for your pension

Anyone younger than 39 will have to wait for future announcements to learn what their precise pension age will be.

‘Cocktail of ill health’

The change will affect those born between 6 April 1970 and 5 April 1978.

The government said the new rules would save the taxpayer £74bn by 2045/46. While it had been due to spend 6.5% of GDP on the state pension by 2039/40, this change will reduce that figure to 6.1% of GDP.

Labour said the move was “astonishing”, given recent reports suggesting increases in life expectancy were beginning to stall, and long-standing health inequalities between different income groups and regions in retirement.

State pension calculator – check your age and entitlement

Shadow work and pensions secretary Debbie Abrahams told MPs that many men and women were beginning to suffer ill health in the early 60s, well before they were entitled to their state pension.

“Most pensioners will now spend their retirement battling a toxic cocktail of ill-health,” she said.

“The government talks about making Britain fairer but their pension’s policy, whether it is the injustice that 1950s-born women are facing, or today’s proposals, is anything but fair.”

TUC general secretary Frances O’Grady said the government risked creating “second-class citizens”.

“In large parts of the country, the state pension age will be higher than healthy life expectancy,” she said.

“And low-paid workers at risk of insecurity in their working lives will now face greater insecurity in old age too.

“Rather than hiking the pension age, the government must do more for older workers who want to keep working and paying taxes.”

Age UK was also critical of the change.

“In bringing forward a rise in the state pension age by seven years, the government is picking the pockets of everyone in their late forties and younger, despite there being no objective case in Age UK’s view to support it at this point in time,” said Caroline Abrahams, charity director at Age UK.

“Indeed, it is astonishing that this is being announced the day after new authoritative research suggested that the long term improvement in life expectancy is stalling.”

Pensions Commission

The government has also committed to regular reviews of the state pension age in the years ahead.

That raises the prospect of further rises. Indeed a report by the government’s actuary department in March suggested that workers now under the age of 30 may have to wait until 70 before they qualify for a state pension.

Tom McPhail, head of policy at Hargreaves Lansdown, said the government would need to do more to encourage saving, particularly amongst younger people.

“For anyone yet to reach age 47, there is still time to adjust their retirement plans by looking to contribute more,” he said.

“We feel it is important the government meets them halfway; we need a national savings strategy to help people save and invest for their future. A good starting point would be for the government to look at a savings commission.”

The SNP said it remained opposed to raising the pension age beyond 66 and reiterated its call for an independent pensions commission to be set up to look at “demographic differences across the UK”.

In response, Mr Gauke said the Scottish government would have the power to provide extra financial help for those approaching retirement if they so chose

If you would like to speak to me directly about your retirement plans please send me an email or call me for info.

Have a great day

Stuart

CEO

Farringdon Group

+60 3 2026 0286

Bank Negara Malaysia (BNM) responds to a stabilizing ringgit which managed to climb against the U.S dollar over the course of the second quarter. June until present has shown stabilization in the ringgit with rates consistent between RM4.3 and RM4.27 which effectively led to the BNM’s decision NOT to raise the Overnight Policy Rates (OPR).

The rate will remain at the current 3 per cent in to the foreseeable future. The threat of excessive capital outflows has been diminishing simultaneously with the decrease in exchange rate volatility securing BNM’s decision.

Increased domestic demand has helped to strengthen growth along with higher than expected exports. Projections for 2017 suggest that Asian economies will be subject to increased domestic activity as well as rising external demand suggesting prolonged growth for Malaysia.

As for the decision to not change the OPR, a hike would most likely strengthen the stabilizing currency, however, it would come at the cost of inhibiting growth which is currently holding a good pace.

What does this mean for the Ringgit going forward?

The first quarter has experienced higher than expected growth in 2017 BUT, interest rates are changing abroad. Political shocks have been the root of unfavorable losses in the Ringgit against the US dollar for the past three years.

The central bank’s decision to not adjust the OPR following other major economies suggests projected stability not only in the Ringgit, but in the growth outlook for the rest of 2017.

The Federal Reserve followed by several other major banks have increased overnight rates however most of Asia is holding out. The BNM is confident that a mixture of increased demand for exports, greater domestic demand, as well as a stabilizing conversion rate provides the necessary grounds for healthy economic growth.

Have a great day

Stuart

CEO

Farringdon Group

+60 3 2026 0286

Fed chair suggests monetary policy won’t change

China inflation running low

G-20 summit concludes

Bank of Canada hikes rates

US retail sales miss expectations

Global equities moved up this week with solid gains. The yield on the US 10-year Treasury note faded seven basis points on the week, to 2.32%, while the price of West Texas Intermediate crude oil moved up to $46.35 a barrel from $44.50 a week ago. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), dropped to 9.89 from 11.75 last week.

MACRO NEWS

Yellen testifies on Capitol Hill

US Federal Reserve chair Janet Yellen testified on monetary policy before the House Financial Services Committee this week as markets continued to digest the Fed’s recently announced balance sheet reduction plans. Fed Chair Janet Yellen’s semi-annual testimony before Congress struck a generally dovish tone, according to the firm’s traders.

Yellen signalled that the Fed was in no rush to tighten monetary policy, and offered reassurances on the current state of the economy. Investors may also have been relieved that she avoided repeating the reference she had made in late June to asset prices as being “somewhat rich.” Global equities moved up this week with solid gains.

China inflation running Low

The United States is not the only region experiencing low inflation. China’s consumer price index was reported at 1.5%, missing a 3% target. Its producer price index was reported at 5.5%, which was in line with expectations. It is worth noting that the slowdown in inflation is consistent with the slowdown in inflation in the US and many other countries.

It is occurring as policymakers in the US, Canada and Eurozone are all moving, or signalling that they will move, away from the low-interest-rate environment of recent years.

G-20 summit concludes

The G-20 summit of leaders of major economies concluded in Hamburg, Germany this week after discussions on a broad range of topics, including trade, climate change and immigration policy. Many leaders attending the summit appeared at odds with US President Donald Trump, particularly over trade policy and climate change.

On the trade front, Japan and the European Union signed the Japan–EU Economic Partnership Agreement after several years of negotiation.

Bank of Canada raises rates

The Bank of Canada raised rates by a quarter of a percentage point to .75% while suggesting that monetary policy will remain accommodating for the foreseeable future.

Of concern is the stability of the housing market, where prices have risen rapidly in recent years, particularly in areas such as Toronto and Vancouver, where prices have doubled since 2009.

US retail sales off

Headline retail sales were down .2% month over month, with six of the 16 categories falling into negative territory. Department stores in particular were hurt, falling .7% after a similar drop in May.

The recent drop in sales and subsequent selloff in retail stocks have attracted the interest of professional investors in search of a bargain.

All the Best and have a great week ahead

Stuart

CEO

Farringdon Group

+60 3 2026 0286

CEO Stuart Yeomans, CEO of Farringdon Asset Management Martin Young, Datuk Dr. Mohd Daud Bakar and Mr Zulkiflee Saharom FAM Sharia Advisor launching Algebra today.

What a stressful few weeks to finally get this launched. Watch this space for a few more surprise announcements.

Today an Asia’s first……..in the near future there will be a world’s first..