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Financial matters expat need to consider during the COVID-19 pandemic

The rapid spread of the novel coronavirus has impacted people all over the world in many different ways. Unsurprisingly, some of the main concerns during these times involve financial matters. As an expat, it is vital for you to evaluate your current situation by asking the right financial questions and thinking about crucial areas. In this Pacific Prime UK article, we discuss financial matters expats need to consider during the COVID-19 pandemic.

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Important financial questions and considerations

Asking key financial questions and knowing which areas you should be pondering can help you seek specialist advice. This will also ensure that you don’t make any avoidable and potentially costly mistakes.

Since markets are very volatile, it’s currently the ideal time to evaluate your financial situation and determine where any improvements are possible. This enables you to put some effort into finding out if you’re vulnerable to any potential risks. Additionally, it gives you the opportunity to make sure that your existing agreements are up to date.

Tax planning for expats

Advice regarding tax residency rules was given to expats who must stay UK because of the global COVID-19 pandemic. Expats who are risking their non-residence tax status because they are unable to leave the UK yet will be given special treatment.

HMRC has said they realise that people have either been told not to travel, are unable to because of border closures, or are required to self-isolate due to health concerns, and will be treated as “exceptional circumstances” accordingly. What’s more, these exceptions will be applied to individuals whose employers have asked them to return to the country because of the coronavirus. Under the Statutory Residence Test (SRT), expats and non-residents are allowed to spend between 16 to 183 days in Britain before they need to start paying UK tax.

Furthermore, it’s advisable for people to use this time to prepare for their self-assessment tax return. Aside from helping you save money, you’ll also be able to find out what your tax liability is probably going to be like.

Pensions and investments

When it comes to pensions and investments, it is incredibly difficult to ignore feelings of uncertainty and panic during a global crisis. Market situations across the globe are very unpredictable at the moment, and any decisions made during this period of time are considered risky.

It’s always advisable to assess any investments and underlying costs. Even so, many important decisions that are made under stressful conditions end in disaster. Both pensions and investments involve reviewing your unique circumstances and risk tolerance with a financial advisor who is familiar with the expat world. Doing so will allow you to see if there’s anything about your current situation that you should be worried about.

If you are an expat who has transferred your pension into a QROPS (Qualifying Recognised Overseas Pension Scheme), you may want to use this time to evaluate your underlying investments along with the fees surrounding the pension. If you’re an expat with a personal pension still in the UK, you might want to find out if a QROPS would be good for you. A QROPS offers a broader range of underlying investments and additional benefits over UK pensions. For example, you can receive an income in currencies other than GBP.

You should still be careful though since QROPS are not always ideal. Similarly, some advisors may try to take advantage of you if you’re worried about your current situation. The best way to avoid being taken advantage of is to seek independent advice from at least two sources and know the following information:

  • Tie in periods
  • Underlying investments
  • Fees and charges

Keep in mind that international financial advice has barely any regulation, so you need to choose an advisor that you can trust before making an important financial decision. Avoid engaging with financial advisors that pressure you to make hasty decisions without allowing you to evaluate tie in periods and the fee structure.

Wills and estate planning

The coronavirus pandemic emphasises the importance of having a legally binding will that covers multiple jurisdictions of your estate. Our natural reaction to the very real threat of a pandemic is to think about our own mortality, but have you thought about what will happen to your family and estate if you or your loved ones pass away? The thought alone is enough to cause feelings of urgency and negligence.

Fortunately, firms have been providing will writing services over the phone during the lockdown. During the call, they’ll take instructions and give advice before offering the drafts and final wills via email or post. Online will-writing services provide another way to construct a new will remotely.

It’s advisable to seek expert advice if you’re uncertain about any step or if you’re looking for guidance regarding what you should have ready. Regardless of where you live or your age, you should have a legally binding will in your home country and your country of residence.

Currency management

Exchange rates are currently very volatile and fluctuating globally. For instance, GBP vs USD fell from USD $1.3 to the GBP to USD $1.15 in a matter of days in March 2020.

This shift will significantly affect how much your GBP is worth, regardless of how much you are transferring. The extreme fluctuations that are occurring can mean that you can lose a huge sum of money within just a few hours. If you receive your income from the UK, such as through rental income or pensions, or a lump sum from asset disposal, such as the sale of your property, these extreme rates of change put you at serious risk of losing a significant amount of money.

One way to reduce the volatility is to avoid receiving money in your foreign bank account. This will help you avoid using bank exchange rates and their exorbitant fees as well. In most cases, your bank won’t give you the rate you want.

A currency transfer specialist makes it possible for you to receive and hold your money in its original currency, allowing you to exchange it when the rate is desirable. If you’re an expat that regularly sends or receives money in various currencies, you must remember that you have options and you should review them whenever you can. However, incredibly volatile exchange rates make reviewing your options a must.

The procedure for sending money between different countries has evolved dramatically over the last twenty years. When turning to their banks, most are met with undesirable rates and extortionate fees, but that doesn’t mean you have to accept it.

Get advice from Pacific Prime

With over two decades of experience in the insurance industry, Pacific Prime is a reputable international health insurance broker that you can rely on. Whether you’re looking for UK health insurance, family health insurance in the UK, or other types of insurance, we’re here to help you find the best plan for your needs and budget. Contact us for expert advice or a no-obligation quote or plan comparison today.

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Senior Copywriter at Pacific Prime UK
Jantra Jacobs is a Senior Copywriter at Pacific Prime with over 10 years of writing and editing experience. She writes and edits a diverse variety of online and offline copy, including sales and marketing materials ranging from articles and advertising copy to reports, guides, RFPs, and more.

Jantra curates and reports on the results of Pacific Prime’s monthly newsletters, as well as manages Pacific Prime’s Deputy Global CEO’s LinkedIn posts. Complemented by her background in business writing, Jantra’s passion for health, insurance, and employee benefits helps her create engaging content - no matter how complex the subject is.

Growing up as a third-culture kid has given her a multicultural perspective that helps her relate to expats and their families while 8 years of working remotely have given her unique insight into hybrid work arrangements and enthusiasm for employee benefits.
Jantra Jacobs