Villas inside and out

Many people consider retiring overseas for a warmer climate and a slower pace of life.  This can be a life changing decision and one that should not be taken in a hurry or in the exuberance following a very good holiday.

I have spoken to people who have left key decisions to the last minute. Shall we sell or keep our UK property? is that really not something that should be high up on the decision list?

Generally, pension arrangements will be a key factor in retirement plans. Most 'normal' destinations have a 'Double Taxation Treaty' with the UK but do check if you are considering somewhere more exotic. Failure to do so may mean that UK tax will be deducted from your pension despite your living abroad.

You should also check, and this will almost certainly require professional advice, the status of any qualifying recognised overseas pension scheme (QROPS) under which it is possible to transfer a pension fund to another country. Talk to your advisor as you need to be careful not to lose out on a valuable benefit.

Your UK State Pension will usually present no problems within the EU but, for countries such as Australia and Canada, you will sacrifice indexation increases.

If you have just retired and are yet to decide on a specific location, you could become 'fiscally nomadic' enabling you to travel before putting down firm roots. You will have to ensure that you do not spend enough days in any one country to be liable to pay tax to that state.

I know one couple who emulated their son's gap year by spending a few years travelling.  They made sure not spend too many days in any one country (or more specifically taxation region) and so were income-tax free. They have now settled down to a proper life but strongly recommended the experience.

Touching back on the topic of what to do with your home, ie do you sell and free up the capital or do you rent it out to generate income. I suggest that the safest route is to retain the property for at least two years.  It gives you the option of returning to the UK if things do not work out in your chosen country.

Sign up for the Non-Resident Landlord Scheme to make the rental income exempt from UK tax.

Some people are attracted to countries because of their tax arrangements.  Whilst this has to be a factor, it is worth remembering that rules can change and what is good today may not be so good in the future.

Climate, cost of living, visas and residency requirements must also be considered. Even the most healthy among us must also consider health care and insurance.

The further afield you go, the more that political stability needs to be considered and, even within Europe there have been horror stories of disputes between local and National governments over planning permissions.

Retiring abroad is a big decision. It may sound idyllic but it has many pitfalls even for the wary and experienced traveller.

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