Whilst the majority of expatriates return home at some point, many don’t formulate a comprehensive exit strategy beforehand.
Here at Finsbury Associates, we wanted to provide a simple 5-step guide to help those returning home get their ducks in a row in a timely fashion.
We hope you find our guide adds value, however, this isn’t exhaustive, so please remember to speak with your financial professional to ensure each eventuality has been covered before you book that flight.
1. When should you start planning?
Best advice is to get your planning hat on at least 12 months before you move back home; or to another country of choice.
It’s often sensible if you’re moving to a tax jurisdiction, to complete everything before the start of the next tax year. For example, April 6th in the UK, January 1st in the United States, and July 1st in Australia.
Why is this prudent?
Looking at your assets, you may want to realise any capital gains made, prior to becoming liable for tax in your home country. The important consideration here is where these assets are housed.
You can ‘bed and breakfast’ liquid assets such as stocks & shares, however, this won’t be possible with the property.
Speak with your adviser to be totally sure of the best plan of action, however long before the physical moving process starts, there are solutions that can be set up to mitigate the tax payable on your assets when moving home.
These are straightforward to implement and the simple rule of thumb: the earlier you start, the less tax you’ll be liable for in future years.
2. Debt & Visa Cancellation
Clearing all debt prior to leaving the UAE is imperative.
Non-payment of debt is a criminal offence and could result in somebody not being able to leave the country or being stopped and arrested if they try to come back, or even transit through the UAE.
Pay off all traffic fines, cancel your salik tag, give sufficient notice to your landlord if renting, cancel contracts with utility and mobile phone providers, and even cancel delivery services to your abode, such as newspapers or groceries.
If your employment is coming to an end, you’ll need to hand over your passport temporarily to your company so they can cancel your residence visa, so don’t leave this to the last minute and risk delaying your departure or be marked as an absconder on the immigration system.
3. How should you transfer your savings?
With options a-plenty, it’s easy to get confused of who to use when moving your pennies from A to B.
I can’t stress the need to do your homework though, as settling on the first option you find could hit you in the pocket.
It’s best practice to set up bank accounts and investment portfolios on a multi-currency basis. Many institutions offer around a dozen options, with USD, GBP and Euro being the most common. If you need to set up a new account, allocate weeks rather than days, as anti-money laundering requirements do take time.
On the monetary side of things, the first rule of thumb is to look beyond the promise of zero commission and fees that many banks and mainstream Foreign Exchange (FX) houses make. For complete transparency, ask the exact amount that will hit your account at the other end, then work around this number.
Many banks charge upwards of 3% or 4%, but their ‘captive’ audience often means people look no further. Don’t fall into this trap. FX houses charging between 1% to 1.5% are out there, you just need to do the due diligence, with guidance from your financial professional.
A wise plan of action if transferring a hefty sum would be to carry this out in a number of tranches.
For example, transferring 500,000 AED in one hit may or may not work in your favour if the rate suddenly changes. Staggering four transfers of 125,000 AED a time should de-risk the whole process and provide the best opportunity for currency fluctuations to level out.
If you feel the exchange rate is unfavourable and your leaving date is fast approaching, it may be possible for your UAE bank account to remain open. This is, however, at the discretion of your bank, so speak with them in good time and ask them to clarify any fees or charges associated.
With regards to End of Service Gratuity, speak with your employer to ascertain exactly when this will be paid and be clear on which bank account you would like this sent to. Many employers still don’t have plans in place to ringfence their Gratuity liability, potentially delaying payment.
4. Moving possessions – what do you need to know?
There isn’t a hard and fast rule when it comes to possessions – some decide to sell larger pieces of furniture before moving, thus saving on container costs. Others however, are happy to pay a hefty sum for a container averaging 20 to 30 feet, thus ensuring all their prized chattels make the move with them.
Relocation companies are aplenty, however beware of smaller offerings who may charge less, but behind the scenes may sub-out different jobs, meaning there’s a greater risk of items being delayed or even lost altogether. Goods and possessions being held up in customs often leads to the bill landing on your lap, not the moving company.
Our advice at Finsbury is to work with a reputable, established relocation company. This may cost a little more, but taking the stress out of the whole process can’t be underestimated during the busy repatriation process.
Consider the option of insurance, and always read the small print – if you’re unsure of some jargon or a particular stipulation, ask for clarity.
Shipping your car abroad can be costly, so consider its resale value here in the UAE, as well as whether the same size of car is really needed back in your home country or new jurisdiction of residence?
When it comes to pets, you can either go down the DIY route or use a pet relocation company.
Our advice to cut out as much legwork as possible is the latter, however, do your homework to find a relocation company that takes care of everything, from documentation and clearance procedures to flight and customs.
The whole process is easier than many think, especially if vaccinations are up to date.
If your destination is the UK, major airlines including Emirates and BA, are authorized carriers under the UK’s Department for Environment, Food and Rural Affairs (DEFRA) Pet Passport Scheme (PETS), known colloquially as the pet passport. The PETS scheme allows cats and dogs from the UAE to enter the UK without needing to go through quarantine – providing certain health and vaccination conditions are met.
Be aware that if you have more than five pets, you may also need to apply for a commercial license.
5. What should you consider at the other end?
Considerations on your list need to include your credit score, tax status, and for returning Brits in particular, the status of National Insurance Contributions (NIC’s).
The new UK state pension came into effect in 2016, and to qualify you need to have made at least 10 years NIC’s.
The two voluntary types of NIC for expatriates are Class 2 and Class 3; and to be clear on how to maximise your state pension and associated benefits, visit the HMRC website (www.gov.uk) with the guidance of your financial professional; and complete the form CF83.
Upon receipt of this, and any additional information requested, the National Insurance Contributions and Employers Office will calculate what needs to be paid to make up for any shortfall you have.
Repatriating is by no means a straightforward process, but by allocating sufficient time, and knowing when and where to delegate, you’ll have the best chance of a worry-free departure from the Emirates.
Here at Finsbury Associates, we’re here to help, so don’t hesitate to get in touch….just remember to send us a postcard at the other end!