How can my sister in South Africa invest in UK?

sneekymum · 20 May 2005 at 12:39PM

My sister - who lives in South Africa needs to find out how to invest here - and she wants me to sort it out. The money's here already - my mother wants to give it to us out of some bonds that are maturing. Is there any way I can invest for my sister through a discout broker in the UK? (Last year I bought some ISAs through Cavendish Online and only paid £20 instead of 3% - which was nice, but they're not responding to eMail or answering the phone(trying for two days now).

My sister's not trying to avoid tax - I understand she would have no income tax allowances but investments in "British Government Stock" (gilts?) are tax free for those abroad and she's still got a Capital Gains Tax allowance (according to the Daily Mail Tax Guide).

We really do not want to pay someone 3% for advice we do not need on what to invest in. So it would be good if I can find how to do this.

Any suggestions? I need urgent advice as she's in the UK this week.

EdInvestor · 20 May 2005 at 7:15PM

Does she have a UK (or offshore UK) bank account on BACs?

If so she can open an account with Comdirect and invest in shares, gilts funds, money market whatever.

https://www.comdirect.co.uk

She would have the personal allowance. No CGT is charged to anyone who has been resident abroad for at least 5 years. Dividends are tax free to basic rate or non-taxpayers.

Another broker which deals with expats in Internaxx, based in Luxembourg.

dunstonh · 20 May 2005 at 8:16PM

We really do not want to pay someone 3% for advice we do not need

From your post, it appears you do.

and she wants me to sort it out. The money's here already -

Money laundering verification requirements could be a problem for you.

The products/tax wrappers and rules for ex pats or non-residents are different. She may be better off purchasing UK investments through a South African tax wrapper.

sneekymum · 20 May 2005 at 11:17PM

Thanks for your "free" advice. - We had a financial adviser who mis-sold my mother an offshore with-profits bond with an MVA of £22,000 until 2012. We tried another adviser from whom we bought an ISA - just to test the water. After we mentioned another £350K we wanted investing he remained firmly Mr 3% and had to go. We do know a fair bit about finance and after watching the offshore fund grow by less than 0.1% over the last 12 months I think I'd rather take my own advice when it comes to fund selection - I'm easier to kick.

As for money laundering - our affairs are squeeky clean - in fact we probably pay too much tax and would benefit from a smart IFA after all.

Your selected soundbite "and she wants me to sort it out. The money's here already -" makes us sound like gangsters.......

cheerfulcat · 21 May 2005 at 5:18AM

Hi, sneekymum,

Have a look here ( Motley Fool Expat Investors board ) -

http://boards.fool.co.uk/Messages.asp?bid=50919

Is your sister planning to remain in SA? If so, she would be better organising her affairs to comply with tax law there, not in the UK. The UK CGT allowance is only relevant if she is a UK taxpayer, AFAIK.

It might also be worth getting the advice of an accountant, rather than an IFA.

She should be able to buy gilts and UK-listed stocks through a broker in SA, btw, or alternatively there is internaxx, an international broker ( no connection, not even a customer ).

http://www.internaxx.lu/staticcontent/expatInvestors.html?navform_menuid=home_expat

HTH

Cheerfulcat

dunstonh · 21 May 2005 at 4:28PM

After we mentioned another £350K we wanted investing he remained firmly Mr 3% and had to go

Perhaps he wasn't allowed to alter the commissions. Not all are allowed to alter commissions. If you think Safeways is too expensive, you go to Tesco. You don't stop buying food.

We do know a fair bit about finance and after watching the offshore fund grow by less than 0.1% over the last 12 months I think I'd rather take my own advice when it comes to fund selection

So why are you investing in offshore funds for just 12 months? These are long term investments and obviously you were prepared to invest in an area with some volatility. The fund could have a 30% gain one year, a drop the next and a small increase the one after. Its the nature of the investment you are in. One of the UK's top performing funds over the last 24 months had a duff year before that.

As for money laundering - our affairs are squeeky clean - in fact we probably pay too much tax and would benefit from a smart IFA after all.

Your selected soundbite "and she wants me to sort it out. The money's here already -" makes us sound like gangsters

Not at all. I was just pointing out that satisfying European money laundering requirements may prove a snag if it is you that is arranging the investments and they are to be in her name. Any financial services company is going to be on guard straight away from someone saying that they want to invest £350k in the UK but live in South Africa.

The other point I raised have been repeated in other posts on this thread but you have chosen to ignore those.

Ideally, she should be getting advice from SA and not the UK. The odds of anyone on this board knowing SA tax wrappers in enough detail to deal with £350k is extremely unlikely.

sneekymum · 21 May 2005 at 7:07PM

Certainly Mr 3% may well have been tied to this percentage.

We haven't invested in an offshore for just 12 months. £100K was invested seven years ago by IFA #1 who assured my recently-bereaved mother that she could have her money back whenever she wanted. I've no idea why he thought it was a good idea to be offshore - I wasn't there. Mother wanted the money back 12 months ago and got a statement showing the MVA to be more than the growth before tax. I checked recently to see if the MVA had gone down (it hasn't) and a the statement showed under £100 growth over the year. My reference to this was just an example of our poor experience with IFAs. We referred this case to our solicitor who advised us that it was mis-sold and we should demand the return of the commission.

Sadly my mother is not giving us the £350K. About £20K each, I think. For which we are most grateful.

I have no idea how easy or difficult it is to invest from abroad (my sister will do her own investing once I find the information for her). It may prove too dificult for me to find this out and she may well have to use a South African advisor. I don't mind spending a few hours looking into it - at the end of the day if she choses to use an advisor at least we'll know what he's talking about.

I'm very grateful for the links people have been kind enough to add to this thread. This whole website is about people taking more responsibility for getting value for money, and helping each other by sharing knowledge is a vital part of the process. Anything I discover on this subject, I shall post here.

As for my money - I've found that I can get 103% tax gain on a pension - http://forums.moneysavingexpert.com/showthread.html?t=54456

EdInvestor · 22 May 2005 at 6:51PM

Sneekymum,

Is your sister a long term resident of SA or a UK expat temporarily living there who will return to this country later?Where is she likely to retire to?For instance does she pay voluntary NI contributions?

If the former she would probably be best to get advice locally and possibly even invest locally.If the latter, she would be best to maintain connections and put at least some investments in the UK.

I think you've probably already figured this out, but the thing to avoid is falling between the two and buying the kind of offshore products sold to expats by British IFAs based overseas.

Cook_County · 23 May 2005 at 2:17PM

Dear SM

The answer is complex.

If you are domiciled in SA then you should not have money in the UK. It should be offshore so that you are exempt from UK income and capital gains tax unless remitted to the UK; and not subject to UK IHT on your death.

HOWEVER, different rules apply for tax credits. For tax credit purposes the remittance rules do not apply so worldwide income (including that in SA and offshore need to be reported).

If sister is domiciled in SA then once again she will want to keep savings offshore to avoid UK IHT.

She will of course report worldwide income and gains in SA; because she has to.

If she is thinking of moving here then an excluded property trust would be good, but may be useless from a SA perspective.

The conclusion is that this ain't DIY; so you need to pay for competent advice now...

Debt_Free_Chick · 23 May 2005 at 4:12PM

Agree with CookCounty.

Whilst you can DIY for very many simple money issues, this probably requires specialist tax advice, at least. If you don't want to pay an IFA, have you considered paying for the tax advice, to include a list of suitable "products" and then doing the research on the best providers of those products?

Could be a useful compromise. At least you'll know you are paying for advice on the tax issues and not advice simply on products.

HTH

sneekymum · 23 May 2005 at 5:09PM

South African sister (domiciled in UK) now confirms she will be seeking advice over there.

I shall resume this thread at some point...

Thanks for all your help

How can my sister in South Africa invest in UK?

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