Savings in UK but moving to New Zealand

mothership_2

In September 2012 my partner and I are planning to relocate to New Zealand for a couple of years with a view to permanency depending how we find it (she's from NZ but holds dual nationality I will be on a resident's visa but still a British Citizen). We also own a house which we're planning to rent out paying the mortgage with the rent and banking the rest.

For first 4 years of being in NZ we will not have to pay double tax, so any interest earned on money held in accounts in the UK is effectively tax free anyway.

We currently have about £35,000 sitting in cash ISA's (various fixed terms all due to end before we go) the exchange rate is rubbish so it's not worth converting into NZ$ and we have some savings in NZ we can rely on anyway.

ISA applications seem specific in that you need to be a UK resident with a UK address. Can we ignore that and just bung the lot into 2 or 3 year fixed rate ISA's and forget about it, (if so what about the fact we won't have a current address) or must we stick into standard taxable savings accounts?

Should we find the best rate paying non tax free savings account and use that?

Should we look at NS&I products?

Is it worth looking into offshore savings accounts at all (a quick look at interest rates shows they are not very competitive)

Any help to point us in the right direction would be welcomed.

Rafter

Good luck with the move - slightly jealous!

Think you might run into problems trying to maintain your ISA stable if you are living overseas but maybe someone with more experience than me can advise. Might be worth talking to someone at your banks expatriate team to see what they suggest.

Otherwise you are down to opening a £ account with a NZ bank or using an offshore account but as you say, rates aren't that great.

Agree that converting the money to NZ$ isn't a great idea in case exchange rates move significantly - particularly as you will still have mortgage debts in £GBP in the UK.

Given you have savings in NZ would you not be better off simply paying off a chunk of your mortgage rather than earning c. 3% on savings before tax and paying 4%+ on a buy to let mortgage?

Good luck

R.

atush

I think you are OK with the ISas built up before you leave (incl ones for april 2012). You wont be able to make new deposits into ISAs after you leave. AFAIK, your old ISAs continue in that state and can be transferred to new providers. I would do as much of this as you can, before you leave.

The exchange rate could get even worse. Were you thinking of buying there? If so, it might make sense to move some money there?

mothership_2

Lots to think about here:

1. I went to Virgin Money who confirmed an ISA can be opened before departure but not from outside of UK. They also said they needed a UK address to write to (can't use c/o) raising prospective issues with future transfers into other online ISA's

2. When does one cease being a UK resident, can you be on holiday and working and still be a UK resident? The plan is to get to NZ and do some casual (could be taxed but I don't know) fruit picking work and travel around for 12 or so months and then get proper jobs for another year and re-evaluate. This uncertainty is why we don't want our UK savings to pay off part of the mortgage and in the event we return to the UK want to have access to ISAs to either draw on them or continue adding to them.

We are on a 5 year mortgage deal with Natwest who allow you to keep the current terms without having to change to a buy to let mortgage, 3.95% - so that's ok until 2016.

How can we transfer existing ISA funds from place to place if all documentation has to be sent to a bloomin' UK address?

atush

Do you not have a parent or sibling that you could use their address for mail? Also, once accts opened opt for online statements. They still need a postal address for other reasons but at least you'd get your statements.

Get bills etc routed there too like CCs you will keep open.

xylophone

Transfer into on line ISAs - use parents' address?

RetiredInThailand

If you will not be resident in the UK then you should look at savings that pay interest gross. These seem to offer a much better return than ISAs do anyway.

There are several UK deposit-takers who will open accounts for non-residents and pay interest gross with suitable certification.

mothership_2

AlasI have no sibling to entrust or parents alive in this country (estranged father in Australia). My partner is a Kiwi and her family are in NZ. We have friends but would rather not impose on anybody and Virgin won't send c/o someone else - don't know if other insitutions will. This seems like a silly rule if it is actually a rule rather than 'computer saying no', surely it is far from unusual for people to work abroad or go travelling for 12 month periods or longer.

It seems that because we will have no address in the UK (apart from our house which will be tennanted with strangers) we will have to lose the tax free status of our savings and become offshore banking users, for possibly 2 years only.

My other half has been able to conduct her entire banking business via email and phone calls with occasional posted materials (to a UK address) with New Zealand banks for the last 10 years without a single issue. Opening new Term Deposit accounts, splitting investments, managing credit cards etc. We had a joint account a while back with AngloIrish bank when she lived in Ireland and I worked there temporarily, they happily wrote to us in the UK without question when we both moved here. I despair of the UK sometimes I really do!

Retiredinthailand asked about savings accounts but the point is that at the mo' we're planning to return so all the ISA cash won't be in it's little tax free wrapper anymore if we go down this avenue. Whilst £35K is not millions it's a big sum to be suddenly paying tax on interest and it took a while to build up.

xylophone

Perhaps you could transfer into two year on line ISAs as they mature. Obviously the address you would be using would be your current UK one because it will be before you go. Perhaps you could then contact the providers initially by phone and then in writing and explain that you do not wish any correspondence to be sent to your address until further notice as you expect to be away on an extended working/backpacking holiday?

You could provide your e-mail details so that they could request you to contact them if necessary?

Ifts

mothership wrote: »

We currently have about £35,000 sitting in cash ISA's (various fixed terms all due to end before we go) the exchange rate is rubbish so it's not worth converting into NZ$ and we have some savings in NZ we can rely on anyway.

When the various fixed term ISA's mature, put the money in to an easy access ISA (or open the easy access ISA now with this years ISA allowance if you have not already used this years allowance, also next years ISA allowance from 6th April 2012 if you can spare the money), then before you go in September (do allow plenty of time for the transfer to take place, to make sure it goes through and you receive initial paperwork before you leave at current address?) transfer the contents of the easy access ISA in to a fixed rate ISA (duration depending on how long you think you will be in NZ), a fixed term online ISA would be best.

Try to avoid loosing the tax free ISA benefit if you can. Like you say it took you a while to build it up and it would be a shame to start paying tax on.

RetiredInThailand

mothership wrote: »

It seems that because we will have no address in the UK (apart from our house which will be tennanted with strangers) we will have to lose the tax free status of our savings and become offshore banking users, for possibly 2 years only.

Not all UK banks accept non-resident customers, but quite a few do. So there is no real need to go offshore where interest rates and deposit protection are both lower.

Retiredinthailand asked about savings accounts but the point is that at the mo' we're planning to return so all the ISA cash won't be in it's little tax free wrapper anymore if we go down this avenue. Whilst £35K is not millions it's a big sum to be suddenly paying tax on interest and it took a while to build up.

At the moment many ISA holders would better off having cash in a regular taxable deposit account, due to the higher rates they pay even after tax. This may not last, admittedly, but even so it's worth bearing in mind.

It all boils down to whether you can keep your existing ISAs open or not. Answer that question and you know what to do. For any new savings you can open a gross interest onshore non-resident account and then move them into ISAs when (if?) you return.