Moving abroad for good, suggestions about what to do with UK financial products

andrea1983

Hi,

I have been living in here UK for 10+ ys and we recently started to pondering my return to our home country (Italy).

Although I managed to foreseen, image and plan how the relocation would happen (the physical one), I still don't have well clear what would happen or what would I have to do with the financial products I have been accumulating during the years (regular accounts, ISAs, pensions contributions both as NI or private/company ones and all these kind of things).

I'm thinking about the case I'll move my residency in Italy.

I would be interested to hear from someone who is going through the same situation or someone who did already this in past maybe?

Any suggestions where I can find useful info about this?

Some of the questions I have are:

What would be the easiest way to transfer my money to an Italian bank account by paying as less as possible in commissions? I have an HSBC accound and I recently saw they have a Currency Account where it seems you can store money and exchange them in different currencies without commissions. Does anyone have experience with that account?

What's about my ISAs? will I have to close them?

What about NI contributions? I guess i'll stop contributing to NI once I'm away so ideally it would be great if I could move/translate my contributions from UK to Italy...any idea how that could work out?

What's about the company pension contributions?

Anything that could help clarify my doubts would be greatly appreciated (links to websites, personal experience info and so on).

Thanks for helping!

dunstonh

What's about my ISAs? will I have to close them?

No.  However, ISAs are a tax allowance for UK residents.  Other countries do not recognise the tax free status of ISAs and you will be subject to Italian taxation rules on them.

What about NI contributions? I guess i'll stop contributing to NI once I'm away so ideally it would be great if I could move/translate my contributions from UK to Italy...any idea how that could work out?

NI contributions are effectively a tax.    Any benefit entitlement you have built up is retained and you will get a UK state pension when due.

What's about the company pension contributions?

They will stop when you leave employment.

The most important thing is to get your UK financial products sorted out before you leave the UK.   The EU has refused to grant permissions for UK financial companies to offer financial services to EU residents unless they have an office in the country within the EU (or have passporting permissions within the EU from within other EU states).   Most do not.    Unfortunately, this is a punishment from the EU to the UK for leaving and is unlikely to be resolved in the short to medium term.

That will not prevent you from holding on to products in the UK but it will prevent you from carrying out any trades other than sales/withdrawals. 

PRAISETHESUN

If you're 100% sure you're not returning to the UK then I'd just close all your accounts and convert the GBP into EUR. Managing dual tax residency can be a pain in my experience. Pensions are the only lose end that I'm aware of - in most instances you need to wait until retirement age to deal with them.

Currency conversions - avoid the high street banks like the plague. They offer "fee/commission free" conversions but their underlying exchange rate is generally quite poor (I've seen 5-10% difference compared to the true inter-bank rate). I'd recommend something like Wise. Otherwise here, https://www.moneysavingexpert.com/banking/foreign-currency-exchange/

ISAs - fairly sure you can keep them open, but you can no longer contribute to them. Additionally, you'll need to read up on how Italy treats them as it's possible that the tax wrapper isn't recognised meaning you'll be taxed anyway, which kinda defeats the point of having the account.

NI - not sure about that. Worst case is you end up with a partial aged pension from UK based on your contributions so far. I don't think you can transfer this out of the UK.

Private pension - similar to NI. You'll stop paying into this when you stop UK employment and when you come to be of pension age you claim from it. 

Daliah

PRAISETHESUN said:

NI - not sure about that. Worst case is you end up with a partial aged pension from UK based on your contributions so far. I don't think you can transfer this out of the UK.

Agreed. NI, or entitlement earned through paying NI, cannot be transferred to anywhere.

You do keep your accrued state pension entitlement, however, and there is an agreement in place between EU countries and the UK how such accrued entitlement will be handled once you qualify for your state pension. I am not allowed to post links here, but the information you need is on /europa.eu/youreurope/citizens/work/retire-abroad/state-pensions-abroad/index_en.htm

TBC15

If you are with HSBC and there is a HSBC in Italy open a HSBC account there. You can combine the 2 accounts globally and transfer money within seconds. Don’t know what HSBC Euro/Pound exchange rate is but while I was in the middle east it all worked out very well.

maxsteam

In your shoes, I would open a Fineco account now and I would keep one no-fees mainstream UK current account after the move.

You will not be able to put any further funds into a UK pension scheme or an ISA but you can keep the existing savings where they are after the move.

It may not be possible to open an HSBC account in Italy until you are resident there but it's possible to open a Fineco account now. The Fineco account will accept transfers in GBP without charges and will let you exchange funds between currencies at extremely competitive exchange rates.

Annikka_Green

maxsteam said:

You will not be able to put any further funds into a UK pension scheme or an ISA but you can keep the existing savings where they are after the move.

It may not be possible to open an HSBC account in Italy until you are resident there but it's possible to open a Fineco account now. The Fineco account will accept transfers in GBP without charges and will let you exchange funds between currencies at extremely competitive exchange rates.

I agree with this.

But as someone who lived overseas for over 20 years thinking I would not return to the UK as resident and have recently relocated back, I would recommend keeping at least one credit card and bank account open in the UK just in case...

Also I suggest you weigh up whether it is worth making additional voluntary National Insurance contributions to improve your UK government pension when it becomes payable. I did it while I was living abroad (self employed rate) and I consider it money well spent.

Neruda

maxsteam said:

In your shoes, I would open a Fineco account now and I would keep one no-fees mainstream UK current account after the move.

You will not be able to put any further funds into a UK pension scheme or an ISA but you can keep the existing savings where they are after the move.

It may not be possible to open an HSBC account in Italy until you are resident there but it's possible to open a Fineco account now. The Fineco account will accept transfers in GBP without charges and will let you exchange funds between currencies at extremely competitive exchange rates.

Another vote for Fineco: actually an Italian bank but they have a London branch that offers accounts to customers based in the UK.

As others have said: your NI contributions give you partial rights to a UK state pension, and there should be a procedure to  exchange them to equivalent rights to an Italian state pension. Alternatively, you can continue to make Voluntary NI contributions to build up your right to a full UK state pension. I have no idea how you calculate whether this is worthwhile for you, but a good start would be to get a pension forecast through the (UK) Government gateway site.

If you have any occupational pension rights, all you need do is make sure your former employer has your contact address. When you reach pension age you will be paid an appropriate amount just like an employee who had simply moved to a different job.

Daliah

Neruda said:

As others have said: your NI contributions give you partial rights to a UK state pension, and there should be a procedure to  exchange them to equivalent rights to an Italian state pension. Alternatively, you can continue to make Voluntary NI contributions to build up your right to a full UK state pension. I have no idea how you calculate whether this is worthwhile for you, but a good start would be to get a pension forecast through the (UK) Government gateway site.

Sorry to disagree with you.

NI contributions give you full rights to UK state pension, and there is no procedure to exchange or transfer your UK state pension rights to Italian, or any other country's, state pension rights.

However, full rights to a UK state pension doesn't mean you will get the maximum state pension amount. The max new UK state pension is currently £179.60 per week, and you need at least 35 NI years to get that maximum. I.e. each NI year is worth £5.13 a week. Each UK NI year entitles you to 1/35th of the maximum new UK state pension, provided you have at least 10 years of contributions. These 10 years can be made up of contribution years in the UK and in any EU country. For example, if you have 5 years in the UK and 25 years in Italy, you will be entitled to 5/35ths of the UK state pension. If you have more than 10 NI years in the UK already, contribution years in other countries become irrelevant for the purposes of calculating your UK state pension amount. So it is very easy to work out whether additional voluntary contributions are worth it, and how much they are worth.

UK state pensions get increased annually, and whilst residents of some countries are not entitled to such increases, residents of EU countries are entitled to it. 

The UK state pension is always paid by the UK, not any other country. It can be paid into a UK or an EU current account. It would generally be a better idea to have it paid into a UK account in GBP, and do the exchange into Euros yourself. Fineco would be a good account to have for this as the Fineco exchange rates are good, and it's very easy to move money from one Fineco 'wallet' to another.

UK state pensions are paid tax free but they will count to towards your taxable income in Italy.

Neruda said:

If you have any occupational pension rights, all you need do is make sure your former employer has your contact address. When you reach pension age you will be paid an appropriate amount just like an employee who had simply moved to a different job.

In theory, it might be possible to transfer your occupational pension to another country. However, this requires the advice from an Independent Financial Advisor, is limited to a few selected target pension schemes, and invariably a terrible idea as you are likely to lose significant amounts in the transfer. I would agree that the easiest is to leave it where it is (and then have it paid into your Fineco Bank account, as per above). The taxation of occupational pensions can be a bit of a minefield, depending on what kind of a pension it is, but you should hopefully be able to get it paid without UK tax deduction. You'd have to, obviously, declare it in Italy.



There is a dedicated pension board here on the MSE Forum if you have further questions about pensions.

IanManc

UK state pensions are paid tax free but they will count to towards your taxable income in Italy.

Just to clarify, UK state pensions are taxable, but are paid gross, without prior deduction of income tax. They are not "paid tax free".

Daliah

IanManc said:

UK state pensions are paid tax free but they will count to towards your taxable income in Italy.

Just to clarify, UK state pensions are taxable, but are paid gross, without prior deduction of income tax. They are not "paid tax free".

It's what I meant. Your words are probably more precise.