Relocating to Singapore / UK Finances

DFWATTS

Hi Everybody,

A bit of a long-winded one, but I thought I'd put our current situation out there and see what people's opinion are, so here goes...

We are due to relocate to Singapore in December, where both my wife and I have been offered nice roles at the company we work for.  Kids are coming with us (obviously) and will start school there in the middle of January, and the estate agent is already working on finding us a place.  So far, so good.  What we don't know though is what we should do with the various investments+cash we have in hand here in the UK, and also the money we'll be earning whilst overseas.  Below is what we have between us:-

House - No mortgage, and will rent here for £1,350/month.  Once estate agent has taken their fees, plus insurance costs, we will be looking at around £1200/month net. Property is worth around £380k

Free-Trade - I have around £30k of shares here, earning me around 5-6% p.a. in dividends.

Premium Bonds - Other half has around £30k in bonds, and in all honestly they're not earning a great deal at all (probably 1%)

Junior Investment Funds - We have two of these for our kids, and combined there's around £30k in here too.  It's with BMO, and the reason I plumped for these ones 10 years or so ago is that I liked the fact I could withdraw money at any time, but also that it doesn't automatically transfer to the child when they reach 18.

Cash - Between us we probably have around another £55k in cash.

Workplace Pensions - We also both have pensions with work via Scottish Widows, where I have around £200k saved and my other half has around £160k.

In terms of Singapore, as the company gives us a housing & car allowance, plus pays the school fees for the kids, we'll be able to save a fair bit of cash.  Rough estimates are that we'll be able to put away around £4-5k / month.  This is then topped up with the rental income I detailed already.

All in all we're in a pretty good position for a pair of 41 year olds with kids aged 10 & 7, but....we're not making our money working anywhere near hard enough, and that has to change. We have no debt at all. Some questions I have are as follows:-

Free-Trade Shares - I believe I can earn up to £2k in dividends each year before having any tax liabilities, and the amount I have invested means I don't hit this number. Should I therefore just keep these shares in place and keep re-investing the dividends, or do I move the money somewhere else (Singapore, perhaps)?

Premium Bonds - My wife grew up in Argentina so is about as risk averse as you can get, but what should she do with this money instead? I think she's slowly realizing that she's not going to become a millionaire this way.

JIF's - Do we keep these 'as is' and just keep the £400/month going into both accounts (£200 into each), or do we put this money somewhere else?

Cash - Earning about 0.1% interest, and losing value every day with inflation going up as it is.  Sure, we want to keep some cash available, but what can we do here?

Workplace Pensions - I assume these will just remain 'frozen' for the time we're out of the country?

I'm sure there's other information you may need/want that I've omitted, but please feel free to ask.  ANY advice/hints/tips appreciated as we appear to be doing well from re-reading the above, but we're actually rubbish with money.

Thanks!!

D

tebbins

DFWATTS said:

Hi Everybody,

A bit of a long-winded one, but I thought I'd put our current situation out there and see what people's opinion are, so here goes...

We are due to relocate to Singapore in December, where both my wife and I have been offered nice roles at the company we work for.  Kids are coming with us (obviously) and will start school there in the middle of January, and the estate agent is already working on finding us a place.  So far, so good.  What we don't know though is what we should do with the various investments+cash we have in hand here in the UK, and also the money we'll be earning whilst overseas.  Below is what we have between us:-

House - No mortgage, and will rent here for £1,350/month.  Once estate agent has taken their fees, plus insurance costs, we will be looking at around £1200/month net. Property is worth around £380k

Free-Trade - I have around £30k of shares here, earning me around 5-6% p.a. in dividends.

Premium Bonds - Other half has around £30k in bonds, and in all honestly they're not earning a great deal at all (probably 1%)

Junior Investment Funds - We have two of these for our kids, and combined there's around £30k in here too.  It's with BMO, and the reason I plumped for these ones 10 years or so ago is that I liked the fact I could withdraw money at any time, but also that it doesn't automatically transfer to the child when they reach 18.

Cash - Between us we probably have around another £55k in cash.

Workplace Pensions - We also both have pensions with work via Scottish Widows, where I have around £200k saved and my other half has around £160k.

In terms of Singapore, as the company gives us a housing & car allowance, plus pays the school fees for the kids, we'll be able to save a fair bit of cash.  Rough estimates are that we'll be able to put away around £4-5k / month.  This is then topped up with the rental income I detailed already.

All in all we're in a pretty good position for a pair of 41 year olds with kids aged 10 & 7, but....we're not making our money working anywhere near hard enough, and that has to change. We have no debt at all. Some questions I have are as follows:-

Free-Trade Shares - I believe I can earn up to £2k in dividends each year before having any tax liabilities, and the amount I have invested means I don't hit this number. Should I therefore just keep these shares in place and keep re-investing the dividends, or do I move the money somewhere else (Singapore, perhaps)?

Premium Bonds - My wife grew up in Argentina so is about as risk averse as you can get, but what should she do with this money instead? I think she's slowly realizing that she's not going to become a millionaire this way.

JIF's - Do we keep these 'as is' and just keep the £400/month going into both accounts (£200 into each), or do we put this money somewhere else?

Cash - Earning about 0.1% interest, and losing value every day with inflation going up as it is.  Sure, we want to keep some cash available, but what can we do here?

Workplace Pensions - I assume these will just remain 'frozen' for the time we're out of the country?

I'm sure there's other information you may need/want that I've omitted, but please feel free to ask.  ANY advice/hints/tips appreciated as we appear to be doing well from re-reading the above, but we're actually rubbish with money.

Thanks!!

D

The fact that you even have investments, know what they are and how much you have, and know the different types of pensions already puts you way above average.
Emigration is one of those areas I would strongly suggest seeing an IFA (who operates in the UK and Singapore) about. A quick Google comes up with the Fry Group and Roy Walker (I've never heard of them, have no idea who they are, whether reputable or good, this is just to show that the kind of advice you're after does exist).
You could also ask around some local IFAs as if they can't help you they may be happy to refer you to someone they know so does specialise in your situation.

Worried_fool

It seems that you have not given any thought at all to your tax position, and yet this could prove to be very significant for you.

Check this: I understand that once you are living outside the UK for tax purposes, you no longer have a personal allowance, so every penny you earn of UK income becomes taxable. So there would be a hefty bill for the rent you receive on your house (and in any case I think your expenses will be higher than you expect, and not all eligible for tax relief). Check a landlord's forum to get some idea of what to expect. Remember that if you were to sell your house while still living abroad you would pay a lot in capital gains tax: to prepare for this you should arrange a professional valuation now. It could well be that selling your house rather than letting it, so there is no CGT, would be a sensible decision.

At the moment while you are still in the UK you can put money into ISAs and SIPPs, and the funds would retain their tax-free status indefinitely. Once you have left the UK you will not be allowed to pay any further funds into such accounts. So your holding on Freetrade should be moved into an ISA, along with any more money that is available for this kind of investment. Do be aware that Singapore might charge you tax on any dividend income or capital gains from an ISA.

DFWATTS

Hi Worred_fool,  I did look into this and I understand that I will still get a basic tax-free allowance as a British passport holder.

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance

It means that, over 12 months, I should virtually pay zero tax as I'll have a £12,570 tax free-allowance, and also up to £2,000 per year in dividends (again, my income from this source will be less than this).

Correct me if I'm wrong though as I'm no expert!

The ISA and SIPP advice is excellent and much appreciated. I will likely struggle to move all my current freetrade shares into an ISA as it's more than the annual allowance, but my dividends from this should be tax free anyway, as detailed above, so i'm not too worried about this.

blenz101

You are correct you will get an allowance, there is an HMRC form you can complete to prevent overseas landlords having tax taken at source by the agent managing your property.  Your agent should be able to direct you.  You will need to do a self assessment each year, my own company helps with this as part of my relocation.

You can also top up your workplace pensions for the first five years out of the country and get tax relief, £2880 is the maximum you can pay in before tax comes into play for a total top up (after tax relief) of £3600.

Assuming you aren't moving on the first day of a new tax year you will want to do a self assessment to get your tax back pro-rata in your first year.  You should do one every year afterwards as well to declare your housing income and shares although the calculation should be that you owe zero.

Many of your investments may well require you to be UK resident in order to hold them, may subject you to tax in SIN or may not even be legal (Premium Bonds being a lottery).  You can obviously keep quiet on these provided you are reporting to HMRC but think very carefully about topping them up as a non-resident.  A KYC check / source of funds enquiry could be a major headache.

Best advice would be to join some local ex-pat facebook groups / Redit etc. in Singapore and see what others are doing.  You can of course take professional advice but it will be heavily geared towards you moving your money offshore which you may not wish to do until settled for a few years.

DFWATTS

Thanks for the feedback everybody, much appreciated!

steampowered

A key decision to make is whether you want to keep your investments in GBP or move them into USD or SGD.

The GBP hasn't been performing well against the SGD or USD for a number of years now, as the UK continues its slide towards becoming a lower tier "also run" country following the stupidity of Brexit. If you want to be in Singapore long term you might want to look at moving your GBP investments into SGD. Or USD if you want a stable global currency that keeps your options open.

The big banks in Singapore (OCBC, UOB, Citibank) do offer USD denominated investment and brokerage accounts. 

As to your more general financial affairs, £55k in cash, £30k in premium bonds = £85k in total that is not invested. As your wife grew up in Argentina which is suffering from runaway inflation, she must appreciate that inflation can gut people's cash savings? Inflation running at 3% a year would mean you are actually losing £2,550 a year on your £85k. 

It makes sense to have some cash on hand to cover emergencies and unexpected expenses, but £85k is far too much. I would be investing most of that £55k. 

If you are staying in Singapore for the long term, the other thing you will need to think about is pensions. You may not qualify for the UK state pension if you don't have enough qualifying years. Singapore does not have a state pension at all.

Employees and employers do contribute to the "Central Provident Fund" which is a bit like a personal DC pension scheme, but I don't think you can participate in the CPF if you are in the country on a work visa and not as a permanent resident. So, if you stay as an expat longer term, you will need to make sure your personal investments and personal pensions are up to the task of giving you a comfortable requirement without expecting state support.

This will mean putting a lot more into your private pensions than most Brits do, as Brits get the UK state pension. However you will also be paying much lower tax in Singapore, so you will have more spare money to save. 

DFWATTS

Steampowered, thanks massively for your response, it's much appreciated.  A lot of 'food for thought' in there, and indeed I do agree with you in terms of the issues in Argentina and the impact this has on the population's mentality towards money (i.e. preferring to keep cash under the bed as opposed to trusting any sort of financial institution with it!!).  I do agree also it may be worth biting the bullet and simply transferring a lot of what we have in GBP into either SGD or USD.

penners324

Steampowered's advise should be taken with a large dollop of salt.

GBP is stronger today against the SGD than 10 years ago.

Against the USD it's currently up on 12 months ago. The USD also has some very big issues, China holds an awful lot of it, some think it's artificially high because of this , also government debt in the US is massive and continues to grow alarmingly quickly.

Thrugelmir

penners324 said:

Steampowered's advise should be taken with a large dollop of salt.

GBP is stronger today against the SGD than 10 years ago.

Against the USD it's currently up on 12 months ago. The USD also has some very big issues, China holds an awful lot of it, some think it's artificially high because of this , also government debt in the US is massive and continues to grow alarmingly quickly.

Under investment in US domestic infrastructure for decades is another challenge to overcome.