Investing Inheritance as a non UK resident

EdSwippet

blenz101 said:

I am saying that the best course of action by far to invest £30k GBP is to keep that in GBP and invest it in a UK GBP GIA.  Tax is a consideration if doing this as any income or capital gains will still be subject to UK tax even for a non-resident.  However, the personal allowance still applies and unless withdrawing over £12k of profit a year is not going to be an issue.  I agree if you move the money out of the UK then UK tax is no longer a consideration (but local taxes may well come into play).

Let's dissect this a little. For a start, local tax may be an issue no matter where the account is held. Many countries operate similarly to the UK; that is, residents are liable for local country tax on worldwide income.

Specifically to the UK, non-UK residents are exempt from UK capital gains tax on gains of UK assets (except UK real property) provided they remain non-residents, with five years of non-residency being the basic bright-line test.

blenz101 said:

I'm not sure what you don't understand about currency conversion if your advice to seek out a non-UK platform is taken in their current country of residence.  The money is currently in GBP, it was an inheritance in GBP.  Hopefully the OP will come back and confirm where they are based but say they are living say in Spain and seek a local platform, they will almost certainly need to convert that £30k to EUR as their trading / investment account will be in that currency.  If they are in the UAE then they will have to move it to USD or Dirhams.  And so on...   The only place using GBP as a home currency, for practical purposes, is the UK.

Well, how about opening an Interactive Brokers account and buying a GBP traded Ireland domiciled ETF, such as VWRL, on the LSE? No currency exchange. EU UCITS ETFs should cause no issues with (hypothetical) Spanish residency. And being Ireland domiciled but held through a US and international-friendly broker means no tangling with UK tax either. Nor any significant tangling with US tax.

I'm not say this is definitively the OP's answer (in fact, if they are a US resident, it emphatically is not, because of the US's aforementioned draconian tax rules on 'offshore' fund holdings). It is however a demonstration of at least one possible answer that avoids both currency exchange and any hard and non-negotiable requirement to invest through a UK platform. And it would probably work reasonably well for residents of practically any country apart from the US.

bostonerimus

The OP's country of residence and access (or not) to good local investing options is important to this discussion ie if they are a US resident the situation will be very different from them being a resident of Thailand or UAE - for example. If they have been living outside of the UK for 14 years, I come back to what are they doing for pensions and as they say they still get a "UK salary", what is their tax and NI situation?

mxh

masonic said:

What I don't understand is why someone who has lived outside the UK for 14 years would want to cling on to a financial services market they no longer have ties with (and would not be permitted to start new business with), when it is likely they have more local services that are likely more convenient.

I can offer one answer to that because I'm in a similar position to the OP and looking for an answer to the same question. I'm in Australia, and at the moment the AUD is strong against the GBP - over the last few years it's fluctuated between $1.7 and $2 to the £, and is currently sitting at about $1.77. Bringing the money over to Aus now will potentially 'lose' me 10% compared to the recent average.

Yes, I'm fully aware that this may be the new normal, but I'm prepared to wait a while and see if the GBP strengthens again - it's not beyond the realms of possibility that we'll be back to $2.00 before long.

Therefore I want to park the money somewhere in the UK for a while, but would prefer it to be earning a little 'something' rather than the (virtually) nothing that it's getting in a bank 'savings' account.

masonic

mxh said:

masonic said:

What I don't understand is why someone who has lived outside the UK for 14 years would want to cling on to a financial services market they no longer have ties with (and would not be permitted to start new business with), when it is likely they have more local services that are likely more convenient.

I can offer one answer to that because I'm in a similar position to the OP and looking for an answer to the same question. I'm in Australia, and at the moment the AUD is strong against the GBP - over the last few years it's fluctuated between $1.7 and $2 to the £, and is currently sitting at about $1.77. Bringing the money over to Aus now will potentially 'lose' me 10% compared to the recent average.

Yes, I'm fully aware that this may be the new normal, but I'm prepared to wait a while and see if the GBP strengthens again - it's not beyond the realms of possibility that we'll be back to $2.00 before long.

Therefore I want to park the money somewhere in the UK for a while, but would prefer it to be earning a little 'something' rather than the (virtually) nothing that it's getting in a bank 'savings' account.

My comments were in relation to investments rather than banking. Someone earning a UK income may well need to retain a UK bank account to receive their money, and this is permitted by most financial institutions if you were resident when the account was opened.

Regarding your situation of trying to time transactions, that is a bit of a gamble. What will you do if the pound weakens further? It's currently at $1.77, but dipped to $1.72 in April and has been down at $1.43 in 2013. Other than a brief period in 2015, it hasn't been in the $2.00+ territory since the global financial crisis. The weakening of sterling against several other currencies has been part of a secular trend going back decades.

There are some pretty unfavourable economic headwinds over in blighty, and talk of a recession on its way. Currency speculation is a bit of a mug's game, so it's normally recommended to do the equivalent of pound cost averaging and convert money as it is received, rather than try to time the currency market.

If you really wanted to try to time the market, while earning some interest on your capital, you could convert the money immediately and use a currency spread bet or binary option to hedge your currency risk. It does separate out the gambling element and make it more explicit though.