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    • Jeems
    • By Jeems 9th Mar 18, 11:58 AM
    • 188Posts
    • 118Thanks
    Jeems
    LISA for retirement / living overseas
    • #1
    • 9th Mar 18, 11:58 AM
    LISA for retirement / living overseas 9th Mar 18 at 11:58 AM
    I already own a property so the LISA would be for my retirement. I'm in my early 30's and have recently been offered a job overseas - not something I'd considered at all until a few weeks back. Its a permament position and I have no idea how long I will be away (or even if I'm going, but lets assume that I am).

    Would people recommend opening a LISA this tax year anyway? I am British born and always thought I'd be here forever - but now the sun is calling, its all up in the air a little. I have around 50k in a S&S isa and yet to top up this tax year. I'd certainly keep that one going regardless of what I do. Originally I was planning to put 16k into that and 4k into a LISA
Page 1
    • bowlhead99
    • By bowlhead99 9th Mar 18, 12:20 PM
    • 7,831 Posts
    • 14,302 Thanks
    bowlhead99
    • #2
    • 9th Mar 18, 12:20 PM
    • #2
    • 9th Mar 18, 12:20 PM
    The problem with using a LISA rather than a pension for your long term investing / retirement planning is that the 'ISA' concept is a particular UK one - which means that HMRC won't charge you any UK income tax on your ongoing income and gains inside it, but other countries (depending which country you end up being tax resident in) would not care that it was a special ISA product and might still seek to charge you tax on your worldwide income and capital gains, including the gains you made in the LISA account.

    Whereas a UK pension fund would not be a resident of that foreign country you moved to, so wouldn't find itself needing to pay tax there.

    So, if you are going to be spending a long time overseas and that 4k (plus bonus plus growth) wouldn't get used until you were in your late 50s or beyond, might be smarter to contribute it to a pension and take the tax relief.

    Of course, if you come back to the UK in a decade's time, you won't then be able to access that money because it will be locked in a pension wrapper which won't be very useful if you were hoping to use it to buy property or draw it back out when you want/need it due to a change of plans. But hopefully you have plenty of other savings anyway by that point.

    Also, you mention doing it 'this tax year'; if you are still tax resident here for a bit of time in the 2018/19 tax year which starts less than a month from now, you also have the chance to make the same decision for that year too. Even if you split that tax year and have only one month in the UK before relocating, you still get to use a full ISA/LISA allowance as well as having the full annual personal allowance available to use on perhaps only a month's salary, which is quite neat.

    But when doing your planning you will have to give some serious thought to when (if ever) you might come back and whether your money could be locked away over here. It would be useful if you came back and had lots of money already in tax wrappers so you wouldn't have to spend years dripping it back in at 20k/yr or whatever... but might be more useful for example to be put in equivalent local tax wrappers in the country where you become resident (if available). It can certainly be a bit of a faff if you want to change ISA provider at a time when you're not UK resident, because many companies don't want to open up new ISA accounts for non-UK residents.

    Obviously some places like UAE don't have income tax on investments and various places in Asia don't have CGT, or won't charge you tax on foreign dividends anyway - but if your 'place in the sun' is Florida for example then you would be paying tax on your UK investment income through your US tax returns even if it's hidden in an ISA. So the approach you take depends on your tax status, and your tax status is one of the many things to consider as part of your relocation and remuneration negotiation etc.
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