How does the UK Autumn Budget 2024 affect British expats living abroad?

After the UK Autumn Budget announcement in October 2024, UK citizens living abroad asked us questions about what this would mean for their UK investments and pensions, and whether there were any other important changes that would impact their finances.

In our recent webinar, we put questions from UK expats to our panel of tax, financial management and currency experts to find out the most important things you need to know if you’re planning to leave the UK and live abroad.

Pensions update for UK expats

While there have been no significant changes announced to pensions other than the fact that they will fall under UK inheritance tax (IHT) from 2027, there are a number of important considerations for expats to be aware of.

Many UK citizens who move abroad will have retained pensions that they have left behind in the UK. Often, they might have four or five different pensions from their working life.

When you retire abroad, you will need to consider how you will take your benefits from your pension. Many of these pensions will have legacy schemes, meaning that they don’t fall into the drawdown system that the UK made available with the pension freedoms legislation introduced in 2015. Many UK expats with these legacy schemes will find that they are unable to do anything with them.

Therefore, it is important to understand what pensions you have in place and gather all the information together. It can be much more difficult to find this information once you move abroad, especially if there are old pensions you have lost track of.

One you have all the information on your pensions, you’ll want to look at how you will be using them in future and what action you need to take. Often, it is easier to consolidate all your pensions into one type of scheme which allows you more flexibility when you eventually come to take your benefit.

A lot of expats find that when they retire and come to take their pension benefit, they are locked out by their UK pension provider because of the various rules and regulations around giving advice. Therefore, you will want to ensure everything is in order when it comes to your pensions before reaching this point.

Investment update for UK expats

If you have UK-centric investments, these assets are usually reportable as worldwide income and gains in the country you’re living in unless you are under a specific regime which relieves them. Therefore, it is recommended that you speak with a specialist financial adviser who can support you with restructuring, planning and retention.

Additionally, moving any investments from the UK to another country is going to come with an element of currency risk, therefore you will want to ensure you are liquidating the investment at a time that also ties into a strong currency movement.

For example, if your UK investments are up 4-5% but the Pound is weakened by 3-4%, then your investment is potentially negated by FX volatility.

Of course, currency fluctuations can work in expats’ favour as well. A number of UK expats bought property in the US when the Pound was high against the US Dollar, and they have now sold their properties for huge market increase as well as benefitting from a weak GBP against USD for the last few years.

Post-budget tax considerations for UK expats

Many UK expats will have retained their UK pensions with the knowledge they would be exempt from the UK Inheritance Tax (IHT). However, it is currently proposed that this will change from 2027 and pensions will be considered part of an estate under new IHT rules.

This means many UK nationals living abroad with no other connection to the UK other than their pensions are now at risk of being subject to UK estate taxes and will need to think about planning for this accordingly.

There have also been some headlines around changes to qualifying recognised overseas pension schemes (QROPs). In the past, many people have relied on treaty planning with regards to taxing rights for pensions, because estate tax hasn’t been an issue. As its anticipated QROPS will be within the IHT net from April 2027 we expect that they may be used even less.

Additionally, after 5^th April 2025, you may be subject to IHT as a non-resident if you have been resident in the UK for 10 years out of the last 20.

Your UK IHT exposure will depend on whether your country of residence has a tax treaty in place with the UK.  For example, if you are living in the US, you are less likely to be affected as there is a UK-US estate tax treaty in place which determines who is allowed to tax which assets. These changes, however, may be a significant concern for somebody that falls within the IHT regime and is now resident in a country that does not have an estate tax treaty with the UK.

Request assistance from our trusted partners

We have created a specific introduction service to help British expats, foreign nationals, and anybody affected by the changes announced in the UK Budget and changes to the Non-Dom status. As part of our free introduction service, our partners will offer an initial discovery call during which you can discuss your situation and determine if and how you'll be affected by the changes announced.

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