Packing up and moving on

5.5 million Brits live overseas. Do you wish you did, too? I went to St Pancras International to see off the latest wave of emigrants.

CURRENCY COMMENTARY

On BBC 2's Working Lunch I'm talking about the impact currency conversion has on the spending power of Brits migrating abroad. 

HOW TO BUY FOREIGN CURRENCY

If you're migrating with a lump sum of money, buying an overseas property, or looking for an income stream in another currency, then your focus will be firmly attuned to foreign exchange issues.

Currencies are all about relationships. For one currency to be strong, it means another has to be weak. If the currency you are spending gains ground against the one supplying your income, then the tip in balance immediately impacts on your wallet. For some, such a rise will make them feel richer. For others, the slide will leave them decidedly poorer.

Mark Bodega, Marketing Director with currency exchange specialist company HiFX, talks here about the role forex brokers play in assisting expatriates to switch their pounds into another currency. 

TIME TO BARE ALL?

Savers with a nest-egg in an offshore savings account, who have yet to share the news with HM Revenue & Customs (HMRC) have been given an opportunity to bare all. So , if the burden of non-disclosure is weighing you down, now's your chance to 'fess up. You'll benefit from a healthily reduced penalty rate if you do. Okay, that's not a complete amnesty, but the full penalty is an additional 30% of the tax charge or higher, and anyone adjudged to have deliberately tax-dodged faces the risk of a criminal prosecution. All of which makes the promise of a 10% penalty charge seem positively benign. You have until 12 March 2010 to come clean.

HMRC knows how effective these non-disclosure opportunities (NDOs) are. According to accountants James Cowper, the last one in 2007 saw more than 45,000 offshore savers put their hands up netting the Revenue a cool £450m.

HMRC says this latest NDO will allow savers with unpaid taxes linked to offshore accounts or assets to settle their tax liabilities favourably. Savers determined to make a clean breast of it must notify HMRC to make a disclosure. This means giving HMRC the full details of our offshore savings/assets, along with a calculation of the amount due. Full payment must then be made within the time limit. More information, along with further guidance and instructions for making a full disclosure will be found on HMRC's site from 1 September 2009. www.hmrc.gov.uk/offshoreaccounts/offshore-ndo.htm

Go on - you know you'll sleep better afterwards.

Watch out for changes to residence rules

Of course, expats who have had their 'non-resident tax status' confirmed by HMRC needn't trouble themselves. Their savings can continue to accrue interest tax-free, quite legitimately, provided they keep within the residency rules. Broadly speaking, 'non-resident tax status' is determined by the length of time an expat spends outside the UK in any one or more tax year/s and confirmed by the number of days spent back in Blighty calculated over a one or three year period.

A 'pumpkin' rule introduced in 2008 stipulates that the physical presence of an expat in the UK at midnight, on any given day, now counts as one full day's presence. This seemingly insignificant little rule change will notch up the number of days some expats spend back in the UK quite considerably. Cinderellas who habitually stretch their visit allowance to the wire had better watch out.

What's more, current rumblings in the undergrowth suggest further changes are afoot. My guess is we'll see the UK rules on non-residence mirroring the US model. This would mean that any expat resident in the UK for 31 days or more with a single tax year, or 183 day or more during a three year period, will be deemed to be resident for (UK) income tax purposes. So, an expatriate with non-resident tax status would have to ensure that he/she spends on average less than 61 days back in the UK in any one year stretched over a three year period.

Such a move hasn't happened yet, but non-resident expats should keep watch for any further developments and diary their cross-border movements carefully. I'll keep you posted.

REBATE MATTERS AND ROBBERS

The prospect of receiving money from the taxman is one of life's moments of delight. Most expatriates can expect a rebate from HM Revenue & Customs (HMRC) in the first year of moving abroad. Why? Because the chances are your tax code has been calculated on the premise that you were to remain in the UK for the entire tax year. By spending part of that year overseas, in all probability you've overpaid already.

The form to obtain from HMRC to make such a claim is P85. So contact your local tax office, or to to www.hmrc.gov.uk/cnr to download online, or telephone 0845 070 0040 (the HMRC Centre for Non-Residents - tax matters). If you're phoning from outside the UK the number is 0044 151 2222.

However, whilst rubbing your hands in gleeful expectation of a rebate coming your way, watch out that you don't fall prey to the latest scam where fraudsters are contacting hopeful recipients via the internet and operating what HMRC describes as the "most sophisticated and prolific phishing scam that we have ever encountered."

The scam tells the recipient they are due a tax refund and asks for bank or credit card details so that the fictitious tax refund can be paid out. HMRC is also aware of a growing number of telephone calls from fraudsters posing as tax officials arranging rebate payments.

HMRC emphasises that as a matter of policy it never uses emails, telephone calls or external companies when dealing with rebates and requesting personal details. HMRC strongly urges that if any expat is in doubt, check with the Revenue first at www.hmrc.gov.uk/security/fraud-attempts.htm

COMPENSATION LIMITS

As we watch our hapless expatriate brethren continue their fight to claw back deposits lost with Landsbanki Guernsey and Kaupthing Singer & Friedlander Isle of Man, expat savers not tangled up in the debacle can express a collective sigh of relief, "There, but for the grace of God..." The most valuable lesson we can learn from this sorry saga is to always interrogate the vigour and vim of a jurisdiction's financial compensation scheme before placing a penny of our hard-earned savings with any of its financial institutions.

For many British expatriates, offshore Britain's three finance centres (namely, Guernsey, Jersey and the Isle of Man) are the chosen locations for offshore money management if for no other reason than these islands' high streets house the subsidiaries of banks and building societies whose names are familiar to us. 

So, what's the extent of financial compensation these centres offer to savers if the worst comes to the worst?

Both the Isle of Man and Guernsey modified their depositor compensation schemes post credit crunch in the light of the Icelandic bank fiascos. They now guarantee depositors up to a limit of £50,000 per bank invested.

The ceiling of £50,000 per bank suggests that for the particularly cautious amongst you, placing large sums of money on deposit to attract 'top tier' levels of interest is no longer an option. The name of the game these days is to spread your savings pot across different banks so that the sum invested with each one does not exceed the ceiling, leaving a percentage of your balance uncovered.

Jersey, meanwhile, has no depositor protection scheme in place. A draft proposal is expected to be submitted to the States of Jersey before the summer.

THE CURRENCY JUGGLING IMPERATIVE

The pound was over-valued against other currencies for so long, spenders became dangerously complacent about the punch sterling packed into their wallets.

Today, as the pound, euro and US dollar look close to achieving parity - British expatriates must be on guard against the damage unfavourable currency swings will wreak on long term saving plans.

David Bulteel, Executive Director with investment management company Rensburg Sheppards, talks us through the art of currency juggling. Listen to what he has to say here.