Can You Afford to Repatriate?

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Good to be home? Can you afford to repatriate?

[Acuma Wealth Funds’ James Thomas looks at the UK while Craig Holding considers the Australian situation]

Craig: Right now I am in southwest of Western Australia and enjoying some down time with family and friends. I have been an expat for 6 years now and when I come home I forget how expensive it is to live in Australia.

James: While Craig is enjoying his time in Australia, I am back in the UK for my summer break, amidst London Olympics, and have also been reminded of the high cost of living.

From an Australian perspective, things that are on people’s minds is the strong value of the Australian dollar, lack of disposable income and also high property prices. With the exchange rate so high, many people are looking at keeping and growing money offshore and then returning it to Australia if/when the AU$ returns to lower levels.

British expats are generally less concerned about exchange rates, but do have a similar view on property and living costs.

We have clients returning to their home countries on a regular basis and advise them on the best ways to repatriate assets and cash in a tax free manner.

For example, one of our clients is going home in the next few months on what can be considered a good salary but after tax he will be able to save 30% of what he is currently saving in Dubai. Regardless of the numbers involved this is a massive difference and luckily he has made substantial savings whilst living in Dubai and will be in a good position after returning home.

However, not all expats that we see have made the most of their time offshore and below are some tips to consider.

Firstly, it is useful to remind ourselves of the tax positions in the UK and Australia.

In the UK, earnings are taxed at source at up to 45% as there are National Insurance Contributions to pay, most items that you purchase will have Value Added Tax (VAT) applied at 20%, and there are various other taxes and duties that you will have to pay.

In Australia, earnings are also taxed up to 45%, while there are Medicare levies, and Goods and Services Tax (GST) at 10%.

In return for these taxes, you will be entitled to various benefits such as education and healthcare, but you need to factor these things into any calculations if you are considering returning home.

If you have accumulated funds while in the UAE, there are a number of offshore options available that you can consider.

If you become a tax resident of Australia and still have this account you will be able to keep up to AU$250,000 in foreign currency per person without any issues. You will pay tax on the interest as if it was back in Australia but at least it is earning something.

The UK rules are similar as well. Once you are a UK resident any interest is liable to tax, but there is no cap on the amount that you can hold in a foreign currency.

If you have cash or assets in Australia, now is a good time to be buying overseas assets with these funds. Property in the UK is yielding around 5% and mortgage costs are low so if you have sufficient funds, a property in London could be a worthwhile opportunity. When you return home this property is treated as if it is in Australia which is taxed as income but you will also achieve tax credits as well if the property is costing you money.

From a UK point of view, buying property for investment is a good long term proposition, and while the rental income is potentially taxable there are ways to offset this to make it as efficient as possible.

While you are offshore you should be trying to save at least 10% of your salary as a minimum to make sure you have something to show for your time overseas.

You can put this back into superannuation if you wish but the growth will be taxed at 15%. We have offshore superannuation options for our clients who can grow the funds at 0% tax and then return these funds to Australia at a later point in time.

From the UK perspective, any growth on your savings may be liable to tax, but with the right advice this can be minimised or even completely avoided.

As expats, we sometimes forget how lucky we are to be able to save a good percentage of our salary to hopefully get ahead in life. Try to make the most of your time offshore and plan for the future, and when things aren’t going quite so well, remember how it could be back at home!

World Tax Comparison Infographic
World Tax Comparison INFOGRAPHIC. Image credit:

For a comprehensive review of your finances contact:[email protected]

(This is a special report by Acuma Wealth Fund exclusive to Arabian Gazette)

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