Returning to the UK? Here are 7 nasty surprises you might want to avoid

Every year about 60,000 people return to the UK, having lived abroad for several years

If you are planning to return, here are some surprises to avoid:

1. Charges on importing your belongings into the UK

Your personal possessions are exempt from VAT and duties, but you must be able to show that you are returning to the UK permanently.

You should complete form ToR1, listing (in detail) everything you will bring into the UK. The form can be completed online and there are guidance notes (and access to the form) at Transfer of residence to the UK.

2. Credit Score

We use credit in many ways, including car purchase, a mobile phone account and even a credit card. After years of absence from the UK, your UK credit rating will be low or non-existent. There is no quick fix but here are 3 steps you can take to speed up the process of rebuilding your credit rating:

• Get a UK credit card, use it and pay-off the balance each month.
• Open a basic bank account (without any borrowing or overdraft) and run it well.
• Get on the electoral roll.

3. Renting a home

Most letting agencies require you to pass a credit check (see previous item) and an affordability check.

The obvious solution is to pay six months’ rent and the deposit up-front, if you can. If this is not possible, shop around. Some agencies are more relaxed than others. As a last resort you could try to find a UK resident guarantor.

4. Car Insurance

This can be tricky. It may be difficult to convince a UK insurer of your no-claims record. Many will ask for proof of the no-claims record and they may want it in English. Some insurers will not accept any overseas no-claims record.

Before you leave your overseas home, ask your insurer for evidence of your no-claims record (in English if possible). And then shop around. Use sites like: Confused.com, Money Supermarket and Compare the Market.

5. Bank Accounts

UK banks vary enormously in the criteria required to open an account. The banks have two principal concerns: credit worthiness and their own anti-Money Laundering procedures. The main difficulty is lack of a permanent UK address, making it very difficult to open an account until after you have arrived in the UK.

You will very quickly exhaust the half dozen banks we used to call “high street banks”. If one of these will open an account for you that is good news, but if none will there are still plenty of places to look. There are banks that operate internationally such as Revolut, and you may be able to open an account before you leave your overseas home. The UK has a number of smaller banks, and some grouped as “challenger banks”. These are mainly digital banks, and they all have slightly different criteria. You can find a full list on Finder.

When selecting a bank, you should always make sure it is part of the FSCS (Financial Services Compensation Scheme). This scheme provides a government guarantee of your money, should the bank fail. The guarantee is capped at £85,000 per person per bank. (£170,000 for a joint account with your partner).

6. Pensions

You should always consult an IFA for advice regarding your pension.

Before you bring your overseas pension into the UK, you must decide whether it is desirable to do so. Exchange rate fluctuations and political stability are serious risk factors, and overseas regulations surrounding the operation of pension schemes may not be the same as UK regulations.

You should always consider the local and UK tax treatment of transferring your overseas pension rights. It is also worth considering how and where an overseas pension would be taxed once you start to draw it.

If you consider the UK state pension to be of value, you can check your record and obtain an estimate of your likely pension. You can also buy “missing years” if you consider this provides good value for money.

7. Capital Gains Tax

If you are thinking of selling any assets that are outside the UK, it might be best to do this while you are still non-resident. While HMRC may tax non-residents on the disposal of any UK land or buildings, gains made on disposals of assets outside the UK belonging to non-residents are outside the scope of UK tax.

Conversely once you are UK resident disposals of any relevant asset anywhere in the world is potentially subject to CGT.

Finally, watchout for changes in the upcoming Budget!

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The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.