Brits Who Hide Assets Abroad Face Punishment
Many expats are being reminded that if they hold assets abroad, they may be required to complete a tax return.
Over 5,000 taxpayers were fined in 2018 for failing to disclose they held assets abroad because most expats are not aware of the requirements.
The first set of ‘hidden’ financial data about Britons living abroad was handed to the UK’s Revenue & Customs in 2017, as part of the global transparency drive that has been introduced via a series of information sharing agreements across the world’s financial centres.
As a result, thousands of expats with undeclared savings accounts are potentially at risk of being hit by large tax penalties, once the information is transferred to the country where they live, according an article published in the Financial Times.
Banks, building societies, insurance companies and investment companies are required to provide HMRC with data about their overseas clients’ accounts.
Tax data exchanges in both directions have been agreed via tax authorities across the world under the transparency initiative known as the Common Reporting Standard (CRS), following on from the Panama Papers data leak, that exposed the extent of tax evasion around the world.
HMRC Targetting British Expats Abroad
HMRC, the UK tax authority, is working to ensure British expat taxpayers continue to pay tax on their UK affairs.
It recently released new figures that demonstrate its increased co-operation with foreign authorities overseas, leading to a considerable rise in levels of expat tax collected.
In 2017, HMRC made 1,006 requests to overseas tax authorities which resulted in an additional £5.7 million of tax being recovered, an increase of £3.7 million on 2016 and almost treble the amount collected five years ago.
How to Invest Money Safely Overseas
British expats can safely invest in monies overseas through an insurance contract. An insurance contract can be set up that can invest monies via an “insurance wrapper”. Monies sent into the insurance wrapper can then be reinvested into bank accounts or the stock market via professionally managed funds.
An investor may choose from funds, similar to mutual funds, offered by a life insurance company. Investments are usually made through a lump sum amount, for example investing $200,000 to $5,000,0000. Investors can also add monies in on a regular basis, for example, adding extra cash in monthly or annually.
The insurance contract is usually a whole of life insurance contract and you can choose who the beneficiaries are. For example, you can decide to have the full amount paid out upon death to your spouse or any chosen partner or heir of your choice. There may also be tax advantages of investing via an insurance contract rather than investing directly into a stock brokerage account.
Key Features of Investing Assets into an Insurance Contract
- Choice of 7 differentcurrencies including Pounds (GBP), Euros (EUR), United States dollars (USD) Swiss francs (CHF), Australian dollars (AUD), Hong Kong dollars (HKD) or Japanese yen (JPY).
- You can opt for a capital redemption or life assurance basis.
- You can invest from GBP 100,000 (or the currency equivalent) with the option to increase later.
- Professionally managed investment portfolio with billions under management.
- Easily managed in one place. High level of security. No need to worry about loss of your phone or laptop.
- You can access your plan at any time and take regular or one-off withdrawals.
Example Portfolio
- Money is moved from an overseas bank into an insurance wrapper, e.g. $100,000 is transferred from a bank in Indonesia to an insurance wrapper in the Isle of Man.
- The money is then reinvested through professionally managed funds via large investment fund houses such as Black Rock, Morgan Stanley and Vanguard.
- There may be tax advantages of leaving your money invested in the insurance wrapper.
- Upon death, 100% is paid out in cash to anyone you name in the contract.
- In ten years time, you can cash in the entire bond or decide to have an annual income paid out from the wrapper every year for the next 20 years.
How to Set Up an Offshore Insurance Wrapper to Protect Assets
Please contact a financial planner for more information and to receive brochures explaining the plans.