Please see below the latest financial update from Blevins Franks
Please do not hesitate to contact Paul should you have any questions related to this or other financial matters.
https://www.blevinsfranks.com/uk-financial-advisers-4-considerations/
Living in Spain and still using UK-based financial advisers?
4 things to consi
By Paul Montague, Partner, Blevins Franks
928 433 411 | canaryisles@blevinsfranks.com | www.blevinsfranks.com
If you are living in Spain or another EU country, continuing to use the services of UK-based financial advisers may present several challenges and result in outdated, incomplete or unsuitable advice for your new residence status.
Using a professional financial adviser is incredibly beneficial for managing your wealth effectively. Their expertise and experience help you navigate complex financial planning decisions with confidence. Working together, you can establish personalised financial plans to optimise your investments and pensions, minimise taxes and ensure a smooth transfer of wealth to your heirs.
Specialist advice becomes even more important when you move abroad, as you find your way through foreign tax and succession regimes, use a different currency for living expenses, and consider the cross-border implications of living in one country and having heirs and assets in another.
An essential element for successful wealth management is that it is carefully designed around your specific circumstances and aligned with your long-term objectives. Building a good, long-term relationship with a financial adviser certainly helps here, as they become familiar with your family concerns, income needs, risk tolerance, etc.
Wishing to retain your UK financial adviser even when living abroad is understandable. Unfortunately, this presents many challenges both for yourself and your adviser, and increasingly so since Brexit. Advisers may need to establish regulation and licences in your new country of residence, perhaps new qualifications, and could have compliance headaches, as they navigate complex cross-border tax laws, reporting requirements and multiple currencies.
UK-based financial advisers who hoped to continue helping EU-based clients are recognising that they can no longer support them. Unless your adviser has arranged to meet the necessary regulatory requirements in Spain, it may only be a matter of time before they concede they cannot support you anymore. In any case, guidance from UK-based advisers may turn out to have been unsuitable for someone with Spanish tax residence status, and you and/or your heirs end up paying more tax than necessary, sometimes significantly so.
While starting again with a new adviser may seem daunting, building a relationship with one living locally in your area will soon prove advantageous.
- Regulation
For your protection and peace of mind, it is essential to use a financial advisory firm which is authorised and regulated to provide advice and services in your country of residence. The EU has a ‘passporting’ system that enables firms authorised in one EU Member State to offer regulated financial services in other Member States, without additional authorisation, facilitated by harmonised financial regulations. UK-based financial advisers, firms, banks, and other financial institutions lost access to this passporting mechanism as of 1 January 2021, following the UK’s departure from the European Union.
Some UK financial groups of companies put arrangements in place to be able to continue working in an EU country post-Brexit, but many others did not due to the complexity and costs involved.
If you are using the services of a UK-based financial adviser or institution, confirm what authorisation they have in place to advise and service clients who are resident in Spain. Establish whether their professional indemnity insurance covers you and what their complaint procedures are for EU clients.
- Limits of UK advice and services
If you retain UK investments, a UK-based adviser may be able to continue supporting you there. But if you hold savings and investments with an EU-based institution, they may no longer accept instructions, such as top-ups, from a UK adviser. This could limit the planning opportunities for expatriates using UK-based advisers.
There may be practical challenges to keeping a UK-based adviser, such as having to travel to the UK for meetings and paperwork requirements. This could prove detrimental in situations where you need funds quickly or are unable to travel through illness.
Another issue to be aware of is that, as part of their product governance, product providers are no longer keen on having clients retain UK products if you have permanently moved to a European country. You may therefore be asked to close your UK accounts.
- Advantages of local knowledge
As well as the legal and practical implications, consider whether an UK-based adviser is best placed to help you take advantage of opportunities available in Spain. For example:
- Do they fully understand the intricacies of the Spanish – and Canary Islands in particular – tax regimes and how it interacts with UK taxation?
- Do they have in-depth knowledge of the Spanish residence, tax, succession law and reporting rules? Do they keep up to date on Spanish reforms?
- Do they know about – and have access to – tax-efficient solutions that offer significant benefits to Spanish residents?
- Who will pay the bill or face the consequences if they get things wrong?
While UK-based advisers are experts on the ins and outs of the UK system for residents there, it is unlikely that they have the same in-depth knowledge for another country, and it is your wealth that will suffer.
And of course, UK advisers who have relocated and now live and work in your country of residence will also have personally experienced what it is like to make the move, set up home here and navigate the local rules and regulations. They’ll understand both the frustrations and opportunities you encounter and be in a position to share a wealth of local knowledge and advice that goes beyond financial planning.
- The suitability of UK planning
Financial planning that is tailored for a UK resident is unlikely to remain suitable once you become resident elsewhere, and could have negative tax and succession consequences. Ideally, you should review your arrangements before you move to minimise taxation when changing residency and make the most of tax-efficient opportunities in your new home.
If you are holding on to UK savings and investments, beware that they can lose their tax benefits once you are living abroad. Meanwhile, Spain residents have access to locally-compliant alternatives that can offer other advantages besides tax-efficiency – such as multi-currency and estate planning flexibility – so explore your options. Depending on your circumstances, many British expatriates in Spain have found that reviewing and adjusting how and where they hold their capital and assets has significantly improved their tax position. This applies even more now with the UK tax reforms.
It has never been more important to ensure your financial affairs are both compliant and suitable for your life abroad. Secure financial peace of mind by talking to an experienced, Spain-based adviser.
Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com.
Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.
