Expat Financial Planning
Pensions, QROPS, offshore investments, inheritance tax, currency risk, and tax residency: the financial decisions expats face are genuinely complex. This guide explains the six pillars of cross-border financial planning and what each one involves.
Informational only, not financial advice.
Last reviewed: July 2026
Definition
Expat financial planning is the structured process of managing your financial affairs across more than one jurisdiction, typically because you live abroad while retaining pensions, assets, or estate planning obligations in your home country.
Unlike domestic financial planning, expat planning must account for the interaction between two or more tax systems, regulatory frameworks, and currency zones simultaneously. Pension rules that apply in one country do not automatically transfer to another. Inheritance tax may follow you based on residence history rather than your current address. Protection policies may lapse or exclude claims once you leave. Currency movements erode income in ways that domestic planning rarely considers.
The consequence is that the standard toolkit of domestic financial planning, designed for a single jurisdiction, is insufficient for most expat situations. Cross-border financial planning requires a specialist who holds the regulatory permissions for your specific jurisdiction and understands the interaction between home-country rules and the rules of the country you now live in.
Nothing on this page constitutes financial, tax, or legal advice.
The 6 pillars
These six areas form the core of most expat financial planning conversations. They interact with each other: a pension decision affects tax, which affects currency, which affects cashflow, which affects estate planning. A specialist sees all six together. The sections below explain each pillar in detail.
What to do with UK pensions, whether to transfer, keep in a SIPP, or explore QROPS, is often the most consequential financial decision an expat makes. The choice depends on jurisdiction, pension type, age, and long-term plans.
UK IHT is no longer only about domicile. The long-term resident test, the nil-rate band, and the April 2027 pension-IHT change (Finance Act 2026, now law) all affect how your estate is structured.
Residence determination under the UK Statutory Residence Test, double taxation agreements, and the local tax rules in your country of residence interact in ways that require specialist navigation.
Multi-currency income and savings require a deliberate strategy. Offshore investment structures can be appropriate for long-term non-UK residents, but suitability and tax treatment vary significantly by jurisdiction.
UK life cover and income protection policies may not pay out for overseas residents. International structures require specialist knowledge of what travels and what does not.
US citizens and green card holders face an additional layer of complexity: FATCA reporting, PFIC rules on non-US funds, FBAR obligations, and incompatibility between QROPS and US tax treatment.
Pillar 1
For most UK expats, the pension question is the most financially significant item on the planning agenda. UK workplace and personal pensions remain in the UK scheme when you move abroad: they do not disappear, but the rules governing contributions, drawdown taxation, and potential transfers change substantially depending on where you live.
Defined contribution pensions held in a UK SIPP (Self-Invested Personal Pension) can typically continue to be accessed in drawdown from abroad, subject to the tax treatment in your country of residence and the terms of any applicable double taxation agreement. The interaction between UK and local tax on pension income is one of the most jurisdiction-specific issues in expat financial planning: what applies in Portugal differs from what applies in Spain, the UAE, or Singapore.
Defined benefit (final salary) pensions require additional consideration. If you hold a defined benefit pension and are considering transferring it, HMRC requires regulated advice from a pension transfer specialist if the transfer value exceeds GBP 30,000. A QROPS (Qualifying Recognised Overseas Pension Scheme) transfer is one potential route for non-UK residents, but it carries an Overseas Transfer Charge risk of 25% of the transfer value unless you are resident in the country where the QROPS is based. The HMRC ROPS list should always be checked for current recognised schemes.
UK State Pension entitlement does not stop accumulating simply because you move abroad. Voluntary Class 3 National Insurance contributions at GBP 18.40 per week (2026-27 rate) allow gaps in your record to be filled, up to the limit that generates the full new State Pension of GBP 12,548 per year for 2026-27. Whether voluntary contributions are cost-effective depends on your existing National Insurance record and your country of residence. Some countries have social security agreements with the UK that affect both NI contributions and State Pension eligibility.
The CETV (cash equivalent transfer value) calculator at tools/cetv can illustrate the approximate transfer value of a defined benefit pension. The QROPS guide at /qrops covers the transfer route in detail. The SIPP guide at /sipp-for-expats covers the option of remaining in a UK pension structure.
Pillar 2
UK inheritance tax (IHT) is an area where the rules for expats changed materially from April 2025 and will change again from April 2027. Understanding both changes is central to estate planning for internationally mobile individuals.
The long-term resident test (from April 2025). Previously, UK IHT exposure was primarily determined by domicile: a concept tied to where you consider your permanent home to be, which is difficult to change and requires sustained evidence of intention to settle permanently elsewhere. From April 2025, a parallel test applies: the long-term resident test. If you have been UK resident for 10 of the previous 20 tax years, you are treated as a long-term UK resident for IHT purposes, and your worldwide assets come within the scope of UK IHT regardless of your domicile status.
The long-term resident test carries a tail: even after you cease UK residence, the status does not end immediately. Depending on how many years of UK residence you have accumulated above the 10-year threshold, long-term resident status may continue for between three and ten years after your departure date. This means individuals who have left the UK may retain worldwide IHT exposure for several more years, even if they are no longer UK resident by any other measure.
Current thresholds, frozen to April 2030. The nil-rate band (NRB) remains GBP 325,000 per individual and the residence nil-rate band (RNRB) remains GBP 175,000, giving a combined maximum of GBP 500,000 per individual (or GBP 1,000,000 for married couples and civil partners where the full RNRB applies). Both thresholds are frozen until at least April 2030. Given asset values in general and property values in particular, many estates that were once below the IHT threshold are now within scope.
The April 2027 pension-IHT change (Finance Act 2026). This is law. From April 2027, most unused defined contribution pension funds and certain lump sum death benefits will be brought within the scope of UK inheritance tax. Under the previous rules, pension assets typically did not form part of the taxable estate, making them one of the most commonly used structures for intergenerational wealth transfer. After April 2027, that exemption will largely end for UK IHT purposes. The practical implication: individuals whose pension and estate assets combined exceed the available nil-rate thresholds face a new IHT liability on pension wealth that did not previously exist. The pension-IHT projection tool at /tools/pension-iht-projection allows you to model the combined position. The IHT illustrator at /tools/iht covers the broader estate position.
Planning responses to these rules vary by individual circumstances and may include gifting strategies, trust structures, pension drawdown sequencing, or domicile reviews. Any of these responses require regulated advice from a specialist who understands both UK IHT law and the tax treatment in your country of residence.
Pillar 3
Tax residency is the foundation on which all other expat financial planning sits. Where you are resident for tax purposes determines which country has primary taxing rights over your income and gains, how much of your worldwide income is within scope, and how double taxation agreements (DTAs) operate to prevent the same income being taxed twice.
The UK Statutory Residence Test. For UK nationals living abroad, confirming that you are no longer UK tax resident is not automatic. HMRC applies the Statutory Residence Test (SRT), a codified set of rules introduced in 2013 that determines UK tax residence for a given tax year. The SRT involves three sets of tests: automatic non-residence tests (which, if met, confirm non-residence without further analysis), automatic UK residence tests (which, if met, confirm UK residence), and tie-breaker tests that count connections to the UK including a UK home, substantive UK work, time spent in the UK, and close family ties. The number of days you spend in the UK in a tax year is a central input, but it is not the only factor. Many expats incorrectly assume that leaving the UK is sufficient to end UK tax residence; the SRT can produce UK residence status for individuals who return to visit family or continue UK business activity above the applicable thresholds.
Double taxation agreements. The UK has DTAs with a large number of countries, covering the treatment of income types such as employment income, pension income, interest, dividends, and capital gains. DTAs typically establish which country has primary taxing rights over each category of income and provide relief mechanisms to prevent double taxation. The precise terms of the relevant DTA matter considerably: the treatment of UK pension income in Portugal under the UK-Portugal DTA, for example, differs from the treatment of the same income in Spain or the UAE. The destination guides at /expats cover the local tax context for specific countries.
Local tax regimes.Beyond the UK position, your country of residence may have its own rules on taxation of foreign-source income, pension drawdown, and capital gains. Some jurisdictions offer preferential tax treatment for new residents: Portugal’s NHR (Non-Habitual Resident) regime and its 2024 successor the IFICI programme are examples of country-specific regimes that can materially affect how UK pension income is taxed. These regimes have their own eligibility conditions, application processes, and sunset provisions, and they interact with UK tax rules in ways that require specialist analysis.
Pillar 4
Investment planning for expats involves considerations that rarely arise in domestic financial planning. Where assets are held, in which currency, and in what structure can all affect both the tax treatment and the practical management of wealth across jurisdictions.
Offshore investment structures. Offshore bonds, portfolio bonds, and international investment accounts are structures that may be available and potentially appropriate for non-UK residents, depending on jurisdiction. An offshore bond, for example, can allow investment growth to roll up without immediate income tax liability in certain circumstances, with tax only arising on withdrawals. The UK tax treatment of withdrawals from offshore bonds, and the local tax treatment in the country of residence, both need to be understood before any such structure is put in place. Suitability is entirely individual and jurisdiction-specific. The investment services section at /services outlines the categories of structure a regulated specialist may consider.
Multi-currency exposure. Expats who draw income in one currency (for example, a UK State Pension or defined benefit pension income paid in GBP) while incurring living expenses in another currency face ongoing currency risk. Exchange rate movements can significantly affect purchasing power over time, particularly for individuals in or approaching retirement who cannot easily offset a fall in the GBP rate with additional earned income. Strategies for managing currency exposure range from holding savings in the local currency to hedging arrangements, and what is appropriate depends on the size and permanence of the cross-currency mismatch. The cashflow model at /tools/cashflow can help illustrate the long-term effect of currency assumptions on retirement income.
Sequencing risk. For expats in drawdown, sequencing risk (the risk that a significant market fall early in retirement permanently reduces the available pot, even if markets recover later) is amplified by currency movements. A fall in both portfolio value and the sterling exchange rate in the same period can compound the impact considerably. This is a structural planning consideration, not a short-term market call, and it affects how drawdown strategy should be constructed.
Pillar 5
Protection planning is the most commonly overlooked pillar of expat financial planning. Many individuals move abroad without reviewing whether their existing UK life cover, income protection, or critical illness policies remain valid in their new country of residence.
UK policies and overseas residency. Most UK life insurance and income protection policies contain clauses that restrict or void cover once the policyholder is resident overseas. Some policies will pay out for a period (often 12 months of continuous overseas residence) before the cover lapses; others have immediate exclusions for certain countries or any non-UK residence. Income protection policies are particularly affected: if the definition of incapacity in the policy is tied to an inability to perform your UK occupation, residency abroad may fundamentally change how a claim is assessed. Reviewing existing policies before, rather than after, a move is significantly easier.
International life and income protection. International life cover structures are specifically designed for individuals who live across multiple jurisdictions and may move again in future. They typically offer portability across countries, currency options for the sum assured and premiums, and underwriting frameworks suited to cross-border lives. The appropriate structure depends on the level of cover required, the currencies involved, and the specific countries of residence both now and in any anticipated future moves.
International private medical insurance. While not strictly a financial planning product, private medical insurance that covers you in your country of residence, and provides access to care in the UK when needed, is a common component of expat financial reviews. Coverage for repatriation, specialist treatment, and ongoing conditions can vary considerably between policies and providers.
The protection services available through Pharos introductions specialists are outlined at /services. A regulated specialist can review existing policies and identify gaps or lapses as part of a cross-border financial review.
Pillar 6
US citizens and green card holders living outside the United States face a layer of financial complexity that applies in addition to, and sometimes in conflict with, the standard frameworks of expat financial planning. The US taxes on the basis of citizenship, not residency alone: US persons are required to file US tax returns regardless of where they live, and a range of reporting and compliance obligations apply to their overseas financial lives.
FATCA (Foreign Account Tax Compliance Act). FATCA requires non-US financial institutions to report accounts held by US persons to the IRS. In practice, this means many overseas banks, investment platforms, and insurance providers apply enhanced due diligence to US account holders, and some decline to open or maintain accounts for them. US persons living abroad sometimes find their access to local financial products is restricted precisely because they are US persons. This is a structural issue, not a compliance failure by the individual.
PFIC rules. Non-US investment funds held by a US person are typically classified as Passive Foreign Investment Companies (PFICs) for US tax purposes. The US PFIC tax regime applies a punitive treatment to gains and distributions from PFICs unless specific elections are made annually. In practice, this means that most offshore investment structures that are standard and legitimate in the non-US expat world (including offshore bonds and most non-US collective investment schemes) may be unsuitable for US persons. Specialist advice from a dual-qualified US and UK financial adviser is required to identify what investment structures are appropriate.
FBAR and other reporting. US persons must file an FBAR (FinCEN Report 114) if they have a financial interest in, or signature authority over, foreign financial accounts exceeding USD 10,000 in aggregate at any point in the year. Additional FATCA reporting under IRS Form 8938 applies at higher thresholds. Failure to file carries significant civil and potentially criminal penalties.
QROPS and US persons. Standard QROPS structures are generally incompatible with US tax obligations: the US does not recognise the QROPS framework and the tax treatment of transfers and withdrawals from a QROPS for a US person can create significant US tax liabilities. This is a technical area where specialist US cross-border advice is essential before any pension transfer is considered.
The guide for US persons living abroad at /us-persons-abroad covers the cross-border financial landscape in more detail. US cross-border planning is a distinct specialism: not all expat financial advisers have the US-side qualifications required.
An important distinction
Financial planning and financial advice are related but distinct activities. Understanding the difference matters practically for expats because it affects who can help you, in what capacity, and with what regulatory protection.
Planning is the map. Financial planning in the sense used throughout this guide is the diagnostic and structural process of mapping your financial position across jurisdictions: identifying what pensions you hold and their status, quantifying IHT exposure, understanding your residency position, assessing currency risk, reviewing protection cover, and identifying gaps. This is an information-gathering and analytical exercise. It helps you understand what conversations you need to have and what decisions are in front of you.
Advice is the personal recommendation. Regulated financial advice goes further: a licensed specialist assesses your specific circumstances and makes personal recommendations on what to do. Giving regulated advice on pension transfers, investments, and protection requires authorisation by the relevant financial regulator, with equivalent jurisdiction-specific permissions applying in most developed jurisdictions. Regulated advice carries regulatory protections: the adviser must assess suitability for your circumstances, disclose how they are paid, and can be held to account by the relevant regulator if the advice is unsuitable.
Where Pharos fits. Pharos Introductions does not give regulated financial advice. We are an introducer: an independent service that connects qualifying individuals with regulated cross-border specialists who hold the appropriate permissions for your jurisdiction. We never recommend a specific pension transfer, investment product, or estate planning structure. That is the role of the specialist we introduce you to, who has the regulatory permissions, professional indemnity insurance, and personal accountability that regulated advice requires. The introduction process is described at /how-it-works.
Common gaps
Most expats who go through a structured financial review find at least one of the following areas needs attention. None of these gaps are unusual: they are a predictable consequence of moving across jurisdictions without a dedicated planning conversation. The Expat Financial Health Check tool is a free self-assessment starting point.
Individuals who worked in the UK for multiple employers over a career often have deferred pension pots with former workplace schemes they have lost track of. These pots may be subject to investment decisions that no longer match current circumstances, and consolidation or transfer may be appropriate once advice has been taken. The UK government’s pension tracing service can help locate missing pensions.
A will written in the UK may not be effective, or may not be optimally structured, in your current country of residence. Intestacy rules vary significantly between countries. Individuals with assets in multiple jurisdictions may need wills in each, and the interaction between them matters for assets that cross borders. An estate plan that was appropriate when you lived in the UK may need to be updated significantly following a move abroad.
Expats who keep the majority of their savings and income in GBP while living in a country with a different currency face ongoing currency risk that compounds over time. A retirement income that appears adequate at today’s exchange rate may be significantly reduced if sterling weakens over a period of years. Addressing this typically involves some rebalancing of where assets are held and in which currencies, a decision that requires both investment and tax analysis.
UK life and income protection policies frequently contain overseas residency exclusions that policyholders have not checked. Discovering that a policy has lapsed or excludes overseas claims after a health event is significantly worse than discovering it in advance. A protection review should be part of any cross-border financial planning conversation.
The April 2027 change (Finance Act 2026, now law) bringing most unused defined contribution pension funds within the scope of UK IHT is not yet widely understood. Many individuals whose estate and pension assets together exceed the nil-rate thresholds have not yet modelled the combined liability or considered whether any planning response is appropriate ahead of April 2027.
UK nationals who have spent years working abroad may have gaps in their National Insurance record that reduce their eventual State Pension entitlement below the full rate of GBP 12,548 per year (2026-27). Voluntary Class 3 contributions at GBP 18.40 per week (2026-27) may be available to fill some gaps, but there are deadlines for buying back certain years and the cost-benefit depends on the existing record. Many expats have not reviewed their State Pension position for years.
Why Pharos
Pharos Introductions is not a financial adviser. We are an introducer: we connect qualifying expats with regulated cross-border specialists who hold the right permissions for your jurisdiction. Every submission is reviewed by a person. No auto-forwarding. No pressure. The regulated advice relationship is between you and the specialist.
Every introduction request is read by a person who assesses fit, jurisdiction, and compliance before any match is considered.
Our specialists hold regulatory permissions for cross-border advice in your specific jurisdiction, not just UK authorisation.
We make introductions. The regulated advice relationship is between you and the specialist. Pharos earns nothing from that engagement.
Questions
In most cases, yes. UK nationals living outside the UK may be able to pay voluntary Class 3 National Insurance contributions to fill gaps in their National Insurance record. The Class 3 rate for 2026-27 is GBP 18.40 per week. Each full qualifying year contributes toward the full new State Pension, currently GBP 12,548 per year for 2026-27. Whether paying voluntary contributions is cost-effective depends on your existing record, your age, and whether your country of residence has a social security agreement with the UK. A regulated specialist can help you assess this as part of a broader pension review.
From April 2025, UK inheritance tax liability for non-UK domiciled individuals is determined partly by the long-term resident test: broadly, if you have been resident in the UK for 10 of the previous 20 tax years, you are treated as a long-term UK resident for IHT purposes and your worldwide assets come within the scope of UK IHT. Crucially, there is a tail: even after you leave the UK, long-term resident status does not end immediately. Depending on how many years of UK residence you have accumulated, it may continue for between three and ten years after you cease UK residence. This means expats who spent significant time in the UK before moving abroad may retain worldwide IHT exposure for a number of years after departure. The nil-rate band remains GBP 325,000 and the residence nil-rate band remains GBP 175,000, both frozen until at least April 2030.
The Finance Act 2026 makes changes to how UK pensions are treated for inheritance tax purposes that take effect in April 2027. Under the new rules, most unused defined contribution pension funds and certain lump sum death benefits will be brought within the scope of UK inheritance tax, where previously they typically fell outside the estate. This is law, not a proposal. For individuals with substantial defined contribution pension wealth, the combined value of pension and estate could exceed the nil-rate band thresholds, creating an IHT liability on pension assets that did not previously exist. The pension-IHT projection tool at /tools/pension-iht-projection illustrates the potential combined liability. Regulated specialist advice may be appropriate well before April 2027 given the time required for any planning responses.
The Statutory Residence Test (SRT) is the framework HMRC uses to determine whether an individual is UK resident for tax purposes in a given tax year. It involves a series of automatic tests (both residence and non-residence), followed by a set of tie-breaker tests that count connections to the UK such as a UK home, substantive UK work, and family ties. For expats, the SRT matters because it determines whether UK income tax applies to worldwide income, whether capital gains are taxable in the UK, and how double taxation agreements interact with your position. The number of days spent in the UK each year is central to the test, but it is not the only factor. A cross-border specialist can model the SRT position as part of a residency review.
US persons face a distinct layer of financial complexity that most cross-border specialists do not handle. FATCA (the Foreign Account Tax Compliance Act) requires non-US financial institutions to report accounts held by US persons to the IRS. This means many overseas banks and investment platforms apply additional scrutiny to US account holders, and some decline to serve them. The PFIC (Passive Foreign Investment Company) rules mean that most non-US investment funds held by a US person are subject to a punitive US tax treatment, making standard offshore investment structures potentially unsuitable. Additionally, FBAR (the FinCEN Report 114) requires US persons to report foreign bank accounts exceeding USD 10,000. Standard QROPS structures are generally incompatible with US tax obligations. Specialist US cross-border advice is a separate discipline from general expat financial planning; see /us-persons-abroad for further information.
Financial planning is the process of mapping your financial position and identifying the areas that require attention: what pensions you hold, how IHT exposure is structured, what currency risk exists, what protection gaps are present. It is diagnostic and structural. Financial advice is the regulated next step: a licensed specialist assesses your specific circumstances and makes personal recommendations on what to do. Giving regulated financial advice requires authorisation by the relevant financial regulator in the jurisdiction concerned. An introducer service such as Pharos Introductions provides a bridge between the two: we help you understand what kind of specialist you need, and then introduce you to a regulated specialist who can provide the regulated advice. We do not ourselves give advice.
The gaps that come up most often in cross-border financial reviews tend to follow predictable patterns. Dormant or forgotten UK workplace pensions are common: individuals who worked in the UK for several employers may have multiple deferred pension pots they have lost track of. Cross-border wills and estate planning are another frequent gap: a will written in one jurisdiction may not be effective or optimally structured in another, and intestacy rules vary widely between countries. Single-currency savings and income are a third: expats drawing UK pensions in GBP while incurring expenses in a different currency face ongoing exchange-rate risk that compounds over time. Protection cover that does not travel is a fourth: many UK life and income protection policies contain clauses that restrict or void cover when the insured person is resident overseas. None of these are unusual or avoidable; they are a predictable consequence of moving across jurisdictions without a structured review.
The Expat Financial Health Check at /tools/expat-financial-health-check is a free self-assessment tool that prompts you to review your position across the key areas of cross-border financial planning: pensions and State Pension entitlement, inheritance tax exposure, residency and tax position, investment and currency structure, protection cover, and any US person considerations. It does not give personalised advice. It produces a summary of the areas most likely to warrant attention, which you can use as a starting point for a conversation with a regulated specialist, or as the basis for an introduction request.
More questions? Visit our full FAQ or read the guide to finding an expat financial adviser.
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