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Expat Financial Planning
South Africa's residence-based tax system, exchange control regulations, and the formal financial emigration process create significant complexity for expats — particularly those managing assets in both South Africa and the UK.
Why it matters
South Africa taxes its tax residents on their worldwide income, including income earned abroad. Tax residency is based either on the physical presence test — spending 91 days or more in South Africa in the current year, and 915 days in the preceding five years — or on the "ordinarily resident" test, which considers where a person's natural home is.
A significant change effective from 1 March 2020 affects South African tax residents who earn employment income abroad. Previously, income earned while working outside South Africa for more than 183 days (including 60 continuous days) per year was fully exempt from South African income tax under Section 10(1)(o)(ii). This exemption has now been capped at R1.25 million per year — meaning South African tax residents with foreign earnings above this threshold face South African income tax on the excess, even when working entirely outside South Africa.
The South African Reserve Bank (SARB) imposes exchange control regulations that govern the transfer of funds out of South Africa. South African tax residents are entitled to an annual foreign investment allowance (typically up to R10 million per person per calendar year), but formal clearance from SARB is required. Transferring funds above this threshold, or formalising a permanent departure from South Africa, requires a process known as financial emigration.
Financial emigration — the formal process of ceasing to be a South African tax resident from a SARB perspective — allows individuals to formally externalise their South African assets, including retirement annuities, pension funds, and provident funds, subject to specific rules and applicable tax treatment. This is a significant and often irreversible process that requires careful specialist advice before any steps are taken.
The UK-South Africa double tax treaty covers employment income, pensions, dividends, and capital gains, and provides important relief for expats managing assets and income across both jurisdictions. Rand volatility is also a material consideration for anyone holding significant South African assets while based in the UK or planning to return.
Getting specialist guidance from day one can help you avoid costly mistakes.
The process
South Africa's financial emigration process and SARB exchange controls are highly specific and have permanent implications. We match you with specialists who have direct experience advising on UK-South Africa cross-border planning, including the interaction between South African retirement funds and UK tax obligations.
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“I had left South Africa years earlier and still had a retirement annuity I could not access from abroad. The specialist explained the financial emigration process clearly and helped me manage the tax implications on both sides.”
Questions
Common Questions About Financial Planning in South Africa
What is financial emigration and do I need to do it?
Financial emigration is the formal process of changing your status with the South African Reserve Bank (SARB) from a South African resident to a non-resident from an exchange control perspective. It is separate from ceasing to be a South African tax resident for SARS purposes. Financial emigration allows you to externalise South African assets — including retirement annuities and pension funds — subject to applicable tax treatment on withdrawal. It is a significant step with permanent implications and should only be undertaken after specialist advice on the full financial, tax, and personal consequences.
How does the R1.25m expat exemption work?
South African tax residents who work outside South Africa for more than 183 days in a 12-month period (including at least 60 continuous days) may exempt up to R1.25 million of foreign employment income from South African income tax per year. Income above this threshold is taxable in South Africa, with a credit for foreign taxes paid. This change, effective from 2020, caught many South African expats off guard. A specialist can help you understand your current position and whether tax treaty relief is available to reduce or eliminate double taxation on your foreign earnings.
Can I transfer my South African pension or retirement annuity to the UK?
South African retirement funds — including pension funds, provident funds, and retirement annuities — are subject to South African exchange control and tax rules. Access before retirement age is limited. Upon formal financial emigration, or upon reaching retirement age, the accumulated funds become accessible subject to applicable tax treatment. Transferring these funds to the UK involves both South African tax clearance from SARS and SARB approval. The UK tax treatment of the incoming funds requires separate specialist review. A dual-qualified adviser with experience in both jurisdictions is important for this process.
This page is for general informational purposes only and does not constitute financial, tax, or legal advice. Tax laws and regulations change frequently. Always seek advice from a qualified specialist who understands your personal circumstances.
From exchange controls and financial emigration to UK-South Africa pension planning, we can introduce you to a specialist who understands what expats navigating both countries actually need.