Taking an expat role can be an exciting career move, but it also comes with financial complexities that need to be carefully considered.Â
If you have a family, your financial considerations will be even more intricate.Â
Before signing a contract, make sure you ask your HR department the right questions to avoid unexpected financial surprises and ensure your family’s well-being.
1. How is my salary structured?Â
Understanding the breakdown of your salary, including base pay, bonuses, and allowances, will help you assess its true value.Â
Ensure you know if your salary is paid in local or home currency and how exchange rate fluctuations may impact your earnings.Â
For executives, additional compensation elements like long-term incentives (LTIs) or equity-based remuneration should also be reviewed.Â
Finally, ensure you understand the local taxation on bonuses and equity grants, as some countries may tax these separately from base salary, which could impact your overall compensation.
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2. What benefits are included?Â
While these have been greatly reduced in recent years, many expatriate roles still come with additional benefits like housing allowances, relocation expenses, private healthcare, or tax equalisation.
Confirm what’s included in your package and whether these benefits apply to your family members too.Â
If you have children, inquire about education allowances or tuition reimbursement for international schools.Â
It’s also worth asking about spousal support, as some companies provide career transition programs or work permits for accompanying spouses.
3. How will my salary be taxed?Â
Taxation can be complex when working abroad.Â
Find out where you will be taxed, whether you still have obligations in the UK, and if there are any tax treaties in place to prevent double taxation.Â
Some employers offer tax equalisation to ensure you don’t pay more than necessary.Â
If your company provides tax equalisation, confirm how they determine the tax liability and whether you will need to pay additional taxes upon repatriation.
4. Will my employer contribute to a pension plan?Â
Expatriate employees may have different pension arrangements than local employees.Â
Ask if you can continue contributing to your company’s UK pension scheme, whether there’s a company pension plan for expats, and how your pension savings will be affected if you stay abroad long-term.Â
Many countries do not recognise foreign pension schemes, which could make it challenging to transfer your pension when you return home.
Some multinational companies offer international retirement plans that allow you to continue saving in a tax-efficient manner.
5. Does my employer offer a cost-of-living adjustment?
Moving to a new country can mean higher living costs.Â
Some companies provide a cost-of-living adjustment (COLA) to offset these differences.Â
It’s also crucial to confirm how frequently COLA is adjusted, as exchange rates and inflation can significantly impact your real purchasing power.
6. Does my employer cover relocation expenses?Â
Relocating internationally can be expensive.Â
Clarify if your employer will cover travel costs, temporary accommodation, and shipment of personal belongings.Â
Find out if the relocation package includes settling-in support, language training, and cultural integration programs for your family.Â
The full cost of moving can often be underestimated.Â
In particular, items like visa costs, customs duties, and emergency repatriation expenses should be factored in as well.
7. What kind of healthcare coverage is provided?Â
Medical expenses can vary greatly between countries.Â
Find out if your employer provides an international or local healthcare plan, whether pre-existing conditions are covered, and if medical evacuation is included.Â
Some countries require expats to pay into local healthcare schemes, which may not provide the same level of care as private insurance.
Confirm whether your employer will cover the full cost of private healthcare or if you will need to supplement it.
8. Will I need to open a local bank account?Â
Banking regulations vary by country.Â
Some employers require expats to open a local bank account for salary payments, while others may allow direct deposits into your existing account.Â
Consider the implications of currency exchange rates and transaction fees when managing your finances.Â
Offshore banking and multi-currency accounts may be a solution for executives needing to move money internationally while avoiding excessive transaction fees.
9. Will I still have tax obligations in the UK?Â
If you move abroad, you may still have tax obligations in the UK depending on your residency status.Â
The UK uses the Statutory Residence Test to determine whether you are considered a tax resident.
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The UK uses the Statutory Residence Test (SRT) to determine whether you are a UK resident for tax purposes. Check your status now . . .
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If you remain a UK tax resident, you will likely be taxed on your worldwide income, even if you are working overseas.Â
Additionally, certain types of UK-based income, such as rental income from UK property, may still be subject to UK tax.Â
You should also consider National Insurance contributions, as moving abroad does not always exempt you from making payments.Â
It’s crucial to seek advice from a tax professional to understand your UK tax obligations and whether double taxation treaties can help reduce your overall tax burden.
10. Are there any hidden financial costs?Â
Beyond salary and benefits, consider visa costs, local taxes, and any mandatory contributions to social security or other government schemes in your host country.Â
Some countries require foreign workers to contribute to local pension or social security schemes, even if they will never benefit from them.
Additionally, legal fees for obtaining work permits and residency cards can be substantial.
Case Study: Jo and Steve’s Expat Opportunity in Riyadh
Jo and Steve, both 45, are partners at international law firms currently based in London.Â
Jo was offered a senior role at her firm’s office in Riyadh, and Steve’s firm has confirmed that he can also transfer to Saudi Arabia.Â
With two children aged 9 and 7, they see this move as an opportunity to earn a higher tax-free income, which could help them build significant savings for their children’s university education and enable them to consider early retirement.
While the financial prospects are promising, Jo and Steve have several concerns.Â
They need clarity on whether their salaries will be truly tax-free, how their pensions will be affected, and whether their firms will cover the substantial costs of private international schooling.Â
Healthcare is another major concern, as access to high-quality medical care and insurance coverage for their family is essential.
Their HR teams play a crucial role in answering these questions, ensuring that the financial and logistical aspects of their move align with their long-term goals.Â
Seeking specialist expat financial advice before making the decision will help them plan effectively, maximise the benefits of their expat assignment, and avoid unexpected risks.
The Bottom Line
Accepting an expat role is a major financial and personal decision that requires careful planning.Â
Beyond salary and benefits, it’s essential to consider taxation, pension contributions, healthcare, relocation support, and long-term career implications.Â
Having open and detailed discussions with HR before signing a contract can help you uncover hidden costs and ensure you are fully prepared for the transition.
For professionals with families, ensuring that your spouse and children have the necessary support is just as important as your own compensation package.Â
Researching your new home country’s cost of living, school options, and legal requirements will also help you make an informed decision.
Ultimately, seeking expert financial and tax advice before making the move can provide peace of mind and allow you to maximize the benefits of your expat assignment.Â
