Expat Life and Financial Planning: The Known Knowns, Unknown Unknowns, and the Unexpected
Expat Financial Planning
Living abroad is exciting, but managing your money across borders can be complex. Specialist expat financial planning helps you understand how taxes, pensions, and investments work when you’re no longer UK-resident — and how to avoid the pitfalls that catch many British expats out.
🔍 Key Takeaways
- Expat financial planning involves understanding your known knowns, known unknowns, unknown unknowns, and unknown knowns.
- Even experienced expats can be caught out by cross-border tax rules, domicile laws, and currency risks.
- A clear plan helps manage uncertainty and protect your lifestyle, wherever you live.
- Professional expat financial advice can help uncover hidden risks and improve tax efficiency.
The Known Knowns: The Foundations of Your Financial Plan
Your “known knowns” are the certainties you can plan around. These give you a clear foundation for managing your finances abroad.
Common Known Knowns for Expats
- Income sources – pensions, investment income, or rental property.
- Living costs – you’ll already have a sense of day-to-day expenses in your new country.
- Basic UK rules – for example, ISAs lose their tax-free status when you move abroad.
- Retirement goals – you likely know when you want to stop working and how much income you’ll need.
💡 Planning tip – Document everything you know about your financial position. This gives structure to your plan and highlights any gaps.
The Known Unknowns: The Questions You Need to Answer
These are the areas you know exist but haven’t yet fully investigated.
Common Known Unknowns for Expats
- Local tax treatment – Will your UK pension be taxed twice? Can you claim relief under a double taxation agreement?
- Currency risk – What happens if the pound falls 10% against your local currency?
- Healthcare – Are you covered by the local system, or will private insurance be needed?
- Residency status – How many days can you spend in each country before becoming tax resident?
💡 Planning tip – Known unknowns require research and professional guidance. The goal is to prepare, not predict.
The Unknown Unknowns: The Hidden Risks for Expats
These are the issues you don’t even know exist – until it’s too late.
Examples of Unknown Unknowns
- Domicile rules – You might think leaving the UK frees you from Inheritance Tax, but long-term residency rules can still tie you back to the UK.
- Forced heirship laws – In countries like France, Spain, Italy, and Poland, local law dictates how your estate is divided.
- Changing legislation – From Brexit to the UK’s new residence-based tax system (from April 2025) and pension IHT rules, rules can shift overnight.
- Gift and inheritance taxes abroad – You might trigger a local tax bill when gifting to family.
💡 Planning tip – An adviser experienced in cross-border financial planning can spot the risks you don’t yet see.
Planning Your Return to the UK?
Expat Financial Checklist
Download The Returning Expat Financial Checklist to see exactly what you need to prepare before you move.
The Unknown Knowns: The Truths We Prefer to Ignore
These are the realities you already know — but might not act on.
Common Unknown Knowns
- You’ll probably live longer than expected.
- Exchange rates can move against you just as easily as they move in your favour.
- Governments regularly adjust tax rules and thresholds.
- Life changes — health, family, or politics — can alter your plans.
💡 Planning tip – A robust plan doesn’t ignore reality; it prepares for it.
Case Study: John and Sarah’s Expat Journey
Background
John and Sarah, a British couple in their 60s, were moving to Spain to retire.
Their Financial Landscape
- Known knowns: two UK pensions, £250,000 in savings, and an expected monthly budget.
- Known unknowns: unsure how Spain would tax their pensions or how healthcare would work.
- Unknown unknowns: unaware that Spain’s inheritance laws could override their English will.
- Unknown knowns: knew about currency risk but ignored it.
The Solution
With specialist expat financial advice, they:
- Drew down their pension commencement lump sums before leaving the UK so they would be tax free (they would be taxable in Spain).
- Invested through a Spanish-compliant investment bond.
- Updated their wills for Spanish succession law.
- Built a currency strategy to protect income.
The Outcome
The result? Financial clarity and peace of mind — and a retirement in Spain free from unnecessary tax surprises.
Pulling It All Together
Expat life offers freedom — but true financial freedom requires structure.
The “known knowns” framework helps you:
- Clarify what you know and can plan for.
- Identify what you don’t know and investigate it.
- Uncover hidden risks before they become problems.
- Confront uncomfortable truths before they become regrets.
That’s what good expat financial planning is about: confidence, flexibility, and control.
❓ Expat Financial Planning FAQs
1. Should I transfer my UK pension if I move abroad?
Sometimes. Many UK pension providers severely restrict your options once you move overseas, and transferring to an international SIPP can be beneficial in some cases. The decision depends on your country of residence, tax position, and long-term plans. Professional advice is essential before making any pension transfer.
2. Do UK ISAs stay tax-free when I move abroad?
No. Once you become non-UK resident, your ISA loses its tax-free status in most countries. You can keep the account open, but future gains or withdrawals may be taxable locally.
3. Can I still contribute to my UK pension while living overseas?
You can continue to contribute a limited amount to a UK pension for the first 5 years of living overseas. Expats often keep existing pensions invested or consolidate them into an international SIPP.
4. What happens to my UK State Pension if I live abroad?
You can usually claim your UK State Pension overseas, but the annual inflation increase (“triple lock”) only applies if you live in certain countries—mainly within the EEA or those with a reciprocal agreement with the UK. In other countries, your pension may be frozen at its initial amount.
5. How can I invest tax-efficiently as a British expat?
Options vary by country. Many expats use locally compliant investment structures such as assurance vie (France), Spanish-compliant bonds. Alternatively, products such as offshore investment bonds may provide tax deferral and easier reporting, while keeping funds in a familiar, regulated environment.
6. What happens to UK inheritance tax if I live abroad?
Even if you live overseas, you may still be classed as Long-Term Resident and therefore subject to UK inheritance tax on your worldwide assets. Specialist advice is essential to determine your status and mitigate exposure.
7. How can I manage currency risk as an expat retiree?
Diversification is key. You can hold multiple currency accounts, time transfers strategically, or use structured currency products to reduce volatility. For retirees, aligning income and expenses in the same currency is one of the simplest and most effective defences.
8. Is my Pension Commencement Lump Sum tax free if I live overseas?
Your 25% Pension Commencement Lump Sum (PCLS) from a UK pension is tax-free in the UK, regardless of where you live. However, the country you live in may treat it differently. Some countries tax pension lump sums as income, while others offer partial or full exemptions under local or treaty rules.
To avoid unexpected tax bills, always check your local tax treatment before withdrawing your lump sum. A cross-border financial adviser can confirm whether your PCLS will remain tax-free after moving overseas.
9. Will I pay tax twice on my pension income when I move abroad?
In most cases, no. The UK has double taxation agreements with many countries that determine where pensions are taxed. Proper structuring ensures you don’t pay twice.
10. How do I know where I’m tax resident?
Residency is usually determined by days spent in a country and other ties such as property, family, and economic interests. The UK’s Statutory Residence Test sets clear rules, but other countries apply their own criteria.
📚 Further Reading
🔗 What Are UK Situs Assets? What Every Long-Term Expat Needs to Know
🔗 Expat State Pension guide (2025/2026 update)
🔗 Can I save into a UK pension plan if I live abroad?
🔗 Retiring Abroad: The Complete UK Expat Guide
🔗 Expat ISA Rules: What Can Be Done With an ISA When You Move Abroad?
🔗 Expat Financial Advice: How do I manage currency risk?
💡 Action Points
- Review your known knowns, list your income sources, assets, and costs.
- Identify any known unknowns, local taxes, healthcare, and residency rules.
- Speak to a qualified Chartered Financial Planner who specialises in expat finances.
- Start building a cross-border financial plan that adapts as your life does.
🧠 Final Thoughts
Expat life brings opportunity, but also complexity.
You don’t have to predict every outcome, just plan wisely for the things you know, prepare for the things you don’t, and stay adaptable when surprises arise.
A structured, well-thought-out financial plan gives you the freedom to enjoy the life you moved abroad to live.
Talk to an Expert
Getting reliable Expat Financial Advice shouldn’t feel complicated – or out of reach.
I’m Ross Naylor, a UK-qualified Chartered Financial Planner and Pension Transfer Specialist with nearly 30 years’ experience helping British expats manage complex cross-border investments, estate planning, and tax-efficient retirement strategies.
I firmly believe your location in the world should never be a barrier to expert, independent, and transparent financial advice you can trust.
If you’re planning to retire abroad, return to the UK after living overseas, or simply want to understand your cross-border options, I’ll help you cut through the noise and gain the clarity you deserve — with trusted expat financial advice tailored to your life.
Book a confidential consultation