"It’s crucial for brokers to check if their expat clients have had tax advice, and to refer clients to an adviser if they haven’t."
We spoke to Finn Houlihan, managing director of ATC Tax, about how brokers can help expats returning to the country and the biggest challenges Covid-19 presents to the market.
FR: Tell us a bit about yourself and the reasons behind launching ATC Tax
I’ve been involved in the Wealth Management, Private Banking, and Tax industries for more than 20 years, specialising in international investment advice, retirement planning and inheritance tax planning. Prior to co-founding ATC Tax, I worked with The Fry Group and Royal Bank of Scotland, covering various regions including the Middle East.
It was through these experiences that I decided to launch ATC Tax, as I found that there was, more often than not, a strong demand for tax advice in meetings with expat clients. I saw there was an opportunity to create a company dedicated to providing high-quality tax advice for UK expats and individuals, easing any concerns they had about moving back to the UK or abroad. And, with Covid-19 causing financial uncertainty across the world, people need personal or company advice more than ever, and ATC Tax has been set up to do just that.
FR: What are the biggest challenges Covid-19 presents to expats who are trying to purchase property in the UK?
It was becoming increasingly challenging for expats to purchase property even before the Covid-19 crisis erupted. As a response to the UK housing crisis in recent years, the government had introduced a number of policies designed to discourage expats from buying property in the UK. The most recent Budget saw the government bring in an additional 2% stamp duty surcharges for overseas investors purchasing homes in England. It wouldn’t be a surprise to see these types of taxes raised once again as the economic recovery from Covid-19 takes centre stage.
Another government policy aimed at making it less appealing for expats to buy UK property is the recent expansion of non-resident capital gains tax (CGT). The updated policy means non-UK residents are subject to U K tax on gains arising from direct or indirect disposals of UK land and interests in UK property-rich entities. As a result, individuals who plan to return to the UK should consider selling any UK property as a non-resident, as it may be more beneficial from a CGT perspective compared to selling as a UK resident. A sale of UK property must be reported, and CGT paid to HMRC within 30 days of completion, so individuals must understand their potential tax position. And, as it can take some time to sell a property, individuals should get advice in good time to act on any planning opportunities.
During the lockdown period, the temporary shutdown of the UK housing market has presented the biggest challenge to any expat wanting to buy property in the UK. It’s made it almost impossible to do so. Until early May, banks couldn’t even conduct in-person valuations, while expats couldn’t look around the property/properties they were interested in purchasing.
FR: What can mortgage brokers do to best help expats who are returning to the country?
There are a number of things brokers can and should do with expat clients in the process of returning to the UK. As expat mortgage rates tend to higher, brokers should look to redo deals now they’re UK residents and have access to more products. Brokers should also advise clients to reassess current products and make sure they have a plan which benefits them.
For those expats who have been away from the UK for a long time, brokers will need to get their credit file in order. This can take time to do so, meaning its crucial that this job is near the top of their priorities. Brokers must put a plan in place for clients to receive the highest credit score possible; making sure the client gets onto the electoral roll as soon as they arrive has the heaviest weighting on their credit score, so that’s what they should look to do first. In some cases, expat clients will be using the services of a tax adviser and brokers should ask to be put in touch with them as they will already have oversight of much of the information required to swiftly and effectively.
FR: Why is it so important brokers refer expat clients to tax advisers during the mortgage process?
It’s crucial for brokers to check if their expat clients have had tax advice, and to refer clients to an adviser if they haven’t. With so many considerations, such as stamp duty and capital-gains tax, it’s important that clients know where they stand and what sort of bill to expect when they purchase the property.
Tax advisers can also help with reducing the bill if a client is buying property to live in upon their return to the UK. Advisers can highlight ways for clients to save money, such as principal private residence relief, which can protect an individual from UK capital gains tax laws if they’re applicable. Through this process, brokers and advisers can manage the mortgage process effectively with expat clients and make sure the bill isn’t any more than it should be.
FR: If you could see one headline about financial services in 2020, what would it be?
“Unprecedented demand for tax advice helps prospective property buyers save millions”.