Retirement in the UK provides not only a high standard of living but also quality healthcare. There are attractive prospects for English-speaking persons planning to retire in the United Kingdom. Avoiding the language barrier is one of them. Even though it is important, there is more to consider when planning to retire in the United Kingdom as a foreigner. The cost of living, healthcare insurance, type of visas, et cetera. Weighing your options before traveling will help you decide whether retiring to the United Kingdom is your best move.
This guide discusses some of the important things to know before planning your retirement in the United Kingdom.
Who can retire in the UK?
-citizens from EU countries or the European Economic Area including Norway, Iceland, and Switzerland can live in the United Kingdom without a visa. However, this might change once the UK leaves the European Union.
-anyone who has worked in the United Kingdom can apply for a permanent residency after five years and citizenship after six years. Provided he or she paid the insurance contributions and social security, a United Kingdom state pension shall be paid to such a person.
– For non-EU citizens, relocating to the United Kingdom for retirement requires a residency permit. When applying for a permanent residency, you must provide evidence of a close relationship to the United Kingdom, such as a family member or spouse from the UK/EEA, previous residency in the UK, business interests, and financial statements to show you can support yourself while in the United Kingdom.
Retirement age in the UK
The United Kingdom pension system has undergone a lot of changes over the years to bring women’s retirement age in line with men’s. The official retirement age for men is 66 and 65 for women after the final phase. However, early retirement is also possible but such a person can’t claim the state pension until the official retirement age is met.
Sources of your retirement funds in the UK
Provided you have lived and worked in the United Kingdom, as well as paid UK taxes to HMRC and NIC towards the social security system, you are eligible for a UK state pension. When you meet the minimum contribution of ten years, you can draw a United Kingdom retirement pension besides other funds like occupational pension schemes. If you are not eligible for a retirement pension in the United Kingdom, getting one from your home country or other countries you have worked in is important.
Transferring international pensions to the UK
Combining other EU and EEA state pensions, which are then calculated and paid into your UK bank account is quite possible. To do this, you have to notify the pension office in the country you are retiring; they will communicate with the other pension offices to calculate your pension allowance. It is also possible to transfer private pension funds from European Union countries unless your pension fund provider restricts them. Transferring your pension to the UK carried certain transfer fees and has tax implications. However, to avoid double taxation, you must know which countries are in agreement with the UK.
Taxes in the UK
As in most countries, your pensions in the UK fall under taxable income after it surpasses the annual personal allowance limit, which consists of income received through employment, state pensions, private pensions, and social security benefits. The annual allowance for tax-free income is £11,000; anything more attracts different tax percentages. Tax calculations vary on the amount of allowance you’ve used and your type of contributions made. HMRC or the pension provider makes tax deductions before you receive your allowance.
Inheritance in the UK
In the case of your death, you must draw up a will to show the distribution of your assets. As an ex-pat, it’s preferable to draw up a will both in the UK and your home country, if you have assets in both. Your inheritance will be distributed by the UK rules and procedures and as a rule, there is no inheritance tax to pay if the total estate value is less than £325,000. In the case where you have assets globally, they may be subject to tax in both countries. Make sure to seek expert advice on UK probate law and inheritance tax when you are planning your retirement in the UK.
Healthcare in the UK
The UK’s National Health Service (NHS) grants its citizens access to free healthcare financed through general taxation payments. A legal resident in the UK is entitled to free treatments. Note that free healthcare is only available to ex-pats living in the UK, regardless of nationality, tax, contributions, or owning UK property. If you are a non-UK resident, you must pay for your healthcare services with private health insurance covering the cost.
Living in the UK
Your choice of settlement has a significant role in your plan to retire in the UK. So beyond all the things mentioned, think about the type of community you wish to live in and the features that come with it. For instance, if you want to buy a house in the UK, consider the affordability, accessibility, security, and if it’s realistic to live in such an area for the long term. To buy a property, you must have reached the UK retirement age.
