Financial issues to consider when migrating to New Zealand from the United Kingdom

Banking United Kingdom

To ensure ease of access to a United Kingdom Bank account clients really need to make sure that whatever bank account they leave in the United Kingdom is an internet accessible account.

They should look to rationalise all their banking into one joint internet account - the rationale here is that it is far simpler looking after just one account than multiple accounts and making things simpler in the United Kingdom will pay dividends once in New Zealand.
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Banking New Zealand

We will provide recommendations on the most suitable banking arrangements in New Zealand for a client’s everyday needs, short term cash holding accounts and longer term saving objectives. Please note banking services in New Zealand are not free, and therefore is important to select accounts that will provide the lowest overall cost to your circumstances.
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Currency Exchange

Exchanging Pounds into New Zealand dollars is probably the biggest financial transaction that a migrant will ever undertake. The exchange rates are volatile and the rate obtained will affect what a migrant can buy in New Zealand and their future lifestyle.

The Orientation New Zealand Foreign Exchange Service offers our clients a number of strategies to maximise their currency exchange gain and to provide benefit in the long term.
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Life Cover

A migrant should maintain whatever existing life cover that was provided in the United Kingdom until they are certain that New Zealand is to be their long term home. The Life Insurance needs will be different from the United Kingdom because circumstances and needs have changed.

The United Kingdom provider should be informed of any move to New Zealand and migrants should ensure premiums are maintained from a United Kingdom bank account.
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Income Protection

Migrants will need to give some serious thought to protecting income in the event of ill health as New Zealand employment law allows only 5 sick days per year.
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Medical Cover

This can be very expensive for a comprehensive policy covering doctors prescriptions etc. If migrants select policies which cover specialist costs, tests, hospitalisation and operations etc. the costs become more reasonable.

Emergency care in New Zealand is still very good but it’s for the non emergency operations that waiting lists are long and private medical insurance solves this.
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United Kingdom Tax Issues

Tax residency is different from Residency. Migrants need to seek advice to ensure they finalise their United Kingdom tax affairs to avoid penalties. Exactly what will depend on personal circumstances and we can provide guidance once we know those circumstances.
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Pensions

United Kingdom Pensions are a complicated subject. See www.movemypension.co.nz/, who provide specialist United Kingdom pension analysis, advice and transfer services to New Zealand residents.
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Non-Pension Investments

If migrants have:

  • ISAs - individual savings accounts
  • PEPs - personal equity plans
  • TESSAs – tax exempt savings scheme

They can no longer fund them once you leave the United Kingdom. They can leave them invested in the United Kingdom for up to 4 years and suffer no tax consequences in New Zealand.

After that time a migrant become liable to New Zealand tax on any gains in value [whether realised or not] unless the fund is deemed to be invested in cash, in which case tax will be due in New Zealand on the interest earned.

If migrants have Endowments - the time left to run needs to be considered, the life cover amount, what it is being used for, how much it is costing and where it is invested. In the majority of cases it is probably going to be more beneficial to surrender/sell this plan and make use of the funds in New Zealand.

If migrants have any Bonds e.t.c or any other investments then we need to consider any potential tax implications, whether they need to maintain funding and whether it would actually be better to have the funds here in New Zealand.
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Inheritance Tax

Migrants do not remove themselves from liability to United Kingdom Inheritance Tax simply by leaving the United Kingdom, even if it is on a permanent basis.

A migrant has to “shed” their United Kingdom domicility and to do that they need to effectively remove their assets from the United Kingdom, along with certain other actions [so no leaving houses/land behind] and remain a non-United Kingdom tax resident for some 4 or 5 years – only then will worldwide assets be potentially removed from the United Kingdom’s Inheritance Tax regime.
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Wills & Family Trusts

Migrants should ensure, particularly if they have children, that they have an up-to-date Will in place in the United Kingdom. Consideration should be given to creating a New Zealand Will once the main bulk of the cash/assets are here in New Zealand. Due care and consideration must be given to who will executor a will and who will be guardians of children, and what funds are available to raise any children and what funds are for the children’s long term needs.

Family Trusts are very popular in New Zealand for provision for children’s needs and as an asset protection vehicle. An individual’s circumstances and future plans need to be taken into account when considering the estate planning needs.
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Capital Gains Tax

On realising various assets [both investments and property] migrants may potentially run into Capital Gains Tax [CGT] issues.

An individual will have a personal CGT allowance, which is available for the current tax year and for the previous tax year if unused – the current level is £7,500 per person.

Liability to CGT can be minimised or removed by timing the creation of the Gain. If the timing is right you could have NO CGT to pay as long as a migrant remains a non-UK tax resident for a further 5 years.

This does NOT mean they cannot visit the UK but rather they should not visit for more than 90 days in any one year!

This is an extremely complex area and any actions should not be based on what information we provide on this site. Specialist taxation help is required on both understanding the United Kingdom issues and what opportunities exist in New Zealand to minimize liability. Should the above apply to any individual, please contact Orientation New Zealand Ltd so that we can recommend a suitably qualified specialist.
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