Phil Billingham’s financial plan for Tommy Owens: UK to SA

This is a great opportunity for the whole family, so let’s make sure that this is as successful as possible.

There are three parts to this preparation:

Logistics – before you go:

Given the time away, it is really important that all financial contacts in the UK are set up for internet-only access, and that the address on file is to somewhere secure, such as a family member or a solicitor or accountant.

Otherwise there are services that will accept, scan and email post to you.

Scan and save in the cloud all official documentation, such as passports, marriage certificates, birth certificates, driving licences and anything else you can think of that you may need access to!

Identity fraud is rife, and access to traditional post is one point of weakness. A bit of preparation could make all the difference.

The South African postal system is not great, so don’t rely on redirection from the UK.

On a more positive note, if funds permit, Tommy and his wife should ensure they have made full use of pension and ISA allowances in this tax year, as they will not be entitled to contribute once they are no longer UK tax resident.

Tommy needs to ensure that any life assurance or other insurances they have in the UK are aware of his plans, and that he gets confirmation in writing that he will remain fully covered during his time in South Africa.

This will apply to any buildings and contents insurance on their property, especially if this is to be let out during their time in South Africa. Notify any mortgage company as well.

In all these cases, in the case of any doubt, it’s worth engaging a specialist insurance broker to review and amend anything. Once done, it can almost be forgotten about.

Any Wills and trusts will be worth reviewing, to ensure that, in the case of any issues, their legal representatives are aware of the position.

Ideally, lasting powers of attorney should be updated / put in place.

In medical terms, most of South Africa is malaria free, but it’s worth ensuring all other inoculations are totally up to date.

Get the phone unlocked, or buy an unlocked one in the UK. Mobile phones (cellphones) work well in SA, but international data is expensive, so use a local sim card.

Think about Zoom, WhatsApp and Softphone capability before you go.

Ensure your banks know where you are. They can just stop cards and then write to a UK address for confirmation…

In South Africa

The very first thing to be aware of is that South Africa does not have an NHS system. It’s vital Tommy checks that the whole family are fully covered for all medical costs and contingencies.

Also worth securing travel insurance for the transition period.

Be aware that a UK driving licence will only give 12 months validity to drive in South Africa – they will need to take driving tests.

They may be able to exchange their licences – but it’s still worth looking at taking the test.

Ideally, getting a visa that gives an SA ID number will be helpful. Everything works from the ID number!

In terms of earnings, no doubt they will want to retain enough locally to fund their lifestyle, especially exploring and enjoying the magnificence that is South Africa.

In terms of ‘spare’ after tax income, then it’s worth looking at some form of offshore savings or investment account. This is not about any form of tax evasion, but about protecting the value of savings from what can be pretty rapid currency movements.

Monthly ‘squirreling’ away will protect them from the worst of any future shocks. By way of context, some of us are old enough to remember the ZAR to GBP exchange rate being R1.5 to £1. As I type, its closer to R20 to £1.

The key phrase for this time is ‘Financial Resilience’.

In short, it’s about using insurance to protect the family from the financial effects of any shocks or bad luck, whilst building up cash reserves to build future financial freedom and flexibility.

And enjoy

Tommy and the family are lucky. They are about to live in one of the worlds truly great countries, albeit not without its challenges.

Whilst the Winelands and the Kruger will – rightly – be on their ‘Must Do’ list, it would be a shame to miss out on the Wild Coast of the Eastern Cape, the wild flowers of Namaqualand, the rhinos of Hluhluwe and the beaches of KwaZulu Natal.

And if that was not enough, South Africa is the gateway to … well, lots of places, from Chobe in Botswana to the white sands of Mauritius.

They are about to have an amazing adventure – just stay safe!

Barry O’Mahony’s financial plan for Piet Smit: SA to UK

We would first encourage Piet to invest in a waterproof jacket and a nice warm beanie and obviously an umbrella, it could be a very long three years living in the UK.

Undoubtably, it will be an awesome life and rugby experience for him and his young family.

Understanding and dealing with South African Revenue Services (SARS)

It is rare that you would start a financial planning decision with a discussion around tax, but any South African that leaves SA does need to keep it front and centre since the changes in tax law that came into effect in March 2021. Piet will need to get a sense of the South African tax implications before he leaves.

Secondly, Piet needs to understand that SARS, strictly speaking, still sees him as an SA taxpayer even though he is working in the UK (temporarily abroad).

The law that came into effect in March this year says that if he earns more than ZAR 1.25m overseas, then SARS can tax the amount over and above this.

There is a double tax agreement in place with the UK, which says that the UK gets to tax his income first, but he would include his UK income in his SA tax return and claim a tax credit.

Probably, the end result is that Piet will not end up paying SARS any money earned in the UK while he is on contract depending on his income level.

Another small consideration is to know that as Piet intends to return to SA after his three years are up and has not officially tax emigrated, this means his intention ‘is to return to SA after his wanderings’.

If he were to die in this three-year period then they would see his estate as being estate dutiable in SA. His SA Will should be up to date considering that he now has a young family.

Also the beneficiary nominations should be left to his wife and not members of his own family. He can have a UK Will in time, if and when he accumulates assets in the UK.

Rent out his property

We would assume that he would then rent out his property in SA. At 23 years of age, Piet would probably still have a substantial bond on his property, but if not then this taxable rental income would pay tax to SARS.

Retirement funding

If Piet had been contributing to a players provident fund in SA, then he would preserve the capital into a preservation fund tax free.

If he was contributing to an RA, then hopefully he was using a unit trust based fund and he would simply suspend contributions to the fund and leave the investment as it is in the RA waiting for him to return and resume contributions to the RA.

If he was sold an old style RA with large upfront fees to the adviser then he would have to consider the penalties that he would have to incur and see if he could afford to keep it going.

In general though, depending on the level of his taxable income, if there is no tax benefit in SA or the UK to keep contributing to the RA, so typically he should stop contributing and then preserve the existing capital.

Medical insurance

This is not our area of expertise, but here are some issues we would discuss. We would assume that he would be covered by the NHS and potential medical cover through his new club in the UK.

We would keep the cover in place until he is covered in the UK. He can then reduce down to the cheapest plan on the scheme and then change up to the preferred plan when he gets back.

One consideration is that if he cancels his medical aid entirely he needs to consider a late joiner member penalty, but he is quite young, so this may not be a serious issue. Again you need to seek out good independent medical aid advice.

Risk cover

If he has life cover in place in SA then he needs to realise that he has a responsibility to his young wife and child. He should inform the insurer that he is going overseas and for how long, as different insurers view this differently.

He should hold this cover for the moment, he can then speak to an adviser in the UK and see what the price of cover is in the UK.

If he has income protection cover then it is critical that he, again, speaks to the insurance company, many companies would not cover a three-year contract in the UK.

Once in the UK

1. Medical cover is hopefully in place.

2. Disability/Income protection – this will be critical that he is covered. Hopefully this will be put in place through the club in the UK. This should form part of his contract and be negotiated by his agent.

3. Life cover – this is a nice to have and we would only put it in place if it is a better deal than SA.

4. Look to contribute to the National Insurance and government pension funds.

5. He should consider any tax incentive savings schemes in the UK and should seek advice from a UK CFP Professional.