MONEY MAKEOVER

by Amanda Davidson of Holden Meehan

Name: Stephen McCarty

Age: 28

Job: Company director of recruitment firm

Salary: over pounds 35,000 p.a.

Stephen faces big changes in September when he moves to Australia to set up an office for his firm. He will be there for two years, after which he will probably come back to the UK, though he might end somewhere else, such as Hong Kong.

He owns two one-bedroom flats in a converted warehouse in east London, both of which will be rented out during his time abroad. He has various investments here, including pounds 20,000 in a Halifax Instant Extra Plus account; pounds 1,500 in Halifax windfall shares; pounds 3,000 in the shares of one company, and he pays pounds 500 per month into a personal equity plan (a tax-free way of investing in shares) with Perpetual Portfolio Management. He also pays pounds 200 per month into a Scottish Equitable personal pension plan.

"The main worry I have is about the financial side of these things when I'm away," he says. "No one seems to know what the situation will be. And everyone seems to have a vested interest in what they tell you."

Amanda Davidson, a partner at independent financial advisers Holden Meehan in London (Tel: 0171 404 6442) says:

"Stephen is earning well and likely to continue to do so. There is a degree of uncertainty whether he will return full-time to the UK or be resident in another country. A high degree of flexibility and care is needed with his financial planning.

He must sort out with the Inland Revenue what his status is as far as residency and tax are concerned. It is possible to be resident in more than one country, although only one country of domicile is possible. These issues will dictate what tax Stephen pays and where. For instance, Stephen may well pay tax in the UK on his rental income even though he is living in Australia.

If he can't find a good accountant who is qualified to give advice, then he can ring the Inland Revenue direct. Often the decision of whether a person is resident or ordinarily resident in the UK is made by the local inspector. Remember though, the Revenue is not set up to give tax advice - just information!

It would probably be best for Stephen to hold his cash reserves in an offshore bank or building society account. The interest will be paid gross and he can declare it as appropriate. Check out the different rates. The Alliance and Leicester in the Isle of Man gives 6 per cent for instant access, whereas the Nationwide International gives 6.6 per cent for 180 days' notice.

Stephen should keep his Halifax shares. The shares he has in a single company he could put into a PEP. The decision will depend on whether he sees these as long-term investments. Be careful that the tax savings are not negated by charges! He should PEP these before he goes abroad.

As to the Perpetual PEP, whether or not he can keep paying into this will depend on if he is judged to be resident in the UK. If not, then Stephen will have to stop it. If this is the case he should keep the money with Perpetual for at least five years before encashing it. He can resume his PEP once back in the UK.

As for his pension, it depends how the Revenue treats the portion of Stephen's income to be paid in the UK. But if he is no longer going to have employed earnings here, he will not be eligible to keep his pension going and should therefore stop paying. Scottish Equitable is a good pension company but its charging structure is such that it will not treat him kindly for stopping after only 10 months.

He may keep the pension going for up to two years by electing that future contributions are set against earnings in previous years. The Revenue has special forms that he should obtain.

Stephen will need to check with the Revenue what tax he will have to pay on the property he owns here. He may have to pay tax on rental but depending on his term abroad, no capital gains tax. He must let the lenders and insurance companies know that he has rented the properties.

The main thing is to look into the opportunities he will have in Australia for savings and pensions, and into some off shore investments, especially as there is uncertainty as to whether he will come back to the UK permanently. Bon Voyage, Stephen!"

If you work in secretarial, administration, banking or law and would like a 'money makeover', please write stating your reasons, name, address, job and salary with a daytime phone number to Money Makeover, Features Department, 'The Independent', 1 Canada Square, Canary Wharf, London E14 5DL; fax 0171 293 2182 or 2451.

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Ashdown Group: Brand Marketing Manager - Essex - £45,000 + £5000 car allowance

£40000 - £45000 per annum + car allowance: Ashdown Group: Senior Brand Manager...

Guru Careers: .NET Developer /.NET Software Developer

£26 - 35k (DOE): Guru Careers: We are seeking a .NET Developer /.NET Software ...

Guru Careers: Graduate Marketing Analyst / Online Marketing Exec (SEO / PPC)

£18 - 24k (DOE): Guru Careers: A Graduate Marketing Analyst / Online Marketing...

Guru Careers: Technical Operations Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: We are seeking a Technical Ope...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all