Retiring to Europe: the Brexit race is on
The long, cold winter that lasted well into spring has doubtless made many long for sunnier climes and join about 900,000 Britons who live in mostly warmer EU countries.
If the thought of spending your retirement years sipping cool drinks under the shade of a palm tree, eating out at a fraction of UK prices and enjoying a more measured pace of life appeals, you are not alone.
There were 204,074 Brits aged 65 and over living in the EU at the beginning of 2017 and 41 per cent of the British population in Spain and 39 per cent in Portugal were retired, according to data from the Office for National Statistics.
Far from deterring UK residents from moving to France, Spain, Portugal, Cyprus and Malta — the most popular European destinations — the Brexit vote appears to have galvanised interest in emigrating. Many would-be expats are scrambling to move before the end of 2018 to be in situ before the Brexit transition period begins on March 29 next year.
“There is agreement in place already between the UK and the 27 EU members on legal residency, healthcare and the UK state pension for the transitional period, up to December 31 2020,” explains Jason Porter, director at Blevins Franks, a wealth manager specialising in expat communities and co-author of the book Retiring to Europe.
“We therefore have a significant number of people talking to us who aim to be in-country at the latest by the end of this year.”
The uncertainty of Brexit may have another unwanted effect for would-be migrants, warns Sarah Coles, a personal finance analyst at fund Hargreaves Lansdown, the fund supermarket.
“While the negotiations are ongoing, we can expect currencies to remain fairly volatile, so it’s vital that expats consider the impact of currency movements, both when they initially move overseas and buy a property, and after they have settled,” she says. “Not only could it be cheaper to exchange money with a currency specialist than a bank, but it’s also possible to fix an exchange rate in advance.”
The long-term outlook for UK migrants living in Europe can only be a matter of guesswork at this stage, but Mr Porter is optimistic.
“There is agreement in place already between the UK and the 27 EU members on legal residency, healthcare and the UK state pension for the transitional period (up to December 31 2020), and for the retiree looking to move to a single EU state, this is relatively favourable,” he says.
“Legal residency should not be vastly different state to state, but access to public healthcare can differ. For example, France looks for social contributions. Portugal has a residency card-based healthcare system, so getting a card means you qualify for healthcare. In Spain, if you cannot qualify through any other means, then a low monthly flat fee will gain you access.”
As far as the UK state pension is concerned, the situation is clear, at least for now. Britons moving to countries within the European Economic Area (the EU27 plus Switzerland and Gibraltar) will continue to benefit from the UK government’s “triple lock”, so their state pension will keep pace with inflation.
Tax regulations, however, vary greatly. Ms Cole says: “It’s important to get advice if you are considering a move overseas, because the tax position depends not just on where you live, but where you are domiciled. HM Revenue & Customs may therefore still consider you to be liable for UK tax if you still have UK property, or if you ever intend to return.”
Yet despite the complexities and ongoing uncertainties of moving to Europe, it remains a dream for many that is not purely driven by the lure of better weather. While the cost of living has risen in France and Cyprus in recent years, it remains considerably cheaper than the UK in Spain, Portugal and Italy.
“Currency movements recently have changed the picture somewhat,” says Ms Coles, “but you can still save money on everything from food and drink to eating out and taxation. In Spain, despite something of a recovery since the financial crash, house prices remain relatively low too.”
The UK government website is a good starting point for anyone considering moving abroad. Visit gov.uk/moving-or-retiring-abroad
The pension advantages of Portugal
While life in France and Spain remains highly attractive for Britons, there has been a surge of interest in moving to Portugal in recent years.
Mr Porter says: “The Algarve has much of what the Spanish coast has, but without the high-rise hotels, apartments and overbuilding, and Lisbon, Cascais, Estoril and the Silver Coast have what the discerning, cultural retiree finds interesting in France.”
Some attractions of a move to the Algarve, for example, might include:
Tax: Portugal’s non-habitual resident scheme is available to first-time movers to the country. Qualification entitles you to beneficial tax treatment for 10 years. For example, any non-Portuguese pension income or lump sums can be received tax free.
Climate: Average annual daytime temperatures 16-29C (Met Office).
Cost of living: Three-course meal for two at a mid-range restaurant £26.30 (Numbeo).
Property: Three-bedroom villa with pool ranges from £263,000 to £1.1m (Rightmove International). But prices have been rising since 2015.
Lifestyle: Quite apart from its beaches, the Algarve has some of the finest golf courses in Portugal, if not Europe.