Shifting from your native country to a new country comes with a completely new set of tax rules and financial norms that one needs to know. Often, US expats shifting to the UK make common financial mistakes that they should avoid. If you are a US expat planning to shift to the UK, read on and know these financial mistakes so that you can avoid them.
- Deactivating your US Banking Account and Cards
Some people close their US banking accounts and credit cards when they shift to the UK. This is not a good practice. If they move back to the US in future, they need to open the accounts from scratch and it will be a tedious process.
Also, some people close their physical address as well. Doing this will not allow you to open a bank account in the future so one shouldn’t close the physical address. One can give relatives or a close friend’s mailing address when they are moving abroad.
The primary reason for not closing your credit card is to not have any impact on your overall credit score. One should keep at least one card for domestic purchases. Even if it takes a hefty annual charge, one should keep the card active.
Don’t forget to inform your banks and card issuing authorities about your relocation, this will make them update your details so even if you use the cards in another country, there is no red flag on it.
- Expenses Getting Beyond the Budget
It is natural that when you move to a foreign country, you will be tempted to buy a lot of new things while exploring it. Sometimes, people get way too excited and spend a lot beyond their income. This needs to be avoided and the spending should be within budget.
- Forget to File US IT Return
Even if US people have shifted to the UK and pay tax there, they still need to file a US Income tax return. Many people don’t know this and when they come to know, it is too late and because of that the sum doubles up.
- A Too Low or Too High Insurance Plan
Many people forget to take an insurance plan when they shift to a new country. Sometimes, US expats in the UK take too low or too high insurance plans which affects their budget. Taking a too low plan will require you to spend extra money from your pocket and taking a too high plan will waste your funds unnecessarily.
It is advisable to meticulously check the insurance plans and select an appropriate one as per your family’s needs.
In general, even if any country is offering low or free healthcare, read the rules carefully as it may not be applicable to a non-citizen. Check out all the healthcare rules for non-citizens, see which treatments are applicable for free or low-cost and take a good insurance plan suiting your budget and requirements.
So, these are the most common financial mistakes that a US expat should avoid making in the UK. If you are looking for an expat tax CPA, find out some expat tax CPA which offers professional tax consulting services. Have a look at the services they offer and reach out to them to make the taxation work easy for yourself.
