As the UK's cost-of-living crisis continues to bite, more and more Britons are considering moving abroad to stretch their savings and pensions further. But while a warm climate and lower cost of living may be tempting, there are hidden inheritance tax traps and pension pitfalls to watch out for.
Liz Rowlinson, editor of A Place In The Sun, has revealed the ultimate guide to retiring in the sun, including the top locations to avoid and exactly how much money you need for a comfortable retirement abroad.
According to Rowlinson, the key to beating hidden inheritance tax and pension traps is to do your research and understand the local tax laws and regulations. 'Inheritance tax can be a major concern for expats, but it's not just about the tax itself, it's also about the tax laws and regulations in the country you're moving to,' she explained.
Rowlinson has identified several over-hyped locations in Spain, France, and Portugal that may not be as attractive as they seem. 'Some areas in Spain, such as the Costa del Sol, are becoming increasingly popular with Britons, but they're also becoming more expensive. In contrast, areas like the Costa Blanca and Costa de Almeria are still offering great value for money,' she said.
The Bank of England has warned of the risks of inheriting debt as well as assets when moving abroad. 'It's not just about the inheritance tax, it's also about the debt that can be passed down,' said a spokesperson.
So, exactly how much money do you need for a comfortable retirement abroad? According to Rowlinson, it's not just about the cost of living, it's also about the quality of life. 'You need to consider the cost of healthcare, transportation, and other living expenses, as well as the tax implications,' she said.