British expat in China - how to invest back in the UK for retirement

[bonnex]

I've tried HSBC expat, but they do not allow you to invest if you are a China resident. It seems a lot of other high street banks are the same.

Does anyone have any suggestions? I'm just looking to throw some of my monthly salary into an ETF tracker or similar until I retire.

Much appreciated

 

[sofie]

@bonnex Try Interactive Brokers, Swissquote, Saxo Bank. You could also take a look at some of the banks in Singapore and see if they have execution only trading so you can hold tracker ETF’s and not their own expensive investments or funds

 

[bonnex]

@sofie will check them out, thank you buddy!

 

[sofie]

@bonnex OP be very careful using offerings by insurance companies for investments, many are riddled with high fees (many times your first 6-18 months of contributions only go towards the salesman’s commissions) and many of these types of structures are banned in the UK. Mostly sold by salesman posing as financial advisors

Stick to index fund ETF’s

 

[zachgreenlee]

@sofie Yes, it is true that there a lot of unscrupulous characters. The insurance products should disclose the commissions in their literature (will be in the terms & conditions) however, and OP can always elect to work with a fee-only adviser if looking to take professional financial advice.

However insurance tax products are an important tool for tax and estate planning. OP can buy an ETF within them and with proper planning avoid being hit by taxes upon return to the UK (Capital Gains Tax, dependents hit by inheritance tax etc).

Just buying an ETF in a general investment account/brokerage account for all of what will be OP’s pension savings is a recipe to get nailed by taxes.

 

[whitesunshinee]

@bonnex I would agree, other options are Novia and Ardan which come up a lot. If you don't want to do it, independent financial advisors could sort this out for you, but I'd do your research before investing any money.

Stay away from any offshore bonds or savings schemes. A good website I like to read is Investments for Expats and it's blogs. Got a good YT channel as well.

 

[zachgreenlee]

@whitesunshinee Novia Global and Ardan International both require a financial advisor to be present on the account, they only provide access via referral from a suitable professional. This is generally the case with such platforms, however getting professional advice would be entirely right in OP’s circumstance.

 

[zachgreenlee]

@bonnex There are a number of online investment platforms, insurance companies, and brokerage accounts which can be used as a China resident - and will allow you to get your money out at the other end. If you have a UK address it should be easy to set up a UK based account too - but contributing money from a Chinese bank account may be a problem due to Anti-Money Laundering concerns in the UK.

Given you mentioned saving for retirement and are from the UK, you may want to look into structured savings plans from insurance companies, or Qualifying Registered Overseas Pension Schemes (QROPS/ROPS). These will allow you to transfer your savings into a UK Self Invested Personal Pension at a later date, with associated tax benefits. Unfortunately the HK based schemes are now delisted, however there are other providers in places like Guernsey who can help.

I’ve worked on the UK financial services side for 10 years, but am now an expat myself and faced similar issues to you - happy to provide more info in direct messages or put you in touch with a local expert in China if you like?

 

[edie1994]

@zachgreenlee Hi, could I PM you?

 

[mimitalks]

@bonnex Did you find any answers? I'm in a similar situation but can't work out what is the best option. I'm also worried about the tax implications of sending money back to the UK then reinvesting from there which seems complicated to say the least.

 

[devyn]

@mimitalks I've been trying to figure out my options too. At present, I don't have any sort of pension scheme, just a bunch of money invested in ETFs in an online brokerage (I sent the money from China -> UK -> brokerage).

I think it would be fine just using brokerages and purchasing an annuity later down the line, except for having to pay a ton in capital gains tax - although as long as you classed as 'non-resident' you are not liable to pay CGT to the UK, only tax to your country of residence. Like OP I'm also resident in China, and at the moment it has a very generous policy regarding worldwide income; it's fairly easy not to be liable for it.

If a foreign individual lives in China for 183 days or more per year for over six consecutive years, they will be subject to IIT on their worldwide income starting in the seventh year if they live in China for 183 days or more each year. If a foreign individual spends more than 30 days outside of China in any tax year, the ’six-year’ count is reset. (Source)

As I understand, if the time comes to leave China we should make sure to sell all of our holdings while it is not subject to tax.

Regarding the SIPPs and International SIPPs, they are supposedly tax-efficient, but other than avoiding CGT I don't quite yet understand how. Unlike UK resident schemes they don't have tax relief on contributions (only tax relief is on the one-time lump sum withdrawal), and they have much higher fees. This page further down seems to have some more reasonable options, but I need to do more research.

 

[mimitalks]

@devyn That's useful thanks! I've been probably doing something naughty since I have kept open my Vanguard account and have added to it even though I think I probably shouldn't be doing it (not entirely sure). Either way it seems the new rules for tax means that paying Capital Gains is almost inevitable since it's going to be so low starting from next tax year in the UK. Quite honestly, I (obviously) don't want to have to pay any tax in the UK if I'm not resident there. I imagine if I open brokerage account in the UK any gains/income could potentially be subjected to UK tax, even though the initial monies earned was in PRC? I was thinking about opening some kind of 'expat' account with Barclays or Skipton since even though the returns are pretty low at least it wouldn't be subjected to UK tax law (again, not really sure), at least for Capital Gains and seems more 'hassle free'. I'd like to just stick everything in an ETF and forget about it tbh but can't find that option, at least for expats. Anyway, I don't have any real answers sadly but thanks for providing the information regardless!