The 10 Biggest Mistakes British Expats Make with ISAs

Having advised British expats across the world for over two decades, I’ve come to observe some common pitfalls associated with Individual Savings Accounts (ISAs). Here are the top ten mistakes that can be easily avoided:

Assuming ISA Benefits Apply Everywhere: A misconception is that ISAs’ tax benefits apply globally. In reality, while they’re tax-free in the UK, many countries might tax earnings like dividends, interest, or capital gains accrued within them.

Holding ISAs Across Different Providers: I often encounter expats with ISAs from multiple providers — one year with Tesco, another with Halifax, and so on. Consolidating these into a single account will offer better management, more consistent returns, and reduced hassle.

Out of Sight, Out of Mind: A significant number of expats simply forget about their ISAs after moving abroad. Regularly reviewing and managing your ISAs ensures they’re aligned with your current financial goals and not just gathering dust.

Neglecting the International Equivalent: It’s not uncommon for expats, who previously saved up to £20,000 a year in the UK, to halt their savings routine upon relocating. Especially when not paying taxes overseas, expats should be saving even more. Embracing the international equivalent to ISAs can continue the savings momentum.

Overlooking Currency Fluctuations: Currency risks become very tangible when living abroad. You’re exposed to potential losses due to exchange rate fluctuations.

Sticking Solely to Cash ISAs: Over the long haul, having funds only in cash ISAs might make expats miss out on the growth opportunities equities can offer.

Not Using Multi-currency ISA Accounts: With the potential of dealing in different currencies, limiting yourself to ISAs that only cater to GBP can be restrictive. Multi-currency ISA accounts offer flexibility and growth potential.

Ignoring ISAs with Diverse Investment Options: Staying with basic ISAs might mean overlooking those offering a wider variety of funds and ETFs. These can provide better diversification and alignment with an expat’s unique needs.

Not Reviewing Regularly: Now you’re abroad, it’s crucial to keep a close eye on your ISA, ensuring it remains inline with your financial planning.

Failing to Seek Professional Advice: Many expats have saved via ISAs, particularly cash ISAs, without seeking advice. This can have a profound effect on returns over the years. Professional financial advice can make the difference between mediocre performance and an objective hitting investment.

For a British expat, maintaining control of their ISAs is crucial. Recognizing these pitfalls can lead to a robust financial plan, ensuring their nest egg is consistently working in their best interest.

As always, I am here to help!

About Mike Coady

Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.

Mike is an award-winning money coach and industry leader in the financial sector.

Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Fellow of the Institute of Sales Management (FISM), a Fellow of the Association of Professional Sales (F.APS), a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.

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Blog published by Mike Coady.