When you’re thinking about moving abroad, your bank accounts and your bills are usually top of mind, but what about your ISA?
A lot of UK residents with Individual Savings Accounts assume the tax-free wrapper just follows them wherever they go. But the rules are a bit tighter in practice, so you’ll want to know exactly how those accounts behave to avoid tax complications later if you’re planning to become a non-UK resident. Let’s go through it step by step.
Can I Keep My ISA if I Move Abroad?
The bottom line is that you can. You don’t have to close an existing ISA just because you’re no longer a UK tax resident. That means your cash ISA or shares ISA can remain open in the background.
You’ll still earn interest or see gains in your investment portfolio inside the account, and you’ll be glad to know that the tax-free status of those returns under UK law stays the same.
However, the key difference is contribution. As soon as you become a non-resident, you lose the right to pay into a new ISA. So you can hold on to what you’ve built, but you can’t add fresh money once you’ve left.
The only exception here applies to certain crown employees, like members of the armed forces or diplomats, who can keep making contributions while working overseas. Everyone else has to stop paying in from the tax year after they’ve left the UK.
What About The Tax Treatment in My New Country?
While the UK continues to treat ISAs as tax-efficient accounts, your new country might not recognise them in the same way. In the eyes of your local tax authority, an ISA could look no different from a regular savings account or a straightforward investment portfolio.
So that means everything from the interest you earn and dividends to capital gains could all become taxable where you live now.
For example, if you were to move to Spain or France – neither of which recognises the UK’s ISA system – you might find yourself having to declare and pay tax on what you thought was sheltered.
Obviously, not every jurisdiction is going to be the same, so the best approach is to get investment advice locally before assuming you’re in the clear. Our team at Upscore can help you when it comes to local tips and tax quirks of whichever country you’re thinking of moving to!
Also, some double taxation treaties reduce the risk of being taxed twice, but it doesn’t mean the ISA remains invisible to your new tax office.
What if I’m Retiring Overseas?
For UK expats heading into retirement in a different country, the ISA rules don’t exactly change. You can’t add new money, but your existing ISA keeps growing tax-free under UK law.
The real question is whether the new country recognises that protection. If it doesn’t, then the income you draw out or the interest earned might be taxable abroad. Again, that’s where the tax advice we can provide for you at Upscore becomes so essential, because the last thing you want is to undermine years of careful saving.
What Happens to Capital Gains Inside an ISA?
One of the main attractions of an individual savings account is that gains on shares or funds inside remain shielded from UK capital gains tax. Fortunately, that continues even if you’re living abroad.
But once again, your new country may view it differently. A UK expat in the US, for example, might find those same gains reportable to the IRS. So while the UK ignores them, another tax office may not.
How Does This Work for Different ISA Types?
As you’ll know, there isn’t just one kind of ISA:
Cash ISA
You can keep it, and the interest earned is still free from UK tax. The catch is whether your new country taxes savings interest.
Shares ISA
You can continue to hold your stocks and funds inside, and the growth is sheltered from UK tax; whether your new country taxes those dividends or gains is another matter.
Existing ISA accounts
You don’t need to close them, but you cannot add new contributions as a non-resident.
Most of the issues here arise from the difference between what the UK allows and what your new country requires – it doesn’t always line up when you’re handling two systems at once.
What if I Return to the UK?
If you come back and become a UK tax resident again, you can just resume contributing. From the next tax year after you’ve returned, you can put money into your old ISA or even open a new ISA.
So it’s essentially more of a pause than a permanent block. This is important for anyone who wants to go abroad for a period of study or work and then settle back in the UK.
Do UK Expats Still Benefit From Tax Relief?
Not in the way you might hope. As a non-UK resident, you stop receiving UK tax relief on contributions. This is why new payments are blocked in the first place.
So any contributions made while you were living abroad would be invalid, and HMRC would demand corrections. The tax relief is tied to being a UK taxpayer, so once you’re out of the system, the benefit goes with it.
Are There Risks if I Ignore the Rules?
There are. Those payments are technically invalid if you keep paying in after becoming a non-resident. Your provider will be required to report this, and HMRC can step in to remove the tax-free status from that money.
Needless to say, this undermines the whole point of having an ISA. Plus, your new country might decide the account isn’t tax-efficient anyway, which leaves you with double the headache.
What Steps Should I Take Before Moving?
Make note of these before you move abroad:
Check Your Contributions
Make sure you’ve used your ISA allowance in the tax year before you leave, since you won’t be able to add more once abroad.
Tell Your ISA Provider
Notify them of your change of residence so they freeze contributions properly.
Get Investment Advice
Speak with a qualified advisor in your new country to understand how ISAs are treated locally.
Plan for Tax Treatment
Think ahead about whether your ISA will still be a tax-efficient choice compared with local options.
Keep Good Records
HMRC will still want accurate information if you return, and your new country will expect clean declarations.
How Upscore Can Help
If you’re planning a move abroad, you’ll need a way to keep track of your financial documents and accounts across borders. Upscore’s Finance Passport lets you store your records in one place and stay on top of your accounts when dealing with providers in a different country!
