More than 200,000 British expats live in South Africa, including working professionals, business owners, people enjoying their retirement and a wide range of other backgrounds, ages and lifestyles. Although as anywhere else there are downsides too, living in South Africa as a British expat has many benefits, not only for the quality of your life, but also for your finances.
If you come to South Africa and interact with locals for a while, you will realize that compared to the British they talk about weather much less. This is because weather is less of an issue here. You won’t get two months of constant rain when you only see the sun for an hour once per week.
To be fair, there are better and worse areas in South Africa when it comes to climate and some regions get the occasional streak of windy or rainy weather, but most of the country gets a lot of sunshine and pleasant climate throughout the year.
More Space and Affordable Homes
The nice weather will encourage you to live a more active and healthier life, spending more time outdoors, whether on the beach, in the mountains or in the far stretching countryside. One of the most striking contrasts when compared to the UK is the feeling of space. At lower cost you will be able to live in a home whose size is several times greater than what you are used to from the UK. It can be a country house with a large plot (if you seek peace and isolation) or an urban home (to be close to the professional and expat community).
Infrastructure and Stability
While the above mentioned benefits are available in many countries all around the world, South Africa has the advantage of good infrastructure, strong institutional framework and a familiar common law system thanks to its colonial history. English is the language used in business and official dealings. If you are coming for work or business, the South African economy offers an enormous growth potential, both locally and as a stable and developed hub to access other fast growing African countries.
Financial and Tax Benefits for Expats
Becoming an expat offers considerable opportunities for wealth creation, retirement planning and tax optimization, particularly for the higher rate British tax payers. Transferring your pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) is among the greatest opportunities. If structured properly, it allows you to receive your pension income in a currency of your choice and invest in a wider range of asset classes. Most importantly, it protects your wealth from excessive income taxes and from the British Inheritance Tax (you may otherwise still be liable to that, even when you are living outside the UK).
Nevertheless, South Africa itself may not be the best jurisdiction for your pension. If you are a British expat in South Africa or planning to become one, you can choose to transfer your (British or South African) pension to a more favourable jurisdiction with greater tax benefits. Among the popular jurisdictions are Gibraltar, Jersey and particularly Guernsey, whose Income Tax Law (section 40ee) makes retirement benefits paid from the pension plan to a non-Guernsey resident exempt from income tax.
That said, pension and tax arrangements involving multiple countries are very complex and your unique personal circumstances can affect the viability and effectivity of individual solutions. You should always seek advice of a regulated independent financial advisor or pension planner.