Establishing a Financial Foundation in Singapore for British Expats – Part 1/3

For British expats embarking on a new chapter in Singapore, establishing a solid financial foundation is as crucial as acclimatising to the tropical climate.

This guide is designed to help you navigate the nuances of Singapore’s financial system, ensuring a seamless transition and a secure financial future.

Understanding Singapore’s Financial Landscape

Banking in the Garden City

Singapore’s banking sector is globally acclaimed for its stability and comprehensive services. As an expat, you’ll find that setting up a bank account here is straightforward, with most banks offering the option to start the process online. You’ll need your passport, a valid employment pass and proof of address. Banks like DBS, OCBC and HSBC are popular choices among expats, offering multi-currency accounts and international transfer services that can be managed efficiently through their online banking platforms.

Taxation: A Comparative Glance

Singapore’s tax system is one of the most attractive aspects for expats, with personal income tax rates that are significantly lower than in the UK. The system is progressive, with rates starting at 0% and capping at 23% (increasing to 24% in 2024) for residents, compared to the UK’s 45% top rate. Moreover, Singapore operates on a territorial basis, meaning that only income earned within the country is subject to tax, a potential boon for expats with international financial interests.

The Central Provident Fund (CPF)

The CPF is a key pillar of Singapore’s social security system, requiring contributions from employers and employees to fund retirement, healthcare and housing needs. As a non-permanent resident expat, you are not required to contribute to the CPF, freeing up more of your income for other investment opportunities.

Setting Up Your Financial Base

1. Opening a Bank Account
   Upon moving to Singapore, opening a local bank account is essential. It’s advisable to choose a bank that offers services like international money transfers, multi-currency savings and competitive interest rates. The process is usually quick, with digital banking options available to manage your finances effectively.
   
2. Financial Management Across Borders
   Managing finances in both the UK and Singapore can be streamlined with the right approach. Consider using financial management tools that offer a consolidated view of your accounts. It’s also wise to engage in currency exchange services that offer favourable rates to maximise your money’s value when transferring funds between countries.
   
3. Budgeting and Saving
   Adjusting to the cost of living in Singapore requires a well-thought-out budget. Essentials such as housing, transportation and groceries can be more expensive than in the UK. However, by utilising local saving schemes like the Supplementary Retirement Scheme (SRS), which offers tax benefits, you can make the most of your income. Additionally, investing in fixed deposits or insurance savings plans can be a prudent way to grow your savings.

Navigating Taxes and Pensions

Tax Obligations for Expats: As an expat, you’ll be considered a tax resident if you stay in Singapore for more than 183 days in a year, which means you’ll be taxed only on income earned in Singapore. It’s important to file your taxes annually and you may benefit from the absence of capital gains and inheritance tax in Singapore.

Contributing to a UK Pension from Abroad

You can continue to contribute to your UK pension for up to five years after leaving the country and still receive tax relief. This can be particularly advantageous if you plan to return to the UK in the future. However, it’s important to keep abreast of the annual allowances and lifetime limits to avoid potential tax charges.

Singaporean Pension Plans

While you’re exempt from the CPF, you can consider private pension schemes or investment-linked insurance plans to build your retirement fund. These can offer flexible contributions and a range of investment options to suit your risk appetite and financial goals.

By understanding and leveraging Singapore’s financial systems and investment opportunities, you can establish a secure financial base as a British expat. With careful planning and strategic financial management, you can enjoy the vibrant lifestyle Singapore offers without compromising your financial well-being.

Embark on your financial journey in Singapore with confidence. The Heritage Partnership is dedicated to providing British expats with bespoke financial advice and wealth management services. Reach out to us today to ensure your financial success in Singapore.