The current local and global situation has caused some expats to rethink or expedite plans to leave. If you’re leaving Hong Kong, there are some practical things to consider before you go, and for your future life. SIMON PARFITT of Pyrmont Wealth Management runs through a few key ones.
A to-do list for before you leave
#1 Withdraw your MPF
If you’re leaving permanently, you can withdraw your accrued MPF benefits as a tax-free lump sum. You must declare that you have no plan to return to Hong Kong for employment, and provide evidence that you’re permitted to reside elsewhere. The relevant application can be found on the MPF website (mpfa.org.hk).
#2 Settle all outstanding tax
Give at least a month’s notice to your employer; they will then inform the Inland Revenue Department. You’ll need to complete an IR56G form to determine any tax owed or rebate, which will need to be settled in person at the Revenue Tower. Even if you’re self-employed, you must still complete this form.
#3 Wrap things up at home
If you need to break a lease, check the terms of your break clause and start the process as far in advance as possible, as notice periods can vary. If you have a domestic helper, give them adequate notice to find a new employer. If they’ve been with you for two years, they are entitled to a severance payment and, if five years, a long-service payment.
Planning for what happens after you leave
If not Hong Kong, where? The lifestyle here is unique, so for many there will be some form of adjustment when moving elsewhere. Regardless of what’s driving your decision to seek pastures new, there are several things to plan for.
The most significant adjustment will be reduced living costs, but also a reduction in salary combined with an increase in income tax. Research potential salaries, tax rates and general cost of living. Compare this with how you’re spending here.
#2 Tax planning
There is no capital gains tax in Hong Kong, so if you’re planning to sell investments or property that have experienced gains, it may be sensible to do this while still a resident. If you’re planning to sell investments that have made losses, you may be able to offset these losses against future gains, so it may be sensible to wait. British expats must consider the impact of their domicile status.
#3 Employee benefits
If you’re moving back “home”, check what employee benefits you may be losing, such as life and medical insurance. School fees could be a large cost to make up if they’re currently covered by your employer. Are there any gaps you need to fill? Intangible benefits, such as flexible working, should also be considered. One positive from the pandemic is that this is probably more likely to be an option in the place you’re returning to.
#4 Where to live
If your next move is long term, establishing a place of permanence – buying a property, for example – should be planned carefully. Be sure you understand the costs and taxes involved and that the location is right for the lifestyle you’re looking to enjoy, such as proximity to friends, family and schooling.
Planning in advance will help you make the best decisions around all of these things. If leaving Hong Kong is on the cards for you, the Pyrmont team is happy to help answer any of your financial planning questions to make sure the move goes as smoothly as possible.
This article first appeared in the Autumn 2020 issue of Expat Living magazine. Subscribe now so you never miss an issue.