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Britain - a good time to invest? Make use of your 2018 investment allowance

by Andrew Rissik | Nov 14, 2018
  • South Africans are, by now, well familiar with the concept that when there is uncertainty in a country the local currency devalues and becomes volatile. Nowhere is this truer than in the UK as it nears the looming Brexit deadline. But, when a currency is under pressure, it presents fantastic buying opportunities to investors using foreign currency.

    When there is uncertainty, and a cheap buying opportunity, investors often make rash decisions. This is when it’s important to strip away the noise and look at the substance. South Africans don't just deal with the stresses of an emerging market, but also lots of other political and economic risks. Surely investing in the UK, a first world well-governed democracy, while the Pound is undervalued is a clever thing to do?

    There is a real potential Brexit dividend that one can take advantage of while the UK politicians battle it out with the EU trading block. What the Brexit referendum took away in value from the Pound could be given back once the divorce deal is finalised. We may even see levels of $1.50 (currently $1.28).

    The Pound has already gained about 2.5% this month as the parties move towards a potential draft agreement. Uncertainty will drastically diminish once an agreement is signed, helping the Pound reverse the Brexit discount.

    Following this, certainty and the longer-term likelihood of interest rate hikes in the UK could see significant Pound appreciation. What this means for South African investors is that now is a great time to sell your Rands and buy Pounds. There are some very attractive UK investments in high-yielding real-estate investments, equity portfolios and other asset classes. Furthermore, 2018 is drawing to a close and the window to utilise one’s offshore investment allowance for the year is fast closing.

    Use your 2018 investment allowance effectively

    South Africans living abroad and in South Africa, who have not financially emigrated, are entitled to a South African foreign investment allowance of R10 million and a discretionary allowance of R1 million per calendar year.

    You do not need a tax clearance certificate to use your discretionary allowance. This means you can transfer funds with very little hassle.

    Have a question about your foreign investment allowance?

    Your R10 million foreign investment allowance can be used to invest into offshore investment portfolios, property, bank accounts or other investments. While this allowance is not as easy to use as the single discretionary allowance, it’s not impossible to obtain. To send more than R1 million offshore, you need obtain a Foreign Tax Clearance Certificate from SARS. This certificate allows you to transfer up to R10 million.

    Exceeding your investment allowance limit

    You can exceed your annual investment allowance of R11 million. However, you’ll require a Letter of Compliance from SARS. Once this letter has been delivered, it must also be sent to the SARB for approval. Once approved, you will be able complete your offshore transfer.

    Get better rates and pay lower fees when you transfer with us

    As your forex partner, we can ensure you are always compliant, and you get the most competitive exchange rates and lowest transfer fees. We can help you make use of your allowances, free of charge, and if you wish to exceed the amounts above, we can assist you with applying to the SARB for special dispensation. These applications can be complex and are judged on a case-by-case basis, so having the right partner in your corner can make all the difference.

    We can assist with moving your funds offshore, obtaining your foreign tax clearance certificates as well as advice on many great investment opportunities. Get in touch with our team on or on +27 (0) 21 657 2153.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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