Cyprus tops Britons retirees’ selection list

Record numbers of Britons are fleeing the country for more appealing climates, lower taxes, more affordable property and fewer traffic jams. According to “TimesOnline”, Cyprus tops the list of destinations because it has an income-tax rate of just 5% on pensions for retired residents, as well as low property prices and no inheritance tax. It also scores highly on related issues such as ease of gaining residency, low property buying and selling costs and benefits for pensioners.

Cyprus is a four-and-half hours flight from Britain. It is favoured by retirees because of its hot, dry summers and mild winters. English is widely spoken and they even drive on the same side of the road as in the UK.

Retired residents’ taxation

As far as taxation is concerned retired residents from overseas are taxed on their pensions at the rate of 5% above about EUR3,417 (GBP2,554) a year, whether it is a state, company or personal pension. To qualify for the low rate, you must have lived in the country for at least 183 days, says the Times Online report.

Alternatively, you can pay the normal rates, in which case the first EUR19,500 is tax free, rising to 30% on EUR36,301.

It is important that if retirees’ continue to have assets in Britain, such as bank accounts or an investment portfolio, they will still be liable for UK tax on any income, even if you are resident in Cyprus. Many retirees therefore move their assets offshore, and then bring the income into Cyprus, in which case there would be no tax to pay.

British retirees will also be attracted by the fact that Cyprus abolished inheritance tax in 2000. However, to benefit from this, expatriates will have to prove they have severed all links with Britain – and this may not be as easy as you think.

Property costs

Property prices in Cyprus start from about GBP77,000 – although the island is rapidly catching up with prices in more established retirement hotspots such as France and Spain.

Stamp duty is 0.15% for properties worth up to about GBP130,000 and 0.2% on more expensive homes, compared with 1% to 4% in Britain.

However, there may be property transfer fees of 3% of the first GBP65,000 or so, 5% on homes worth between GBP 65,000 and GBP 130,000 and 8% on those valued at more than GBP 130,000.

Becoming resident

Retired EU nationals do not require a visa to move to Cyprus, but they do need a temporary residence employment permit that should be applied for on arrival.

Those wanting to buy property must also prove they have adequate income or financial resources to live without working. The minimum requirement is about GBP 8,000 a year.

Healthcare

Now that Cyprus has joined the European Union, pensioners from other EU countries are entitled to use the public health system.

However, there are few state residential nursing homes or hospices for the terminally ill on the island, so many people needing long-term care simply return home to Britain.