Monthly Archives: September 2024

Navigating the Financial Seas: Gold and Stocks & The Recent Interest Rate Cut

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Despite the doom and gloom you might hear in the news, the world economy is showing some grit, holding its own. This has given central banks a bit of wiggle room to tweak interest rates, which is good news for stocks, though not so much for gold. However, with the political scene being a tad unpredictable, gold remains a hot ticket item.

All That Glitters: Gold Market Buzz

The gold market is shifting gears. Its focus is moving from Chinese investment and central bank purchases towards anticipation of interest rate drops in Western economies. Gold prices are soaring, especially after the European Central Bank’s second rate cut. Traders in the futures market are hopeful, expecting lower interest rates, and the physical market is buzzing with investors seeking safer options.

However, history teaches us that interest rate cuts alone don’t guarantee a gold price surge. In the past, gold usually climbed only if rate cuts led to a recession, averaging a 15.5% increase within a year. If there was no recession post-cuts, gold prices typically fell by around 7%.

Stock Market Standouts

US stock markets have generally done well when the Federal Reserve cuts rates, especially if there’s no subsequent economic slump. Since the 1980s, the S&P 500 has averaged a 14.2% return in the year after initial cuts, outperforming the average return of 10.4% over the same period. This suggests that lower interest rates, without a corresponding recession, usually make for a good stock market environment.

While the economic backdrop looks positive, market ups and downs may persist due to uncertainties around the upcoming U.S. election and concerns of economic slowdown. However, these fluctuations might be a blip in a larger upward trend. So, long-term investors might want to keep their eye on U.S. large-cap growth stocks, which are likely to lead the charge in this bull market.

Emerging Markets: A Mixed Bag

Historically, when the Fed cuts rates, emerging market (EM) stocks tend to do well, especially if there’s no recession. However, the U.S. elections could sway the outlook for EM assets. Any protectionist policies could hit them hard. So, given the current uncertainties, it might be wise to hold off on heavy EM investment until the economic picture becomes clearer.

Data shows that after the first rate cut, EM stocks often outdo developed markets, especially if a recession is avoided. While initial performance might not show big differences, a clearer picture usually emerges about a quarter later as investors assess the economic landscape.

While EM stocks might not be a priority right now, EM bonds could offer good returns in this period, presenting potential investment opportunities amid U.S. growth concerns. Things might become clearer once election risks reduce and signs of economic stability appear.

The Fed & its Rate Cut

The Federal Reserve cut interest rates by half a percentage point, the first reduction since early in the Covid pandemic, to prevent a slowdown in the labor market. Rates now range from 4.75% to 5%, impacting short-term borrowing costs for banks and consumer products like mortgages and loans. The committee plans further cuts, aiming for another full percentage point by the end of 2025 and a half point in 2026, despite a dissenting vote from Governor Michelle Bowman.

The cut seeks to restore price stability without increasing unemployment, which remains low at 4.2%. Although job gains have slowed and the unemployment rate is expected to rise to 4.4%, inflation outlook has improved to 2.3%. The decision caused market volatility, with the Dow Jones fluctuating significantly.

Concerns persist about the labor market, as hiring rates have dropped, suggesting potential future rate cuts may vary among committee members. The Fed’s last rate reduction was in March 2020, followed by three increases due to inflation. While other central banks are cutting rates, the Fed continues to reduce its bond holdings, lowering its balance sheet to $7.2 trillion, down $1.7 trillion from its peak.

Investor Takeaway

Overall, the current environment looks good for stocks, though the U.S. presidential election could cause some market nerves. For gold, while the environment usually doesn’t favor price increases, it still holds an important place as a diversifier in uncertain times. As central banks tweak their strategies, investors should feel comfortable with the current rate cuts, while remembering that every cycle is unique, especially in our current politically charged world.

Setting Up a Comprehensive Investment Portfolio as an Expat in Singapore

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Let’s tackle a topic that’s increasingly relevant for many individuals living and working abroad: setting up a comprehensive investment portfolio as an expat in Singapore. Whether you’re fresh off the plane or have been in the Lion City for a while, understanding how to build an effective investment strategy is crucial for your financial well-being. Let’s explore the key aspects to consider when constructing your investment portfolio in Singapore.

Understanding Your Financial Goals

The first step in setting up your investment portfolio is to clearly define your financial goals. Are you looking to grow your wealth for retirement, save for your children’s education, or build a security cushion for unexpected expenses? Your goals will significantly influence your investment choices, so take the time to formulate a plan that aligns with your objectives. I’ve written a little bit about it here:

3 Steps Before You Invest!

Assessing Your Risk Tolerance

Once your financial goals are established, the next step is to assess your risk tolerance. This refers to how much risk you’re willing to accept in pursuit of those goals. In general, higher potential returns often come with higher risk. As an expat, consider factors such as your investment horizon, financial situation, and emotional comfort with market fluctuations. Establishing a clear understanding of your risk tolerance will guide your asset allocation strategy. It may be very tempting to go for something incredibly high risk when you see the high returns, but do beware. Think to yourself, “Would I be comfortable to lose all of this money if things were to go wrong?” If the answer is no…opt for a lower risk portfolio.

Understanding the Singapore Market

Singapore is one of the most dynamic financial centers in Asia. The country boasts a stable economy, a robust regulatory environment, and a diverse range of investment options. Familiarising yourself with local markets—such as the Singapore Exchange (SGX)—and understanding industries that drive growth, like finance, technology, and healthcare, is crucial when making informed investment decisions. Check out my latest article here:

Financial Literacy for Expats: Understanding Singapore’s Economic Landscape

Building Your Investment Portfolio

When constructing your investment portfolio, diversification is paramount. A well-diversified portfolio can help manage risk and reduce the volatility of your overall returns. If you are a bit more cautious with your investments, try incorporating bonds or fixed income in your portfolio. If you’re unsure as to what some of these terms mean, you can check out this article here:

Investing Terms Made Simple

I always think it’s best to think about your goals and risk tolerance first, before investing. If you are unsure, it’s best to seek the advice of a professional – they can also give you a bit more information in terms of tax, and how to successfully structure your investments.

Financial Literacy for Expats: Understanding Singapore’s Economic Landscape

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Moving to Singapore, or anywhere for that matter, is an exciting move! But, it does require a bit of getting used to. One of which is how to navigate your finances in a new country.

Singapore is one of the world’s leading financial hubs, known for its stable economy, business-friendly environment, and strategic location in Southeast Asia. As expats, it’s essential to familiarise ourselves with the following aspects of the economy:

1. Currency and Cost of Living:

   Singapore’s official currency is the Singapore Dollar (SGD). The cost of living can be high, especially in terms of housing, dining, and transportation. As you plan your budget, remember to research typical prices for groceries, utilities, and other everyday expenses. Check out my recent article on Singapore’s cost of living here:

Understanding Singapore’s Cost of Living: A Breakdown for New Expats

2. Income Tax System:

   Singapore has a progressive income tax system, which means that the tax rate increases as your income rises. Fortunately, the tax rates are relatively low compared to many other countries, with no capital gains tax and no inheritance tax. Understanding your tax obligations, including filing dates and deductibles, is crucial to staying compliant and minimising liabilities. Find out more about tax here in Singapore with these articles:

Tax Relief For Foreigners
Why Financial Advice is Better than DIY
Why Should Expats Open an SRS Account?

3. Financial Products and Services:

   Singapore boasts a sophisticated financial services sector. Expats have access to a wide range of banking and investment options. From local banks to international institutions, the choices are plentiful. Familiarise yourself with saving accounts, fixed deposits, and various investment vehicles like mutual funds, stocks, and bonds. It’s always advisable to consult a financial advisor, particularly one who understands the regulations that apply to expats. I wrote an article on this exact topics here:

What Type of Advisor Should Expats in Singapore Work With?

4. Retirement and CPF:

   The Central Provident Fund (CPF) is a government-mandated savings plan for Singaporeans and Permanent Residents, helping them save for retirement, healthcare, and housing. As an expat, you probably won’t be eligible for CPF contributions, but understanding this system can provide insight into Singapore’s approach to financial security. You can however (and do read that article above) opt into the SRS (Supplementary Retirement Scheme). This works similar to CPF but is also open to foreigners, and offers various tax benefits.

5. Insurance:

   Health insurance is another critical aspect of financial literacy. Singapore has a high standard of healthcare, but medical care can be expensive without insurance. Depending on your employment package, you may have health insurance coverage included. Otherwise, be proactive in researching local insurance providers to ensure you have adequate health and life insurance. I always say that having medical insurance through work is good, but you should always have your own as a back-up. You can read more here:

Is Corporate Insurance Enough?
What Makes A Corporate Insurance Good?

Practical Tips for Expats

– Open a Local Bank Account: This simplifies your financial transactions and may offer better exchange rates than foreign accounts.

– Create a Budget: Track your spending to get a clear picture of your financial situation in this new country.

– Educate Yourself: Attend workshops or read financial literacy materials available for expats in Singapore. The more informed you are, the better financial decisions you can make.

– Network: Join expat groups or forums. Fellow expatriates can share valuable knowledge and experiences regarding managing finances in Singapore.

Understanding Singapore’s economic landscape is vital for expats aiming to thrive financially. By familiarising yourself with the local currency, tax system, financial products, and insurance options, you’ll set yourself up for success. As always, seek professional advice when needed, and continue educating yourself on financial matters.

What Is Currency Risk & How Can We Avoid It?

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For many expats here in Singapore, we are earning in SGD, but we may have cash or assets in various other currencies. This can often pose certain additional risks when it comes to investing, mainly, currency risk. Currency risk, also known as exchange rate risk, is the risk that the value of your investment will fluctuate due to changes in the exchange rate between, for example, the euro (EUR) and the Singapore dollar (SGD). Here’s how this risk can affect your investment, and what you should take note of before you decide to invest in a certain currency: (FYI I’m going to be using euros as the main example currency here)

  1. Fluctuating Exchange Rates: If you invest in assets denominated in euros, the value of those assets will be influenced by the exchange rate between the euro and your home currency (SGD). If the euro strengthens against the SGD, the value of your investment in SGD terms will increase. Conversely, if the euro weakens against the SGD, the value of your investment in SGD terms will decrease.
  • For example, if you invest €1,000 and the exchange rate is 1 EUR = 1.5 SGD at the time of purchase, your investment is worth 1,500 SGD. If the exchange rate later changes to 1 EUR = 1.3 SGD, your investment would then be worth only 1,300 SGD.

2. Impact on Returns: Currency fluctuations can significantly impact your returns. Even if your euro-denominated investments perform well in their local market, adverse currency movements can erase or diminish your gains when converted back to SGD.

3. Hedging Options: To manage currency risk, investors can use various hedging strategies. These may include forward contracts, options, or other financial instruments that can help offset potential losses due to currency movements. However, hedging comes with its own costs and considerations. I don’t often suggest this to my clients as hedging is a higher-risk strategy. However, for an avid & experienced investor, this is a good option.

4. Diversification: Diversifying your investments across various currencies can help mitigate currency risk. By holding a mix of assets denominated in different currencies, you may reduce the potential negative impact of fluctuations in any single currency. Diversification, as you will know if you’ve read a lot of my articles, is a key part of investing, and whilst it’s not smart to invest in every single currency, having a mix of currencies such as the one you earn in, the one where you have assets etc. is a good way for lessening exchange rate risk.

5. Long-Term vs. Short-Term: If you are investing for the long term, short-term currency fluctuations might be less of a concern since over time, currencies tend to fluctuate in cycles. However, if you’re looking at a shorter investment horizon, currency risk may significantly affect your returns.

6. Global Economic Factors: Currency values are influenced by a variety of factors, including interest rates, inflation, political stability, and overall economic performance in both regions. Staying informed about these factors can help you anticipate potential currency movements.

These are key points to remember if you are faced with currency risk; investing in euros while earning in SGD exposes you to exchange rate risk, which can affect the value of your investments when converted back to your home currency. It’s essential to consider this risk in your investment strategy and explore ways to manage or mitigate it based on your investment goals and risk tolerance.

Spice Taxation: Our Thoughts on the Spring Budget – 6th March 2024

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For those that may be following my blog and my podcast, you’ll know that I’ve been working a fair bit with Martin Rimmer, Managing Director at Spice Taxation; a Singapore-based UK tax company.

Martin has kindly shared with me his write-ups on various UK tax topics, such as this one. You can see his write-up below. You can read more at spicetaxation.com, or follow up with Martin at martin@spicetaxation.com.

Please note that I am not a tax expert, Martin is; therefore these opinions are his, I am merely sharing.

The Most Important Budget for Expatriates since 2010


Over the years I have discovered that I am just not very good at predicting Budgets. Speculation is always rife about what a Chancellor might do in face of this and that economic and political situation, but mostly the actual announcements just tend to underwhelm and disappoint. Maybe I just crave excitement!


However, all that changed with Jeremy Hunt’s Budget on 6th March. It is likely to be the last Conservative Party Budget before the next General Election – an election which the Labour Party is widely expected to win. So, it remains to be seen how many of the announcements will find their way onto the Statute books if Labour does win. That aside, it really was an exciting Budget which promises a lot of change, much of it positive.


For much of the speech, it felt like a ‘normal budget’ with a plethora of announcements about regional incentives, funding initiatives, levelling up grants, subsidies and tax breaks for the arts etc. However, there was also a number of genuinely eye-catching and important announcements which are also relevant to expatriates.


First of all, Jeremy Hunt announced a further reduction in National Insurance paid by employees and the self-employed of 2%, from 6th April 2024. For employees, this will reduce from 10% to 8% and for the Self-Employed from 8% to 6%. For those returning to the UK, this will be welcome news.


Secondly, he announced the intention to introduce a new Individual Savings Account – the UK ISA, with an annual subscription allowance of GBP 5,000, in addition to the existing threshold of GBP 20,000. This new ISA would hold British-only assets – equities listed on the four recognised UK stock exchanges, UK corporate bonds and gilts and collectives. This will be good for UK resident savers.


Third, there were a few property tax announcements which came as a surprise:

o The marginal rate of Capital Gains Tax on the sale of residential property will reduce from 28% to 24% from 6th April 2024. This is intended to help stimulate the property market. The basic rate will remain at 18%. This is good for anyone selling, gifting or assigning an interest in UK residential property from that date.


o Multiple Dwellings Relief for Stamp Duty Land Tax is being abolished from 1st June 2024 – this was a relief that allowed you to take the average purchase price for SDLT purposes where at least two properties were being purchased in a single transaction.

o Furnished Holiday Letting status is to be abolished from 6th April 2025, with some anti-forestalling provisions which came into effect on 6th March 2024.


o The geographical scope of Agricultural Property Relief and Woodlands Relief (two Inheritance Tax incentives) will be limited to assets situated in the UK only from 6th April 2024 – those situated in the Crown Dependencies and the EEA will lose their IHT protected status.


Fourth, the VAT registration threshold will rise to GBP 90,000 from 6th April 2024, an increase of GBP 5,000, which will be welcome news for small businesses.
However, perhaps the biggest and most barnstorming announcement was the abolition of ‘non-dom’ status from 6th April 2025. The Conservative Party has been a staunch defender of the ‘non-domiciled regime’ over many years, so it was something of a surprise to see them adopt an avowed Labour Party policy. Stealing their thunder no doubt. It is a very major announcement that will impact many people.

In a nutshell, the Government plans to delink a person’s ‘domicile status’ from their UK tax outcomes, and move to a residence-based set of incentives. Consultation documents are yet to be published, but the main features of the new system will be to:

Abolish the ‘remittance basis of taxation’ for UK resident ‘non-doms’.

Replace it with an opt-in system that will allow, seemingly anyone – including, presumably, British nationals – to exempt their non-UK incomes and gains from UK tax for the first four years of UK residence, provided that they have been continuously non-resident for at least the 10 previous years.

Exempt from tax the remittance of these non-UK income and gains to the UK, which will be hugely simplifying in the long run.

Retain Overseas Workday Relief for qualifying individuals for the first 3 tax years of residence

Apply world-wide taxation for all individuals from the 5th year of residence in the UK

Introduce a thoughtful set of transitional reliefs for certain ‘non-doms’ who are already resident in the UK

Switch away from a ‘domicile based’ system of Inheritance Tax to a residence-based system, whereby qualifying individuals switch to IHT on world-wide assets only after 10 years of residence

Keep anyone who leaves the UK within IHT for 10 further years, which presumably also will apply to British Expatriates too. UK assets remain within Inheritance Tax at all times, regardless of residence.

We are missing a lot of technical detail here which should be answered by the Consultation Documents that the Government will be publishing shortly. So watch this space! However, whilst I have many more questions than answers at the moment, at first sight the main impacts appear to be the following.


a) Tax planning for relocation to the UK is likely to change quite a bit and these proposals could amount to a generous tax break for returning British expatriates.


b) They will also make Inheritance Tax planning potentially a lot simpler and not so reliant on subjective judgments about where a person is domiciled.


c) It might possibly result in an exemption from Inheritance Tax for a swathe of non-resident British expatriates who have already been non-resident for at least 10 years, which would be quite a result!


I am going out on a limb a little by saying that it appears the proposals will also apply to those we currently regard as ‘domiciled’ in the UK. However, surely that is the point – it is switch away from a tax system where a person’s domicile was the deciding factor, to a tax system where the deciding factor is driven by residence. This potentially bodes extremely well for British expatriates.
If this Budget does turn out to be the Conservative Party’s fiscal swansong, it is perhaps fitting that its period of Government will be bookended by a commitment to enshrine in law a statutory test for residence in 2010 at the start, and a set of announcements that displace domicile with a new regime based on that very residence test at the end. Mastering the Statutory Residence Test is clearly going to be more and more important.
Beyond this, all tax rates, thresholds and allowances for Personal Tax remain frozen, as do the rates for Corporation Tax. The dividend allowance will fall to GBP 500 from 6th April 2024 and the Capital Gains Tax Annual Exemption will fall to GBP 3,000 from the same date. Class 2 and Class 3 voluntary National Insurance Contribution rates will remain unchanged at GBP 3.45 per week and GBP 17.45 per week respectively, and the New State Pension will rise to GBP 221.20 per week (of GBP 11,502.40 per year) from 6th April 2024.

If you would like to discuss your own circumstances in confidence or would like to be on the subscriber list for our new dedicated coverage of these breaking developments, please contact me at martin@spicetaxation.com or by sending a Whatsapp to +65 96650019.

Registered Office : #05-06C The Arcade, 11 Collyer Quay, Singapore 048617
Trading Address: #04-435 Eastcrown @ Canberra, 130a Canberra Cres, Singapore 751130

Spice Taxation: Our Thoughts on the likely Tax Policies of the new Labour Government – 10th July 2024

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For those that may be following my blog and my podcast, you’ll know that I’ve been working a fair bit with Martin Rimmer, Managing Director at Spice Taxation; a Singapore-based UK tax company.

Martin has kindly shared with me his write-ups on various UK tax topics, such as this one. You can see his write-up below. You can read more at spicetaxation.com, or follow up with Martin at martin@spicetaxation.com.

Please note that I am not a tax expert, Martin is; therefore these opinions are his, I am merely sharing.

Change is inevitable
Last week’s General Election unceremoniously dispensed with 14 years of Conservative Government and returned a landslide win for Sir Keir Starmer’s Labour Party. Labour won an astonishing 412 seats (out of 650) which is a massive 291 more than the Conservatives – polling a total of 9,731,363 votes. Such was the scale of the rebellion against the governing Tory party and the split of the centrist/centre-right vote between a resurgent Liberal Democrat Party and huge popular enthusiasm for Reform UK, that Labour actually achieved this feat with roughly 500,000 fewer votes than they polled in 2019 under Jeremy Corbyn, in which they won only 202 seats1.
I am no political analyst. However, much as was the case in 2019 when promises of ‘delivering Brexit’ and ‘levelling up’ allowed the Tories to pierce the ‘Red Wall’ and romp to a 163 seat win over Labour, I can’t escape the feeling that the new Government’s majority is a mandate which has been merely lent by the British Public for a time. In 2019, the Tories persuaded typical Labour voters, particularly in the north, to trust them. This time, out of a deep sense of betrayal, those voters returned home and the mainstream centrist/centre-right constituency, which had coalesced around the Tories in 2019, fell apart. It was a form of planned electoral suicide, knowing full well that a huge Labour majority would result. Trust rendered, provisionally perhaps.
As a result, Labour now enjoys the power to govern more forcefully than any Government in recent memory. And the Centre/Right is now split between the Tories, Reform UK and the Liberal Democrats2. But, given the surprising drop in the popular vote which accompanied the landslide, any serious failure to deliver on the major promises in their 136 page manifesto could reveal serious fragility in their majority in 2029. On the other hand, success in bringing the transformational change that Labour clearly believes it can deliver across all areas of Government, could establish the party in Government for a generation.
So, the time for talking is over and the time for governing has begun. And we should expect this rejuvenated Labour Government to ‘come out of the traps’ at a gallop. Tax policy is going to be at the heart of their decision-making. The new Chancellor, Rachel Reeves, is the first female Chancellor of the Exchequer, and has been a Member of Parliament since 2010. She was described by Sir Keir Starmer in 2023 as “the most influential person on the British left today”. She supports an economic policy which focuses on ‘infrastructure, education and labour supply by rejecting tax cuts and deregulation’3 – a policy type that she has coined as ‘securonomics’. In 2021, she supported a 2p cut in the Basic Rate of Income Tax and she also opposed a 1.2% planned rise in National Insurance. Good signs, perhaps.
So, what has the Labour Party said about the various taxes, current issues and when might we expect change?


One Fiscal Event a Year
Rachel Reeves has made it clear that she will make a break from the routine of a Spring Budget and an Autumn Statement, opting instead for one annual Budget – probably in the Autumn. She has ruled out holding an Emergency Budget and has committed to only fully costed Budgets supported by the rigorous analysis of the Office for Budget Responsibility. The OBR requires a 10 week preparation period before a Budget and as such, given the very brief period between the State Opening of Parliament on 17th July and the start of the Summer Recess on 31st July, I can’t imagine that we will have a Budget much before mid-October.


March 2024 Budget Proposals
You may remember that the Conservative’s last Budget announced a plan to abolish ‘non-domiciled status’ for UK tax purposes with effect from 6th April 2025 and to replace the current regime with a residence-based system, for Income Tax, Capital Gains Tax and Inheritance Tax purposes.
Labour has since given its broad approval to the proposals and my sense is that they are likely to proceed with them more or less in their current form, albeit they have already said that they will:
o Not proceed with some of the ‘transitional reliefs’ proposed by the Conservatives for those already resident in the UK, and
o Not proceed with a protection from Inheritance Tax that the Conservatives had built in for pre-existing trusts known as ‘excluded property trusts’.

Beyond this, Labour has made no further comment at this stage. I expect them to press ahead with this at a pace and I would hope to see some renewed momentum soon. They can’t be blind to the serious uncertainty that the proposals have created and I am sure that they must also be mindful of the need to attract wealthy individuals into the UK, to prevent their exodus from the UK and to restore certainty. I expect some reliefs which will encourage inward investment in the context of these changes.

I also think that Labour would be missing an important trick if it didn’t also use this as an opportunity to encourage the British diaspora to return to the UK. Arguably, there is much more to be gained by welcoming British expatriates and other foreign investors home with a broad package of tax incentives than by penalising foreigners just because they have chosen to make their longer-term homes in the UK.


Income Tax
Labour has committed to not raise Income Tax rates during the next Parliament. Personal tax allowances will remain frozen at least for the moment, and they have been silent on the level of the Personal Allowance and Income Tax Thresholds. This may be telling.


Capital Gains Tax
Labour has been silent about Capital Gains Tax, leading many to believe that they will align the CGT rates to Income Tax rates. They have already announced that certain Private Equity performance rewards will switch from Capital Gains Tax to Income Tax. Capital Gains Tax is one of only a small number of Personal Tax levers that they have left themselves to pull.


Inheritance Tax
Equally, Labour has been surprisingly silent on the question of Inheritance Tax. I expect them to remove or limit some of the more common reliefs and they might even go as far as to abolish the exemption from Inheritance Tax of unused pensions at death. Otherwise, I do not expect them to increase the rate of Inheritance Tax although we might see an extension of the Nil Rate Band to compensate for the above.

National Insurance
Labour has also pledged not to increase the rate of National Insurance during the next Parliament.


Corporation Tax
Labour has promised to cap Corporation Tax at 25%, the present top-rate. This implies to me that they might increase the starting rate of 19% and perhaps introduce a flat 25% rate for investment holding companies.


Stamp Duty Land Tax

Labour has said that it will increase the surcharge paid by Non-Resident purchasers of Residential Property in England and Northern Ireland by 1% to 3% per band. Expect to see this in an Autumn Budget.


Value Added Tax and Pensions
Labour has pledged not to increase the Standard Rate of VAT, which is currently set at 20%. They will proceed to bring Private School fees into VAT at this rate, which I expect to see in an Autumn Budget. Labour has said that it will undertake a review of the pensions landscape (whatever that means). It has, however, confirmed that it will not re-introduce the Lifetime Allowance Charge that the Conservatives abolished in the 2023 Budget. They will preserve the Triple Lock for the State Retirement Pension.


Other Tax Measures
Labour plans to renew focus on combatting aggressive tax avoidance, particularly by large businesses and will allocate GBP 855m to HM Revenue & Customs for this. It intends to replace Business Rates with a ‘new fairer system’, and it plans to introduce a Windfall Tax on Oil and Gas Giants. It is also widely speculated that Labour may introduce some form of Wealth Taxation at some point during the Parliament. Their Manifesto was understandably silent on this highly controversial point, though.


In Conclusion
I see very little to make me think that Labour will be a low tax party. The burden only looks as though it will rise. However, with the trust of 10m voters to vindicate and a raft of important policies to implement in a transformational way, there is a real fiscal tightrope to be walked over the next 5 years.
I can’t help but be reminded of how Jean Baptiste Colbert once famously said that “the art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing”.

We should know a little more about how the Government intends to set about this task with the King’s Speech at the Opening of Parliament on 17th July and in what is almost certain to be an Autumn Budget.


If you would like to discuss your own circumstances in confidence or would like to be on the subscriber list for our new dedicated coverage of these breaking developments, please contact me at martin@spicetaxation.com or by sending a Whatsapp to +65 96650019.

Registered Office : #05-06C The Arcade, 11 Collyer Quay, Singapore 048617
Trading Address: #04-435 Eastcrown @ Canberra, 130a Canberra Cres, Singapore 751130

Understanding Singapore’s Cost of Living: A Breakdown for New Expats

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Moving to a new country can be an exciting adventure, but it often comes with uncertainties, especially regarding the cost of living. A higher salary is often not the only thing that people take into consideration when deciding to move; often things like standard of living, ease of transport and travel, and tax often come up into consideration. For many expats, Singapore is regarded as a desirable destination due to its vibrant culture, outstanding infrastructure, and excellent job opportunities. However, understanding the financial landscape is crucial for any newcomer. Today, I will try to give a comprehensive breakdown of Singapore’s cost of living for those considering a move to this dynamic city-state.

Housing Costs

One of the most significant expenses you will encounter in Singapore is housing. The city’s real estate market is known for its high prices, particularly in central areas, such as River Valley or Tanjong Pagar, where many expats prefer to reside. Rental prices can vary greatly based on location, property type, and proximity to public transportation. On average, expats might find that a one-bedroom apartment in the city centre could cost anywhere from SGD 2,800 to SGD 4,000 per month, although I’m beginning to see less and less of the lower cost options than when I first moved to Singapore. In contrast, units in suburban areas may be more affordable, typically ranging from SGD 1,800 to SGD 3,000. Generally, if you wish to save on cost, it’s better to opt for a HDB or Private Apartment over a condo. It’s important to determine your housing budget early and explore various neighborhoods to find an area that suits your lifestyle and financial constraints. I would say, try to spend no more than 20% of your income on rental.

Transportation

Singapore’s public transportation system is highly efficient, consisting of a comprehensive network of buses and the Mass Rapid Transit (MRT) system. As a new expat, you can expect to spend about SGD 100 to SGD 150 per month on commuting costs if you rely on public transport. And now, with the new Brown Line finally open, it connects a lot of areas where expats live, such as Siglap & Great World. The affordability and reliability of this system means that many expats opt to forgo owning a car, further reducing overall costs. I seldom recommend expats owning a car, simply because of how reliable public transport is, and even taxis can be pretty affordable here. However, if you choose to drive, it’s essential to keep in mind that owning a car in Singapore is expensive due to high taxation and Certificate of Entitlement (COE) fees. The cost of fuel, insurance, parking, and maintenance can add up significantly, you may be looking at a couple of hundred of thousands of dollars!

Groceries and Dining

Another significant aspect of living in Singapore is grocery shopping and dining out. The cost of groceries can range widely depending on your preferences for local versus imported goods. Typically, a family may spend around SGD 600 to SGD 1,200 per month on groceries, heavily influenced by dietary choices. I often buy my groceries online, with platforms like RedMart, which can be a lot more costly than buying at the wet market, but there tends to be a wider range of international foods available. Dining out is also a popular option, with a meal at a hawker centre costing as little as SGD 5, while mid-range restaurants can charge SGD 20 to SGD 50 per person. Expats looking to indulge in fine dining can expect to pay a premium, with prices often exceeding SGD 100 per person. I often think that one of the main pitfalls that expats can fall into is the ‘expat lifestyle’; i.e., expensive brunches and drinks. A brunch at Lavo can set you back $200 a time, after GST & service charge, and cocktails at nice bars can easily be priced at $30 a pop. Not only that, ‘western food’ (it pains me to say that!), is often so much more costly than asian food. Thus, managing food expenses smartly can help maintain a balanced budget.

Utilities and Internet

When setting up your new home, you will need to account for utility bills, which include electricity, water, gas, and internet services. Monthly utility costs in Singapore can average around SGD 150 to SGD 250, depending on your consumption habits and the size of your household. Internet services usually cost between SGD 40 and SGD 70 per month, depending on the speed and provider you choose. Ensuring that you understand your utility needs can help you avoid surprises on your monthly bills. I find that bills tend to be a lot more affordable here than back at home, with pay-as-you-go phone contracts offering a lot of perks, such as unlimited data.

Healthcare

Singapore boasts a high-quality healthcare system, but it comes at a cost. New expats should factor in healthcare expenses, which can vary depending on personal health needs and the type of insurance coverage you opt for. While basic healthcare services, such as a GP or dental visit, are relatively affordable (less than $100 if it’s just a check-up), private healthcare facilities can be quite costly. It is advisable for new residents to acquire comprehensive health insurance to cover potential medical expenses. Depending on the provider and level of coverage, premiums may range from SGD 100 to SGD 1000 per month. Of course. you get what you pay for in terms of level of coverage. You can read more about insurance costs here:

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Education

For expatriates with children, education is often a top priority, and Singapore offers an array of schooling options—from public schools to international institutions. It’s often incredibly difficult for foreigners to get their kids into local public schools, so most have to opt for paying for international. International school fees can be quite steep, ranging from SGD 20,000 to SGD 40,000 per year, depending on the school’s reputation and curriculum. Public schools may be more affordable but often require that students be permanent residents or citizens. Therefore, budgeting for education is a critical aspect of financial planning for expat families.

Entertainment and Leisure

Living in Singapore also means enjoying a vibrant social life and leisure activities. Whether you prefer visiting the city’s many attractions, dining out, or engaging in cultural experiences, entertainment costs can add up. Monthly entertainment expenses can vary widely, depending on lifestyle choices. On average, expats may spend between SGD 200 to SGD 500 on activities such as movie outings, concerts, and recreational classes, alongside various social events. Finding free or low-cost activities in the city can help further balance your budget. I’ve done many articles on fun, free activities, so please go check them out!

If you live in a condo, utilise their facilities, such as pools, gym & tennis courts. These are perfectly great activities and ways to spend your time without costing a bomb!

In summary, while the cost of living in Singapore can be high, understanding the various components—from housing and transportation to groceries and healthcare—can empower expats to navigate their financial path effectively. With careful planning and budgeting, newcomers can enjoy the rich culture and opportunities that Singapore has to offer while managing expenses thoughtfully. Whether you’re attracted by the career prospects or the diverse community, being well-informed about the cost of living will facilitate a smoother transition into your new home.