Could a move overseas save you from the UK’s cost of living crisis?

A fifth of all UK workers are now considering moving overseas to work remotely in a bid to swerve the increasing cost of living in Britain.

One study out this week suggests more than six in every 10 workers are now considering working remotely from another country, with reasons ranging from the weather to lost faith in government and, most common, the rising price of life in the UK.

The research of more than 2,000 full-time workers by benefits platform Perkbox, is backed by a further study of more than 500 UK business leaders who say they “aren’t against” the shift to remote working.

In the post-Covid era, as international travel restrictions begin to ease and would-be digital nomads are able to get further afield than the coffee shop at the end of the street, three-quarters of businesses now trust their staff to work productively from anywhere (even if most will expect them to keep the same working hours as they do).

The figures come in the same week that Britons will face up to a massive energy price hike followed by the confirmed 1.25 per cent national insurance hit from 6 April. At 6.2 per cent we were already facing the highest rate of inflation in 40 years before these increases made their presence felt.

And yet data also out this week from The Money Charity suggests there was only a 0.1 per cent increase in regular pay in the year to January 2022, with total pay actually falling by 0.7 per cent.

The average worker is now earning less than they did before the pre-financial crash peak of February 2008.

No wonder a quarter of businesses already say they are getting requests for employees to not only work remotely on a permanent basis, but from another country. And that doesn’t take into account the nation’s army of almost 5 million self-employed.

But where to go?

There are, undoubtedly, myriad implications for a move overseas, most of which have little to do with personal economics.

And there’s no doubt that the invasion of Ukraine is now being felt – in inflation terms – across the world, with the cost of everything from energy to bread rising sharply. Meanwhile, of course, a lower cost of living means a lower average rate of income if earning domestically.

Digital nomads hope to sidestep that fiscal relationship by being paid in sterling at a rate appropriate for the UK’s cost of living, while converting and spending that money in a local economy whose costs are lower.

There are plenty of options too.

The UK tends to come within the top thirty countries for cost of living, while Jersey and Guernsey are regularly in the top 10, alongside nations like Switzerland, Iceland and Norway.

Cheapest are usually nations like India and Pakistan, Nepal and Peru. Though the time difference may make those Monday morning or Friday afternoon conference calls tricky.

Between the two, though, are near neighbours like Spain, Slovenia and Portugal, whose proximity might make keeping those UK working hours a little easier.

And although the departure from the EU has made a UK passport holder’s life more complicated on the continent, a growing number of nations are now offering visas and tax breaks specifically designed for the new breed of digital nomad.

The Biscay government in northern Spain, for example, has just introduced a new scheme for nomads and relocating entrepreneurs that means 50 per cent of their income could be tax exempt for 11 years, with further tax breaks on relocation expenses including housing, flights from home and local language learning.

In Portugal, digital nomads benefit from a special personal income tax treatment over a 10-year period, enjoy tax exemption on almost all foreign source income, and there is a 20 per cent flat rate for certain Portuguese source incomes, compared with standard income tax rates of up to 48 per cent.

In early 2021, Croatia passed a law that allows non-EU foreigners to get a one-year residence visa, with digital nomads also exempt from paying income tax during that time.

And last June, Malta introduced a nomad residence permit for applicants who can prove they can work remotely, are third-country nationals, and fall into one of three categories, such as offering freelance or consulting services.

Sri Lanka, Indonesia and Greece are all on the brink of introducing new incentives for overseas nomads too.

Those embracing an international escape from the cost of living crisis might get a shock though, as employers too can see the savings potential. The Perkbox data suggests a third should expect to be paid a lower salary based on their new, lower cost of living.

At the same time, the initial cashing in is reversed if they decide to repatriate to Blighty. If a new life overseas doesn’t pay off, a homecoming could get very expensive indeed.