A guide to South Africa

Careers

South Africa is an emerging market with a strong economy, albeit quite volatile due to rapid changes. The country has a high rate of unemployment, but there’s a skills shortage in sectors such as education and engineering, where many job opportunities are created for expats. There’s a strong entrepreneurial spirit, paying taxes is straightforward, hard work is valued and there are incentives for investors. One legacy of apartheid is that unions are influential and labour unrest is often cited as a barrier to investment in the country.

Business has a clear management hierarchy and showing respect for senior colleagues is important. Face-to-face meetings are preferred, with people greeting each other with a handshake and by first names.

Salaries are usually lower than in many Western countries, but if you can get paid in a stronger currency than the rand, your money will go much further, especially with the lower cost of living.

Education

There are significant disparities between public and private education – only the very affluent can afford private schools. The school year runs from January to December with the main breaks in June/July and December/January. Within the government-funded public schools, the standards can vary, especially in less affluent underfunded areas, and teachers are underpaid. Schools in wealthier areas tend to have better resources and subsequently offer a better level of education.

The private schools are excellent, but expensive, and there’s stiff competition for places. Many of these schools are faith-based, and some use alternative teaching methods such as Montessori and Waldorf.

Homeschooling has become more popular among expat parents, but you must register your child and apply to the head of the Department of Education in your province. Your lessons must comply with the basics of education that they define.

There are also several international schools in Cape Town and Johannesburg that mainly follow American, British, French, or German curricula or the International Baccalaureate.

Moving money

Putting the right banking arrangements in place is vital for expats around the world. You want to be able to access and transfer money easily, and with a bank you can trust to comply with international regulations. Most people have two banks – one in their home country and one local to where they’re living. But, if your bank has a global network, you may be able to set up an account ahead of your arrival, which gives you time to assess the financial market.

It’s important to understand how foreign exchange works and how fluctuating exchange rates can affect you. When you’re juggling finances in multiple currencies, remember that the currency markets can move quickly and make a big difference to the value of your money.

To help you reduce the risk of fluctuating currency, you could choose a foreign exchange that lets you fix an exchange rate for a fixed period. Then you’ll know exactly how much you need to convert, whatever happens in the market.

Budgeting

When you’re looking to move to a new country, you need to consider how a change in the cost of living could affect your finances. In South Africa, it’s generally lower than in the UK and US, but the cost of everyday expenses like groceries and electricity is increasing due to the weakening of the rand. If you’re paid in a stronger currency, you’ll probably have more disposable income than you did back home.

If you’re moving with your job, sometimes your employer may help with expenses, such as accommodation or school fees. Remember to account for setup costs, such as buying furniture and arranging insurance, when you’re thinking about your budget.

Costs

Some of our offshore accounts have a monthly fee, such as the International Current Account, whereas others, like the Premier International Account, don’t. Both offer fee free International Payments (correspondent and recipient bank charges may apply) and 24/7 worldwide access. Plus, the Premier also includes worldwide travel insurance for you and your family, which is underwritten by AWP P&C SA and administered by Allianz Assistance, which is a trading name of AWP Assistance UK Ltd. Eligibility criteria, terms and conditions apply.

Financial planning

While it’s going to be a busy time, it’s also worth setting some time aside to review your financial plans, such as whether you want to open any offshore accounts. They offer the convenience of keeping your money in one place so you can stay with the same bank no matter where life takes you.

Your expat status could give you new opportunities that weren’t available to you at home. However, tax rules differ from country to country, so if you’re unsure about your personal tax obligations, you should seek professional advice.

Lloyds Bank International Private Banking is by your side every step of the journey as you start your new life abroad. We offer international knowledge, experience and dedicated expert support to help meet all your financial needs. From savings to international payments and transfers, we can help you navigate the complex world of wealth management away from home.

Security

Offshore accounts are not protected by the Financial Services Compensation Scheme (FSCS), which protects savings up to £85,000 with authorised UK banks and building societies.

However, our accounts are covered by other schemes. The Jersey Bank Depositor Compensation Scheme, the Isle of Man Depositors’ Compensation Scheme and the Guernsey Banking Deposit Compensation Scheme offer protection for eligible deposits of up to £50,000.

Tax and legislation

Individuals resident in South Africa are subject to tax on their worldwide income. Non-residents are subject to tax on income from South African sources. The source of payment usually relates to the rendering of services in that location, so short-term visits of less than three weeks do not generally result in South African tax liability if the individual’s presence is incidental to continuing employment elsewhere, and if the income falls below the annual tax threshold. Under existing law, income tax becomes payable if an individual earns more than 83,100 ZAR (3,407 GBP or 4,335 USD) per year.

• Employment income – the basis of employee taxation is remuneration, consisting of salary, leave pay, allowances, wages, overtime pay, bonuses, gratuities, pensions, superannuation allowances, retirement allowances and stipends, whether in cash or otherwise. These payments, together with the cash value of any fringe benefits received, form part of the gross income of an employee.
• Self-employment and business income – professional fees paid to non-residents are subject to employee withholding tax (if from a South African source), even if the non-resident is an independent contractor. Business losses of a self-employed person may be carried forward indefinitely if the trade is continued. No loss carry backs are permitted.
• Investment income – foreign dividends on holdings of less than 10% that are paid to residents are taxable, subject to the provisions of an applicable double tax treaty.
• Taxation of employer-provided stock options and other incentive plans – the difference between the market value of shares and similar rights as of the date of vesting for tax purposes and the consideration given by the employee is taxed in South Africa if, in the case of non-residents, the incentive is for services rendered in South Africa. Residents are taxable on the whole gain, regardless of source, unless they are exempt under the foreign employment income exemption.
• Estate duty and donations tax – levied at a flat rate of 20% on net assets at death and all capital transfers. Residents are subject to estate duty and donations tax on worldwide assets, except for offshore assets acquired by inheritance or donation from a non-resident or owned before becoming resident. To prevent double taxation, South Africa has entered estate tax treaties with six countries.
• Transfer duty – levied on the acquisition of fixed property with a value exceeding 1 million ZAR. The rate of the duty on property with a value exceeding 1 million ZAR depends on the purchase price of the property with a maximum rate of 13%.
• Social security – limited unemployment insurance and accident or illness benefits are provided with employers and employees both contributing 1% of the employee’s remuneration.

The tax authority is the South African Revenue Service (SARS) and the tax year runs from 1 March to 28/29 February, with the tax return date of 16 November for non-provisional tax payers and 31 January for provisional tax payers. See www.sars.gov.za for further information.