RECORD numbers of Britons are fleeing the country for a new life overseas. In the past 12 months, 385,000 people left Britain for good, according to the Office for National Statistics – the highest number since data were first collected in 1991.

The most popular destination was Australia, with 71,000 Britons starting new lives there. Canada, New Zealand and South Africa are also attracting huge numbers of expats.

Here are the pitfalls to watch out for if you want your escape overseas to be pain free.

Tax trap

Most imagine that once they have emigrated they are safely out of the clutches of the UK taxman, but the truth is that many will still have to pay tax to the British authorities.

Usually you can apply to become resident for tax purposes if you stay in a country for more than six months a year. You then pay local rates on most of your worldwide income and capital gains.

However, tax may still be payable on UK-earned income or gains, from bank accounts or rental properties.

Britain has double-taxation arrangements with many countries to ensure you don’t pay tax twice on the same money.

In your new country, you get a discount for the UK tax you have already paid. But if the UK taxes are lower you may have to make up the difference.

Inheritance woes

Even if you are no longer a British resident, it is extremely difficult to escape inheritance tax. Anyone domiciled in Britain must pay UK tax at 40% on worldwide assets above the threshold of £300,000.

Individuals acquire a domicile of origin at birth and this is normally the domicile of the father. It is very difficult to change this – you must sever all ties with the UK.

This means closing all British bank accounts, selling your UK assets and even organising your funeral abroad.

If you are granted a new domicile of choice, it takes three years for the loss of UK domicile to become effective for IHT purposes.

Pension differences

Although it is now possible to claim a UK state pension from almost anywhere in the world, some pensioners get a worse deal than others.

Pensioners retiring anywhere in the European Union, America and countries such as Israel and Barbados have their state pension increased each year in line with prices, just like someone who stays in Britain.

But those living in most Commonwealth countries, including Australia, Canada, New Zealand and South Africa, do not.

Their state pensions are frozen at the moment they retire, or when they leave Britain if they have already retired. Over time, that means their pensions fall further and further behind the uprated version.

Health issues

Britons officially resident in another EU country usually have the same entitlement to healthcare treatment as a national in the country in which they are living. But free services may not be the same as those in the UK. You need to pick up form E121 before you go. Outside the EU you are unlikely to be entitled to free healthcare, so private medical insurance is essential.

Currency risk

A sudden change in exchange rates can cost you dear. Some foreign-exchange traders let you fix the exchange rate at which your money is transferred overseas up to two years ahead. That way you know exactly how much you will get, even if rates change.

Specialist traders such as Currencies Direct, Moneycorp and Hifx usually offer the most competitive rates. Britons officially resident in another EU country usually have the same entitlement to healthcare treatment as a national in the country in which they are living.

But free services may not be the same as those in the UK. You need to pick up form E121 before you go. Outside the EU you are unlikely to be entitled to free healthcare, so private medical insurance is vital.