ArranP

Tesco just suffered a massive balance sheet black hole and is now trying to dispose of its overseas operations, their days are numbered as the UK's number supermarket, Llidl and co are eating market share.

Barclays, who'd buy banks in these days of negative interest rates, ring fencing, government fines, et al!

Direct Line, possibly.

It seems to me Arran you need to put 90% of your energies into company analysis rather than just looking on the internet to see which shares/bonds people are recommending, either that or diversify so much that your mis/bad-buys don't hurt you too much.

And and, chasing yield alone is a mugs game, there's an old saying, more money has been lost chasing yield than through any other single means! So if you're attracted by a 6.4%/7.4% return you have to ask yourself, why is the return that great, could it be because of the risk involved!

I'm not the best in the world at company analysis. Diversify, what would you recommend, a diversification of 10 ?

GBP 27 Nov 2015 Barclays Bank Plc 6.875 27 Nov 2049 - 33 yrs 9 mths 100 6.434

GBP 17 Feb 2016 Tesco Plc 5.5 13 Jan 2033 16 yrs 11 mths 87.229 6.792

GBP 17 Feb 2016 Direct Line 9.125 27 Apr 2042 26 yrs 2 mths 117.449 7.387

GBP 17 Feb 2016 Paragon 6.125% 2022 6.125 30 Jan 2022 5 yrs 11 mths 93.873 7.417

I'm new to bonds, why wouldn't you invest in these bonds ?

Barclays Bank, Tesco, Direct Line, Paragon all big names in the UK, maybe I'm wrong but unlikely to go bust, bonds have between 5 years to 33 years to run, returning 6.4% to 7.4% per year "running yield".

Due to its buy price, the return on this is a measly1.3% per year, in other words the market has price out 75% the value of this bond for a prospective buyer.

I'm guessing the way to get a better return is to register for the IPOs ? Other than IPOs is it possible to get a descent return from bonds ?

good news, HMRC just confirmed interest from banks and UK corporate bonds is treated as dis-regarded income for non-residents not claiming a personal allowance.

They said, when filling out the self assessment, to claim the personal allowance, and the system will then determine which is the lesser amount, a) to claim the personal allowance or not to claim the personal allowance and dis-regard the investment income.

The bank interest goes in the "UK interest" section and UK Corporate Bonds interest goes into the "Accrued Income / interest scheme" on the self assessment, the software does the rest in calculating the liability.

Yes i know, any ideas what to do ? We arrive Thailand end of march.

Have a safe trip. Am looking for info on schools have put a few feelers out waiting replies.

Just to give you some ideas cost wise on top schools in Thailand. See under.

http://www.nordangliaeducation.com/our-schools/pattaya/admissions/our-fees

You can of cause use the local schools but I will tell you now they will at best be rubbish.

Thanks, but my children will be attending schools in nakhon sawan, this is where their mother lives. Myself and my Thai partner will go to live there with my 3rd son so every can live near to each other.

Its important that my children are fully immersed in thai culture as we intend to live our lives in Thailand.

Yes i know, any ideas what to do ? We arrive Thailand end of march.

Your only chance of your children learning Thai and English before they are fluent in Thai is with a boarding school here, there are many but they isn't any in N/S or north of BKK to my knowledge, they are also very expensive. I do know of one that will take English speaking only children but that's on the edge of Pattaya. Their curriculum does include Thai + all other subjects to English standards. There must be nearer one's than that though.

Thanks for the update on the minimum wage in Blighty, just shows you how long since I have been back there. I had thought it was nearer £9.

As I said £6 a day here. I do have a top man that can do almost everything very well, unusual for Thais he gets 400bt a day = £8.

Regards Uni here it's called you have paid so you will pass. I live near a Uni everyone passes in all subjects even English.

Not one I know 'and that's many' speaks any form of understandable English reading/writing forget it, even though they have learnt it Allegedly.

Welcome to Thailand.

heres a good website for teaching your children to read in english, it has the same books as the UK state schools and int. schools http://www.oxfordowl.co.uk/for-home

Educated Thai's mostly Chinese get all the good jobs or run their own business. All have studded English in G.B or America some even in Thai Uni: but only if they don't have the cash.

The English £8 an hour 'more I believe now' is what the Thai get for a hole day a lot less if they are not educated. At present the minimum is £6 a day I just tried to make it sound a bit better.

When your over next if not now ask any Thai to add up. Out will come a calculator they are 99% clueless on maths. Good education for what life will bring in any country let alone Thailand, sorry I don't think so.

Just another EG my 13 year old Thai/English daughters English is far better than the plank of wood that is teaching her now, she even gets asked to help out the Thai English teacher.

New government idea is to now not employ English native speakers to teach they want only Thai teachers to do that Buddha, help Thai's if that ever comes to fruition.

Regards to travel. A Thai passport is about as good as a postage stamp they cant go to many places even if they win the lotto.

Point of order your English daughter cant work/own anything here unless she has Thai nationality. Duel one's not allowed here. Well legally. Only hope that she was born here or that's another huge problem you'll have to sort out.

Sorry to be the bearer of it's not all rosy here, just trying to point out some of the pitfalls.

Believe you me I could tap out all day on the not so good bit's.

Your main problem is the fact that she cant speak read write Thai. Without same she's not going to get into any Thai School. First of many big problems for you to sort out.

Best of luck.

nothing of what you mention I don't know already, I have lived in Thailand for 3 years.

My children hold both thai and british passports so will have no problem entering or leaving Thailand.

I acknowledge your point about adding up, most thais do reach for the calculator whilst I have added it up before they hit the enter button.

The minimum wage in UK is rising by 50p to £7.20 in october 2016 thats over a 7% increase, usually the increase is crica 1 to 3% so this must be an attempt by the UK government to stoke inflation to help people afford, amongst other things, to buy a house.

The min wage in Thailand starts around 300 baht per day.

Because we intend to live in Thailand my children will need to compete with other thais for a job, hence they are better off attending the same schools/universities as them, attending an english school unless supplemented with extra reading and writing in thai after school will hinder their chances of landing a job in Thailand when their graduate. Talking of graduation, how are my children to graduate a thai university, when they have attended a english secondary school, they could'nt they would have to go back to UK for university.

I've thought and worried alot on this subject, I've come to this conclusion.

Thai schools prepare children for living and working in thailand, english schools prepare children for living and working in england. We boast english education is better than thai, it maybe so, however it is a means to an end, the end :- living and working either in england or thailand.

From my perspective, living and working in england, people have their equal share of problems as most other countries, they struggle every month to pay the rent/mortgage, bills etc just as much as the people do in Thailand.

For me the quality of my life is better in Thailand.

I don't know to what you refer by 3 hours on a bus, I think you are confusing me with another member on this forum.

Your correct on some things.

English schools prepare peeps for living in England also the 'real world'

Thailand as you said prepare peeps for living in Thailand. Most leave school idiots. But they will be Perfectly clued up to receive their £8 a day wage.

The better life is only obtained here if you have big monies that's being replenished on a regular basis, also have the Thai mind set.

IE don't mind having things done 3/4 times to get it right or half right as the case maybe.

Also helps if you are bald at least you cant pull your hair out most days.

I agree British education is more the "world stage" where as Thailand seems to be more insular to the country only. Probably contributed to by the fact the british currency has a high value enabling its people to afford to travel abroad compared to the thai currency which as a low value which makes it less affordable for thai people to travel abroad.

I'm not sure about leaving school/university as idiots, maybe idiots from "the wests" reckoning, but amongst the thai society many are valued and contribute toward its society in the same way as peeps leaving english education system are valued and contributed toward our society.

Why is it so many people, even the thais, value the english schools. Yet when it comes thai companies employing people, all the jobs will go to people coming from thai schools? English schools are for those that intend to return to england to live their lives, I intend to live my life in thailand, coming from an english school my children would not stand a chance competing against the thais for a thai job.

The £8 a day wage is the thai equivelant of the minimum wage in Britain. British people seem to have more money than thai people because the British currency is a higher value than the the thai currency, its more affordable for a british person to travel abroad, however within their own respective countries british people are no better off than thai people.

I've thought and worried alot on this subject, I've come to this conclusion.

Thai schools prepare children for living and working in thailand, english schools prepare children for living and working in england. We boast english education is better than thai, it maybe so, however it is a means to an end, the end :- living and working either in england or thailand.

From my perspective, living and working in england, people have their equal share of problems as most other countries, they struggle every month to pay the rent/mortgage, bills etc just as much as the people do in Thailand.

For me the quality of my life is better in Thailand.

I don't know to what you refer by 3 hours on a bus, I think you are confusing me with another member on this forum.

I am not being funny with this response but if you have a business in the UK and you want the best for your children, why not consider school in the UK.

Having spoken with many international school teachers in Thailand the general feeling seems to be that a good state school in the UK (subjective I know) is better than 90% of the international schools here from an an educational and opportunity point of view.

BIS Phuket to a Thai School in NS.......best for who?

The school is the pre-cursor to living and working in that country. If I want my children to live and work in Thailand its better they attend a thai school. If I would like them to live and work in the UK then its an english school ( or international school ).

I don't like living and working in the UK, I do not expect my children to live in the UK when I don't like to.

good website for teaching your children to read english http://www.oxfordowl.co.uk/for-home

This still seems incorrect to me. The term "interest" clearly refers to more than what is described in 369(2) above, which I suppose is what you mean?

369(1) refers to "interest" and (2) extends what "interest" is taken to mean but isn't meant to be an exclusive definition of what "interest" means.

Bank interest, for example, is clearly "interest", but is not mentioned at all in 369(2). It is however specifically mentioned as "disregarded income" in the HMRC guidelines. Bond interest is also not mentioned specifically in 369(2)but I think this also can't be taken to mean that it isn't disregarded income.

I also don't think that whether an interest is taxed at source or not affects whether it falls under disregarded income, since the wording clearly includes interest where tax has not been withheld at source ("if any" in the advice leaflet above).

I'm not sure your position is quite tenable given that HMRC give, as an example of disregarded income, a type of interest (bank interest) which is not mentioned specifically in section 369 (2), and was not taxed at source:

http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

"Lorenzo is resident in Italy, but has two bank deposit accounts in the UK. He has made a declaration in respect of one of them that he is not ordinarily resident in the UK (see BAM44030), so he receives interest on this account with no tax taken off. He has not made a declaration in respect of the second account, so he receives net interest. In 2006-07, he receives gross interest of £5,400 on the first account, and net interest of £220 (gross interest £275 less tax £55) on the second. He has no other UK income.

All of the bank interest is disregarded income, so the UKs taxing rights on Lorenzos income is limited to the £55 that has been deducted at source."

How do you interpret this article http://moneyweek.com/how-does-tax-affect-your-bonds-93972/

For non-residents, only interest earned in Britain is taxed. Interest income on gilts and most corporate bonds is paid without tax deducted (“gross”), so you have to declare it on your tax return

This still seems incorrect to me. The term "interest" clearly refers to more than what is described in 369(2) above, which I suppose is what you mean?

369(1) refers to "interest" and (2) extends what "interest" is taken to mean but isn't meant to be an exclusive definition of what "interest" means.

Bank interest, for example, is clearly "interest", but is not mentioned at all in 369(2). It is however specifically mentioned as "disregarded income" in the HMRC guidelines. Bond interest is also not mentioned specifically in 369(2)but I think this also can't be taken to mean that it isn't disregarded income.

I also don't think that whether an interest is taxed at source or not affects whether it falls under disregarded income, since the wording clearly includes interest where tax has not been withheld at source ("if any" in the advice leaflet above).

I'm not sure your position is quite tenable given that HMRC give, as an example of disregarded income, a type of interest (bank interest) which is not mentioned specifically in section 369 (2), and was not taxed at source:

http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

"Lorenzo is resident in Italy, but has two bank deposit accounts in the UK. He has made a declaration in respect of one of them that he is not ordinarily resident in the UK (see BAM44030), so he receives interest on this account with no tax taken off. He has not made a declaration in respect of the second account, so he receives net interest. In 2006-07, he receives gross interest of £5,400 on the first account, and net interest of £220 (gross interest £275 less tax £55) on the second. He has no other UK income.

All of the bank interest is disregarded income, so the UKs taxing rights on Lorenzos income is limited to the £55 that has been deducted at source."

I acknowledge, Lorenzo, has declared his is non-resident yet he receives is his interest from the bank gross. This contradicts my current understanding, I will ask HMRC.

HMRC confirmef, if i buy UK corporate bonds as a non-resident, i am liable to pay tax on the interest received from those bonds.

You do know that interest and bond dividends are disregarded income for non-residents? This means that if you have no other income in the UK, and do not apply your personal allowance , tax is limited to that withdrawn at source, if any.

What this means is: if you do not claim a personal allowance, bond dividends and interest arising in the UK are tax FREE for non-residents. As far as I am aware this law has not changed since 2015 and the advice you got from the HMRC is wrong.

Link and relevant quote below from 2015 HMRC advice leaflet:

https://www.gov.uk/government/publications/non-residents-and-investment-income-hs300-self-assessment-helpsheet/hs300-non-residents-and-investment-income-2015

"How is investment income charged to tax

With the exception of income from property in the UK and investment income connected to a trade in the UK through a permanent establishment, the tax charge for non-residents on investment income arising in the UK is restricted to the amount of tax, if any, deducted at source. If the tax charge is limited in this way, personal allowances will not be given against other income. This restriction does not apply in the overseas part of a split year.

[...]

Disregarded income includes:

• interest and alternative finance receipts from banks and building societies
• dividends from UK companies
• income from unit trusts
• income from National Savings and Investments
• profits from public revenue dividends
• profits or gains from transactions in deposits
• certain social security benefits, such as State pensions or widows pensions
• taxable income from purchased life annuities except annuities under personal pension schemes"

EDIT: link to HMRC page giving numbered citations to relevant sections of UK tax law:

http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

Also this one.

http://www.hmrc.gov.uk/manuals/saimmanual/SAIM9200.htm

SAIM9200 - Payment of interest overseas

Overview

A non-resident is taxed on UK-source income.

When any person pays yearly interest to a non-UK resident, they are obliged to deduct income tax from the payment and account for that tax to HMRC in accordance with ITA07/S874(2). This obligation can be removed or changed if the benefits of a double taxation agreement are successfully claimed - and (from 1 April 2004) by making a claim under TIOPA10/S182. This obligation applies to companies, local authorities and individuals.

The tax is the liability of the non-resident recipient: deduction from payment is the collection mechanism for income taxes on non-residents who do not have a taxable presence in the UK.

Banks and Building Societies pay deduct interest at source, this is maybe why interest received from a bank is classified as "dis-regarded income", however interest/coupon received from a bond is paid gross of tax and this is possibly why HMRC require that the recipient i.e. bond holder declare and pay the tax. I will follow up with HMRC on monday and report back.

This is something I have looked at, because I would quite happily load up my UK business with offshore-loans to reduce its profit, however HMRC are aware of this and as you can see require all UK business to deduct tax from the interest payment.

This isn't correct. The wording of the tax law says "limited to tax withheld at source, IF ANY" clearly stating that this applies even if no tax is ever withheld at all. In the leaflet and citation guidelines which refer to "interest" no interest is specifically excluded except that involved in a business partnership that you yourself are involved in.

Although SAIM9200 declares the non-resident is responsible for the tax liability, the disregarded income rules make this liability zero.

However if you are running a UK business you likely have a large income arising in the UK, and so you probably want to claim your personal allowance.

These exclusions, as pointed out, only apply if you declare that you are not claiming your personal allowance, otherwise interest and dividend income are fully taxable.

I always claim my personal allowance because I have other taxable income (rent) in the UK, and my dividend /bond interest income is small, so claiming the allowance results in no tax liabilty.

There comes a tipping point where interest /dividend income becomes big enough to make it worth not claiming your personal allowance and getting this income tax free, but I don't think I'll ever get there.

we start from from the Savings and investment income manual 1170 :- .

SAIM1170 - Savings and investment income: non-residents http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

..... leads to .....

Income Tax Act 2007 - Part 14 - Chapter 1 http://www.legislation.gov.uk/ukpga/2007/3/part/14/chapter/1

..... leads to.....

..... leads to ......

Income Tax Act 2005 - Part 4 - Chapter 2 http://www.legislation.gov.uk/ukpga/2005/5/part/4/chapter/2

Only interest from S369 is "dis-regarded income".

Unlike interest from S369, interest from corporate bonds is paid gross of tax, I suspect this is the reason why HMRC require that I pay the tax.

HMRC confirmef, if i buy UK corporate bonds as a non-resident, i am liable to pay tax on the interest received from those bonds.

You do know that interest and bond dividends are disregarded income for non-residents? This means that if you have no other income in the UK, and do not apply your personal allowance , tax is limited to that withdrawn at source, if any.

What this means is: if you do not claim a personal allowance, bond dividends and interest arising in the UK are tax FREE for non-residents. As far as I am aware this law has not changed since 2015 and the advice you got from the HMRC is wrong.

Link and relevant quote below from 2015 HMRC advice leaflet:

https://www.gov.uk/government/publications/non-residents-and-investment-income-hs300-self-assessment-helpsheet/hs300-non-residents-and-investment-income-2015

"How is investment income charged to tax

With the exception of income from property in the UK and investment income connected to a trade in the UK through a permanent establishment, the tax charge for non-residents on investment income arising in the UK is restricted to the amount of tax, if any, deducted at source. If the tax charge is limited in this way, personal allowances will not be given against other income. This restriction does not apply in the overseas part of a split year.

[...]

‘Disregarded income’ includes:

• interest and alternative finance receipts from banks and building societies
• dividends from UK companies
• income from unit trusts
• income from National Savings and Investments
• profits from public revenue dividends
• profits or gains from transactions in deposits
• certain social security benefits, such as State pensions or widows’ pensions
• taxable income from purchased life annuities except annuities under personal pension schemes"

EDIT: link to HMRC page giving numbered citations to relevant sections of UK tax law:

http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

Also this one.

http://www.hmrc.gov.uk/manuals/saimmanual/SAIM9200.htm

Banks and Building Societies pay interest net of tax , this is maybe why interest received from a bank is classified as "dis-regarded income", however interest/coupon received from a bond is paid gross of tax and this is possibly why HMRC require that the recipient i.e. bond holder declare and pay the tax. I will follow up with HMRC and report back.

This is something I have looked at, because I would quite happily load up my UK business with offshore-loans to reduce its profit, however HMRC are aware of this and as you can see require all UK business to deduct tax from the interest payment.

HMRC confirmef, if i buy UK corporate bonds as a non-resident, i am liable to pay tax on the interest received from those bonds.

my heart goes out for you. i will cry myself into sleep tonight

Its no different for me than it is for any UK national.

UK source income is taxable, i.e. income from UK bonds, interest received from loans to UK companies, income from renting UK property, its all taxable. The only exception I know of so far is dividends, dividends received from UK companies is classified as "dis-regarded income" by HMRC, there is no UK tax liability.

I also need to check with HMRC what the position is regards my Thai partner buying UK corporate bonds, and will report back when I get the answer.

HMRC confirmef, if i buy UK corporate bonds as a non-resident, i am liable to pay tax on the interest received from those bonds.

Good point, have you the names / websites of any offshore brokers ?

it would be better that my thai partner buy the UK bonds, she does not submit a self assessment.

you have to declare it on your tax return

on WHAT tax return? do non-residents file tax returns?

I am a non-resident, HMRC require that I submit a self assessment if I receive UK derived income.

Maybe it is because I am British ? HMRC have stated that as a non-resident, I must declare and pay tax on interest received from UK corporate bonds, have they got this wrong ?

yes!

income tax. Interest received worldwide on both government bonds (“gilts”) and corporate bonds is taxable if you are a UK resident

For non-residents, only interest earned in Britain is taxed. Interest income on gilts and most corporate bonds is paid without tax deducted (“gross”), so you have to declare it on your tax return

http://moneyweek.com/how-does-tax-affect-your-bonds-93972/

How does tax affect your bonds?

First off, income tax. Interest received worldwide on both government bonds (“gilts”) and corporate bonds is taxable if you are a UK resident – someone who spends more than half of the tax year in Britain. For non-residents, only interest earned in Britain is taxed. Interest income on gilts and most corporate bonds is paid without tax deducted (“gross”), so you have to declare it on your tax return

just come off the phone with HMRC in the UK.

HMRC require non-residents to submit a self assessment to declare interest received from UK corporate bonds and pay UK tax on that interest.

HMRC do not requrie non-residents to declare or pay tax on Interest received from offshore corporate bonds.

rubbish! i am holding UK domestic corporate bonds since many years and never paid a single penny taxes. presently i hold Prudential.

if taxes would apply, yield on UK corporates would be skyhigh and London's financial district a graveyard.

Maybe it is because I am British ? HMRC have stated that as a non-resident, I must declare and pay tax on interest received from UK corporate bonds, have they got this wrong ?

The HMRC "Deduction of tax" manuals are here http://www.hmrc.gov.uk/manuals/saimmanual/saim9000.htm , the ones towards the end of the list deal with interest paid overseas :

However ....

SAIM9260 - Payment of interest overseas: bond documentation

Redemption clause

• The commercial expectation is that interest on international bonds will be paid without deduction of tax. For example, the Eurobonds exemption under the UK legislation was introduced in order to provide for gross payment on qualifying cross-border bond issues. Bond documentation will normally include a clause permitting the issuer to redeem the bonds early in the event that a withholding tax obligation is imposed in respect of interest payments.

Are you from the UK Naam?