Income From Abroad - Tax

[MrPatrickThai]

I get money input every month into my bank account through from abroad.

As I am a UK citizen, living in Thailand, I don't have to pay taxes on it.

I am in the process of becoming a Thai citizen.

My question is - when I become Thai, will I have to pay taxes on this money?

 

[Jeffrey346]

My wife works for the Thai Revenue Dept and said it depends on the source of the income.

[glamont002]

What is the source of the money? Is it "income" like a pension or salary? If it is just savings being transferred no Thai tax. If it is income and you are a foreigner and resident of Thailand (more than 180 days in a year) then foreign income is only taxable if remitted into Thailand in the same year as it is earned. This is the rule for both a foreigner and Thai citizen (but no 180 day rule for Thai citizen. This is actually a very stupid rule as money is fungible so who is to say whether the income was earned in the current year of from a prior years income. Effectively no one pays tax on foreign income here.

[Nurseynutcase]

Hi MrPatrickthai - go on then, please give me a clue - how do you avoid paying UK tax?  I have to pay it as I was told that as all of my income was generated in the uk - pensions and house rental then I have to pay tax.  Did speak to my accountant about this and she could not see a way round it.

 

Any tips would be greatly appreciated.

 

Cheers

[Grumpy Duck]

38 minutes ago, Nurseynutcase said:

Hi MrPatrickthai - go on then, please give me a clue - how do you avoid paying UK tax?  I have to pay it as I was told that as all of my income was generated in the uk - pensions and house rental then I have to pay tax.  Did speak to my accountant about this and she could not see a way round it.

 

Any tips would be greatly appreciated.

 

Cheers

As I understand the OP he was concerned about Thai taxes. But perhaps I misunderstood. 

[Surasak]

37 minutes ago, Nurseynutcase said:

Hi MrPatrickthai - go on then, please give me a clue - how do you avoid paying UK tax?  I have to pay it as I was told that as all of my income was generated in the uk - pensions and house rental then I have to pay tax.  Did speak to my accountant about this and she could not see a way round it.

 

Any tips would be greatly appreciated.

 

Cheers

I assume you icome is generated in the UK? If that income is more than 11500 gbp then you pay tax on it in the UK, NOT Thailand.

[Nurseynutcase]

On 12/1/2017 at 12:24 PM, Grumpy Duck said:

As I understand the OP he was concerned about Thai taxes. But perhaps I misunderstood. 

Yes the OP was concerned about Thai taxes but he also stated that he does not pay Uk tax.

 

If anyone knows a way round this I would greatly appreciate any info

[topt]

1 hour ago, Nurseynutcase said:

but he also stated that he does not pay Uk tax.

 

If anyone knows a way round this I would greatly appreciate any info

@Surasak gave you one potential answer above.

Otherwise there is no way round the property income and on pensions it depends if you are referring to the state only and/or private. If private you could look at transferring your pension abroad (QROPS or whatever it is now called) but that is a whole other discussion.

[Nurseynutcase]

1 minute ago, topt said:

@Surasak gave you one potential answer above.

Otherwise there is no way round the property income and on pensions it depends if you are referring to the state only and/or private. If private you could look at transferring your pension abroad (QROPS or whatever it is now called) but that is a whole other discussion.

Thanks for that - three private pensions - no state pension yet.  Will look  into this when I am back in the UK

[SantiSuk]

On 12/1/2017 at 12:27 PM, Surasak said:

I assume you icome is generated in the UK? If that income is more than 11500 gbp then you pay tax on it in the UK, NOT Thailand.

Not necessarily true for interest income or dividend income 'earned' in the UK, even if that income takes you over the personal allowance. Only applies if you are non-resident for tax purposes in the UK (makes those categories of income 'excluded income'). Thailand does not tax such income in Thailand either (even if you remit that particular income in the current year).

 

It makes Thailand a bit of tax haven if you fall in that category and have a high proportion of such income sources. I don't expect it to last too many more years in the current environment. One end or the other is bound to alight on it as it is too much of a gimme. Brought my effective tax rate on all income down from 40% ish to 14% ish when I became non-resident.

Edited December 4, 2017 by SantiSuk

[fletchsmile]

2 hours ago, SantiSuk said:

......

 

It makes Thailand a bit of tax haven if you fall in that category and have a high proportion of such income sources. I don't expect it to last too many more years in the current environment. One end or the other is bound to alight on it as it is too much of a gimme. Brought my effective tax rate on all income down from 40% ish to 14% ish when I became non-resident.

It's a massive reason for not moving back to the UK for us.

 

Here in Thailand we pay very little income tax on our investments and no capital gains tax.

 

But go back to the UK and we land in a high tax bracket, capital gains tax etc.

 

Over the years, I've moved a lot of investments away from the UK, so that largely what remains is in ISAs or SIPPs, and is income and capital gains tax free. In general from a tax perspective Singapore and Thailand are much better places to hold investments than UK if you live here in Thailand

[SantiSuk]

5 hours ago, fletchsmile said:

It's a massive reason for not moving back to the UK for us.

 

Here in Thailand we pay very little income tax on our investments and no capital gains tax.

 

But go back to the UK and we land in a high tax bracket, capital gains tax etc.

 

Over the years, I've moved a lot of investments away from the UK, so that largely what remains is in ISAs or SIPPs, and is income and capital gains tax free. In general from a tax perspective Singapore and Thailand are much better places to hold investments than UK if you live here in Thailand

I beg to differ Fletchsmile. Since you can hold investments in the UK without any tax charge (if you are non-resident) I think it is far preferable to hold investments in London because the UK has the best regulatory regime in the world (from an investor protection viewpoint IMO), pretty competitive broking/admin prices (for non-advisory discount brokers) and a very wide range of international stocks and funds available on most discount broker platforms.

 

I have no axes to grind for the UK financial services industry.

 

I am distraught that one of my 3 brokers in the UK has recently kicked me out, based on an excuse that the Mifid regulations makes it no longer appropriate to service me. They recommend their international offshore services in another part of the group as a substitute, which surprise/surprise charge more and offers a narrower range of investments.

[topt]

12 hours ago, SantiSuk said:

Since you can hold investments in the UK without any tax charge (if you are non-resident)

SantiSuk are you referring to where you do not avail yourself of the Personal Allowance? Even with this option are you still not liable for tax on any property income and pensions?

I understand there is no CGT if non resident other than on property now.

Edited December 5, 2017 by topt

[fletchsmile]

15 hours ago, SantiSuk said:

I beg to differ Fletchsmile. Since you can hold investments in the UK without any tax charge (if you are non-resident) I think it is far preferable to hold investments in London because the UK has the best regulatory regime in the world (from an investor protection viewpoint IMO), pretty competitive broking/admin prices (for non-advisory discount brokers) and a very wide range of international stocks and funds available on most discount broker platforms.

 

I have no axes to grind for the UK financial services industry.

 

I am distraught that one of my 3 brokers in the UK has recently kicked me out, based on an excuse that the Mifid regulations makes it no longer appropriate to service me. They recommend their international offshore services in another part of the group as a substitute, which surprise/surprise charge more and offers a narrower range of investments.

You might differ, but I don't think you're correct :) It's true that for non-residents they have a more favourable situation than residents. But non-residents  are restricted to the amount deducted at source. It is not "without any tax charge". Most retail investment income on in the UK has tax deducted at source before paid out to you.

 

Furthermore if the tax charge is limited in that way then you lose your personal allowances. For most people they will also likely have state and personal pension income so they'll lose out there instead on those if they try and take the preferential treatment on investment income

 

 

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

 

Quote

 

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.

 

 

In contrast for Thailand, on mutual funds you can elect to have dividends taxed at a flat rate of 10% or your marginal rate of tax. If your marginal rate is 0% and covered by allowances, you're better off that route. Either way 10% on the dividend only is the absolute max. Lower than most UK dividends. If you buy accumulation units in a Thai unit trust, then in Thailand as there is no capital gains tax and as they are not subject to income tax either you're tax free.

 

A UK resident of course has it much worse than a non-UK resident, which is why I said for us the first big step is don't go back to the UK and be a UK resident. The second step though where we differ is then move anything that potentially attracts tax in any way. It's a smaller step, but even though as you allude to the amounts are lower than for UK residents they still aren't quite "without tax charge" as you say.

 

The UK does have a better regulatory regime than Thailand. I'm not convinced it's better than Singapore. Have a google of all the failings of the UK regulatory regime compared to failings in Singapore.

 

As an ex-Equitable Life pension investor, I can also say that the UK regulatory regime totally and utterly failed me, when needed. They even calculated the loss on my investments at around 74% of that particular portfolio and compensated a mere fraction of that. It also took the regulatory regime over 10 years to pay their pittance of compensation to me. It was a joke. My father who was a pensioner during the debacle passed away during that 10 years before compensation arrived. 

 

I've no axe to grind against the UK financial services industry in general, and on the whole it's pretty OK for UK residents. But once you become non-resident there are often better alternatives available. 

Edited December 5, 2017 by fletchsmile

[fletchsmile]

2 hours ago, topt said:

SantiSuk are you referring to where you do not avail yourself of the Personal Allowance? Even with this option are you still not liable for tax on any property income and pensions?

I understand there is no CGT if non resident other than on property now.

Yes that's also my understanding, and I think that's what he's referring to. As you say, the offset is losing your personal allowance. Plus you are still liable on property income etc

[SantiSuk]

2 hours ago, topt said:

SantiSuk are you referring to where you do not avail yourself of the Personal Allowance? Even with this option are you still not liable for tax on any property income and pensions?

I understand there is no CGT if non resident other than on property now.

Totp. Dividend and Interest income is currently tax-free to non-residents whatever the level and it's reltionship to the personal allowance. If the income is small then the personal allowance makes it tax free. If it exceeds the personal allowance then HMRC will disavow the personal allowance for you and treat it as "excluded income" when they compute your taxation liability (via online if you file online with commercial software or via an early submission of a paper tax return.

 

This gimme only applies to "investment income" (interest and dividends) and not to other forms of income arising in the UK like pensions, property income, employment income etc. Better to sell the property and buy some shares? Probably not - I can't believe this free gift will last too long

 

Fletch. Prior to 6 April 2016 banks etc deducted tax at source and you did indeed suffer that element. Similarly companies attributed a deemed tax credit to dividends and that provided you with a tax charge. However, as at 6 April there is no longer any actual tax deducted at source or deemed tax credits and the prior legislation that effectively said you paid no more additional tax than had already been suffered amazingly did not change. Since I did not suffer any tax on interests or dividends in the UK on my savings interest or dividends 'arising' in the UK then there was no further tax to pay when I did my return. At least that is how my software showed it when I submitted my return 6 weeks ago and it has not been queried or challenged so far.

 

However, you are right that you will lose your personal allowances, so the extent of tax saving depends on the relativity of your investment income to your other taxable income. In my case my investment income far outweighs my other sources of income so it's a big gain for me. If I had a cold towel I could probably put up some worked examples to indicate where the cut-off lies.

 

So we are both right and wrong in equal measure - smaller investor is better from a tax viewpoint doing it outside the UK. Larger investor (relative to other sources of UK income) is better off to do it in the UK (the latter my opinion and subject to whether current tax rules in the UK last.

 

 

 

Here's the relevant HMRC guidance:

https://www.gov.uk/government/publications/non-residents-and-investment-income-hs300-self-assessment-helpsheet/hs300-non-residents-and-investment-income-2017 

Edited December 5, 2017 by SantiSuk

[oldwelshman]

On ‎02‎/‎12‎/‎2017 at 9:33 AM, Nurseynutcase said:

Thanks for that - three private pensions - no state pension yet.  Will look  into this when I am back in the UK

I am UK citizen, but non resident, will live in Thailand, paid in UK but don't pay tax in uk as nion resident, don't work in countries long enough to pay tax in them either. I do have money deducted from salary same as tax, hypotax, at end of year company tax advisor calculates and pays tax where/if needed, if none needed he gets fee and | get rest. For my rental in UK as someone else said, unless I get over £11500 it is tax free. For my pension I can get 25% tax free. If my pension +rent exceeds £11500 then I will have to pay tax on rest so don't plan to exceed it for a while :-)