Contributing to UK ISA while abroad

[Barnabe]

My friend left the UK a few years ago and is now classed as a non resident for tax purposes.

This means that not only he can't contribute to an ISA account, but he also can't even keep it due to the rules of the account provider. Some providers do allow you to keep it while abroad though, but you still can't put any money in.

 

However my friend still contributes regularly to his ISA every year. Any idea what could be the consequences for said friend if he got caught by HMRC?

[topt]

8 hours ago, Barnabe said:

Any idea what could be the consequences for said friend if he got caught by HMRC?

I have no idea but a quick internet search threw up this link except you need to take a free trial to view -

https://www.telegraph.co.uk/finance/personalfinance/investing/isas/11402387/I-have-been-paying-into-a-cash-Isa-while-living-abroad-will-I-face-a-fine.html

[Barnabe]

17 minutes ago, topt said:

I have no idea but a quick internet search threw up this link except you need to take a free trial to view -

https://www.telegraph.co.uk/finance/personalfinance/investing/isas/11402387/I-have-been-paying-into-a-cash-Isa-while-living-abroad-will-I-face-a-fine.html

 

Thanks, here are the contents:

 

Quote

If you open an Isa while you live in Britain and then move abroad, you can keep the Isa open and still get the tax relief on the money held in it.

However, you cannot put money into the Isa once you move (unless you’re a Crown employee working overseas or their spouse or civil partner).

The onus is on the Isa investor to notify the provider of the account if their residence status changes.

Unfortunately, any subscriptions made while living overseas will be void as the subscription is invalid.

A spokesman for HM Revenue & Customs said the Isa provider would remove the invalid subscription from the Isa and return it, along with any “net” income, to the investor. The tax element will be paid to HMRC by the provider.

A non-UK resident may be able to make a claim for the tax using an R43 form.

The spokesman advised the reader to notify the Isa provider of the mistake. It will then follow the published guidance.

 

[topt]

1 minute ago, Barnabe said:

 

Thanks, here are the contents:

 

 

Well seems to suggest what I was going to write as likely - pay tax on any income/gains - unless I am reading it wrong?

However I would have thought the chances of being caught as quite low unless the person was very careless.......

[Barnabe]

1 minute ago, topt said:

Well seems to suggest what I was going to write as likely - pay tax on any income/gains - unless I am reading it wrong?

However I would have thought the chances of being caught as quite low unless the person was very careless.......

 

It seems to suggest the ISA will be wrapped up and its contents sold and returned to the holder, minus applicable tax, which might be a concern for a stocks & shares ISA (not so much for a cash one).

 

Agree with the chance of being caught - looks like my friend is safe.