Avoiding Uk Income Tax

[hgvneil]

I will be moving to Thailand in January,but due to limited job oppertunities in Thailand for myself,i expect to return to UK a few months per year to work.As i understand the income tax allowance is about £5200 per year so if i earn up to that i can claim tax back right ?

Im sure there must be loads of people who live Thai/UK who do this.Anyone can explain what they do ? Experiences etc ?

[Penkoprod]

There IS a thread on here about the very same thing, but i cant find it right now.

From memory, you have to bank offshore, declare yourself as "non domiciled" to the UK authorities, and not stay IN the UK above a certain ammount of days per year to avoid paying tax.

AFAIK any tax allowance figures dont come into it unless you do the above

A Trip to an acountant versed in theses matters would be my advice

HTH

Penkoprod

[Prakanong]

There IS a thread on here about the very same thing, but i cant find it right now.

From memory, you have to bank offshore, declare yourself as "non domiciled" to the UK authorities, and not stay IN the UK above a certain ammount of days per year to avoid paying tax.

AFAIK any tax allowance figures dont come into it unless you do the above

A Trip to an acountant versed in theses matters would be my advice

HTH

Penkoprod

Even if he is still a UK resident if he earns less than his tax allowance he does not pay tax on that.

If he was earning big overseas he declares himself non-resident and spends less than 90 days a year in country - got a pal visiting me in singapore tomorrow to start to sort this out - 6 months offshore - just over three months in Asia - less than 3 months in the UK

[naka]

There IS a thread on here about the very same thing, but i cant find it right now.

From memory, you have to bank offshore, declare yourself as "non domiciled" to the UK authorities, and not stay IN the UK above a certain ammount of days per year to avoid paying tax.

AFAIK any tax allowance figures dont come into it unless you do the above

A Trip to an acountant versed in theses matters would be my advice

HTH

Penkoprod

Even if he is still a UK resident if he earns less than his tax allowance he does not pay tax on that.

If he was earning big overseas he declares himself non-resident and spends less than 90 days a year in country - got a pal visiting me in singapore tomorrow to start to sort this out - 6 months offshore - just over three months in Asia - less than 3 months in the UK

Be aware that if you own a house in UK then the IR will probably not grant you

non residence status for tax purposes, regardless of your time in/out of the country.

Basically you have to convince the tax man that you have severed ALL (financial) ties with

the country, and it can take a few years to convince them.

The UK gov has a very good plain English website detailing all this.

Basically if you own a house then you need to sell it, you need to move any UK accounts offshore

and you need to stay out of the country for a minimum duration over a three year period.

After that they 'May' agree to inform you in writing that you no longer need to fill in

an annual tax return.

Been there.

Naka.

[Prakanong]

There IS a thread on here about the very same thing, but i cant find it right now.

From memory, you have to bank offshore, declare yourself as "non domiciled" to the UK authorities, and not stay IN the UK above a certain ammount of days per year to avoid paying tax.

AFAIK any tax allowance figures dont come into it unless you do the above

A Trip to an acountant versed in theses matters would be my advice

HTH

Penkoprod

Even if he is still a UK resident if he earns less than his tax allowance he does not pay tax on that.

If he was earning big overseas he declares himself non-resident and spends less than 90 days a year in country - got a pal visiting me in singapore tomorrow to start to sort this out - 6 months offshore - just over three months in Asia - less than 3 months in the UK

Be aware that if you own a house in UK then the IR will probably not grant you

non residence status for tax purposes, regardless of your time in/out of the country.

Basically you have to convince the tax man that you have severed ALL (financial) ties with

the country, and it can take a few years to convince them.

The UK gov has a very good plain English website detailing all this.

Basically if you own a house then you need to sell it, you need to move any UK accounts offshore

and you need to stay out of the country for a minimum duration over a three year period.

After that they 'May' agree to inform you in writing that you no longer need to fill in

an annual tax return.

Been there.

Naka.

I work with a few people who still have their houses back in the UK while they are working abroad?

Houses mostly let out - these people are *resident* in other countries just as I am so no UK tax liability

Its going to be an interesting one with my pal arriving tomorrow. He has been doing 1 month in the UK 1 month offshore in Georgia

It used to be flights back to home country but now its a flight anywhere in the world.

So he is out 6 months working in Georgia or sometimes longer to cover other guys

He is looking at spending at least 3 of the off months out of the UK too and so spending less than 90 days a year in the UK

I think his problem is going to prove he is resident somewhere if not the UK. Its easy for me as I work and pay tax here in Singapore. He is trying t pay tax nowhere at all.

[briley]

Read the Inland Revenue web pages to get the correct answers.

If you plan to live outside the UK and only work there a bit to reduce your tax then

Domicility does not matter in this case - anyway UK authorities make it almost impossible to lose UK dmicility.

Owning a house used to matter - 30 years ago.

The only rule for non-resident is to be in the UK for less than 91 (92?) days a tax year on average over the last 4 years and not in the UK over 182 days in any one tax year.

UK tax authorities will not treat you as non-res in first year unless you have a job and contract overseas, otherwise they want to see that you are out of the country. But once proved you get all the benefits (and drawbacks) from the time you leave.

First and last years of being non-res are treated differently.

Incidentally days of arrival and departure in the UK do not count, but this is a concession only and if you have too many of them then they will count! (Stops those living in France and travelling to London each day claiming to be non-res)

[Prakanong]

"UK tax authorities will not treat you as non-res in first year unless you have a job and contract overseas, otherwise they want to see that you are out of the country. But once proved you get all the benefits (and drawbacks) from the time you leave."

This is the bit that applies to myself and others I know then.

I had a job and contract in the place I was before as I do here.

I know one guy though who has never informed the IR he was out the country - signed off and went - how does that go as he says he has never had a tax form sent to his UK address?

[highchol]

There IS a thread on here about the very same thing, but i cant find it right now.

From memory, you have to bank offshore, declare yourself as "non domiciled" to the UK authorities, and not stay IN the UK above a certain ammount of days per year to avoid paying tax.

AFAIK any tax allowance figures dont come into it unless you do the above

A Trip to an acountant versed in theses matters would be my advice

HTH

Penkoprod

Even if he is still a UK resident if he earns less than his tax allowance he does not pay tax on that.

If he was earning big overseas he declares himself non-resident and spends less than 90 days a year in country - got a pal visiting me in singapore tomorrow to start to sort this out - 6 months offshore - just over three months in Asia - less than 3 months in the UK

Be aware that if you own a house in UK then the IR will probably not grant you

non residence status for tax purposes, regardless of your time in/out of the country.

Basically you have to convince the tax man that you have severed ALL (financial) ties with

the country, and it can take a few years to convince them.

The UK gov has a very good plain English website detailing all this.

Basically if you own a house then you need to sell it, you need to move any UK accounts offshore

and you need to stay out of the country for a minimum duration over a three year period.

After that they 'May' agree to inform you in writing that you no longer need to fill in

an annual tax return.

Been there.

Naka.

I work with a few people who still have their houses back in the UK while they are working abroad?

Houses mostly let out - these people are *resident* in other countries just as I am so no UK tax liability

Its going to be an interesting one with my pal arriving tomorrow. He has been doing 1 month in the UK 1 month offshore in Georgia

It used to be flights back to home country but now its a flight anywhere in the world.

So he is out 6 months working in Georgia or sometimes longer to cover other guys

He is looking at spending at least 3 of the off months out of the UK too and so spending less than 90 days a year in the UK

I think his problem is going to prove he is resident somewhere if not the UK. Its easy for me as I work and pay tax here in Singapore. He is trying t pay tax nowhere at all.

your pals who work rotation assignments ie i month off and one month on, are and beieve me liable to uk income tax. They are classed as resident. Ive been through this.

The 90 / 180 rules go out of the window with rotational work , even if your pals go elsewhere in the world for 3 months the tax man is covered by what he says is your intent.

If though you could prove to his satisfaction that you arn't resident say you have a business /house / condo in thailand with a wife /kids then and thus proove you are settled here then your ok.

You dont have to sevre finacial ties in uk , you can keep property and say rent it out and be non resident. The proceeds of rent are taxable over the thresholds. You still keep your personnal allowances even when non resident.

However if you do have no "ties " to uk ie no house it would be easier ofcourse to claim your non resident,you then have to meet the 90/180 rules when visiting home.

[briley]

To add to HighChol - anyone who earns money in the UK pays tax on the money they earn in the UK.

If you are non-resident than that is the end of the matter. If you are resident you also get taxed on your world wide income (allowing for double taxation agreements)

If you work one month on one month off you are in the UK for over 92 days so are resident and pay tax on your world wide income.

The interesting bit is that you can go to the UK, earn £6,000 or so and pay almost no tax (about £80). Come back to Thailand and £500 a month (average) is 35,000 Baht a month - enough to live on quite comfortably (ignoring airfares)!

[hgvneil]

Thanks, as i understand from goverment website,even if you are classed as non-resident,if you work in the UK you are taxed on this money.Only after the first £5225,so yes if you earn £6000 you will pay next to no tax,and this money can go a long way in Thailand.

But what is the benefit of being non-resident apart from not paying tax on bank interest.How can they prove you are working outside UK if no money is going into UK bank ? We dont have financial ties (morgage/debts) and it would be easy to show am settled in Thailand as i have wife and children but would it benefit me to do this ?

[briley]

hqvneil - if non-resident you still pay tax on your bank interest if it is in an account in the UK.

The only benefit is that income earned outside the UK is not taxed.

You don't have to work outside the UK or prove no financial ties to be non resident. Non-residence is based solely on how many days a year you spend outside the UK.

[TBWG]

I will be moving to Thailand in January,but due to limited job oppertunities in Thailand for myself,i expect to return to UK a few months per year to work.As i understand the income tax allowance is about £5200 per year so if i earn up to that i can claim tax back right ?

Im sure there must be loads of people who live Thai/UK who do this.Anyone can explain what they do ? Experiences etc ?

Hi hgvneil

To get back to your original question, you can earn upto £5225 without being liable for tax however you will probaly have tax deducted anyway under PAYE.

It is then up to you to write to your local tax office at the end of the tax year and recover any overpayment. it might be worth earning another £2230 as this is only taxed at 10%.

Seems to work well as the Boss Lady has been doing this the last few years on our 6 month stint in UK

However this only works for her because she has no other income in the UK i.e. building Society interest, dividends etc. Which would need to be taken into account when calculating your total income.

TBWG

[sukanyacondo]

10% rate has just gone out of the window in the last budget I think, general income tax reduced to 20% down from 22%

[Khun Bob]

How about if you earn more than £5225 (or whatever the tax free alloawance is) in the time you are in the UK every year, but as you are resident overseas, you can move your pension there. You make AVC's with the excess of tax free allowance to your overseas pension. Overseas pension are not as well policed as UK pensions, where you can simply take out the money deposited when you like. And as you know money into pensions goes in gross ! Not sure if this would work, but nice if it does....

[briley]

AFAIK - I've never paid into a UK pension - you can't transfer a pension out of the UK. I know certain 'advisors' claim to be able to do so but it appears to cost more than the savings.

10% rate disappear in April 2008 onwards, except for savings income.

[Khun Bob]

I thought the lower band on income of 10% had already gone and that by default you pay 20% on income from savings, which can be reclaimed if you earn under the persons tax free allowance...

KB

PS not really looked into offshoring a pension, but I do beleive it is possible - how much it costs to do I've no idea - but i guess if you engage other parties its not cheap...

If you have property/land and earn an income from them then they can be transefrred to an offshore company, in a suitable location (British Virgin Isles etc) , that you control and can benefit from - in that way you are no longer the owner and any income gained from them can be excluded from your tax allowance. Persoanlly not an accountant/advisor, but makes sense. In fact if you work as a contractor in the UK it may be possible to get your offshore company to invoice for services rendered and avoid tax this way - I think this one is very hard as the Gov are really comng down hard on tax avoidance for contractors now.

AFAIK - I've never paid into a UK pension - you can't transfer a pension out of the UK. I know certain 'advisors' claim to be able to do so but it appears to cost more than the savings.

10% rate disappear in April 2008 onwards, except for savings income.

Edited May 19, 2007 by Khun Bob

[naka]

hqvneil - if non-resident you still pay tax on your bank interest if it is in an account in the UK.

The only benefit is that income earned outside the UK is not taxed.

You don't have to work outside the UK or prove no financial ties to be non resident. Non-residence is based solely on how many days a year you spend outside the UK.

Not so ! see link below.

R105 Form

I used this for many years.

Naka.

Edited May 20, 2007 by naka

[briley]

Naka - I'm going to stick my neck out,

Although the form you quote does not say so if your UK taxable income is over the personal allowance (£5,200 or so) then you do pay tax on the saving (above the allowance).

I'd love to be proved wrong?

(grammatical error corrected)

Edited May 20, 2007 by briley

[sungod]

Naka - I'm going to stick my neck out,

Although the form you quote does not say so if your UK taxable income is over the personal allowance (£5,200 or so) then you do pay tax on the saving (above the allowance).

I'd love to be proved wrong?

(grammatical error corrected)

Briley, I like you for many years assumed interest on UK savings was taxable. Not the case! 18 months ago I visted a reputable expat financial advisor here in Thailand to basicly iron out my savings and pension plans. This subject arose and he said this was not the case. I then contacted the tax office in the UK enquiring about this and they said it was right. The reason I had payed tax on my savings is that I had neglected to tick a box (9.7 on your UK tax return) to claim back personal allowances. Ticking this box in conjunction with claiming you are non-resident allows you to claim back interest on my UK savings. I realised this had been happening for around 5 years and wrote them a letter stating such. A month later I recieved a hefty payment into my bank account. Cause for celebration.

In addition last year I also recieved a letter that because I had been a non-resident for some years and had no taxable income in the UK then they would no longer send me a return each year to complete! Officially off their radar, happy days!

[naka]

Briley.

Nothing to do with the 5k+ threshold.

But the surest way is to open an account(s) in the Channel Islands using your Thai address

and transfer all your investments there.

As long as you have a permanent fixed address in a non EU country then interest

is paid free of tax. This is the best bet, long term.

Naka.

Edited May 20, 2007 by naka

[pattayadave]

There IS a thread on here about the very same thing, but i cant find it right now.

From memory, you have to bank offshore, declare yourself as "non domiciled" to the UK authorities, and not stay IN the UK above a certain ammount of days per year to avoid paying tax.

AFAIK any tax allowance figures dont come into it unless you do the above

A Trip to an acountant versed in theses matters would be my advice

HTH

Penkoprod

Even if he is still a UK resident if he earns less than his tax allowance he does not pay tax on that.

If he was earning big overseas he declares himself non-resident and spends less than 90 days a year in country - got a pal visiting me in singapore tomorrow to start to sort this out - 6 months offshore - just over three months in Asia - less than 3 months in the UK

Be aware that if you own a house in UK then the IR will probably not grant you

non residence status for tax purposes, regardless of your time in/out of the country.

Basically you have to convince the tax man that you have severed ALL (financial) ties with

the country, and it can take a few years to convince them.

The UK gov has a very good plain English website detailing all this.

Basically if you own a house then you need to sell it, you need to move any UK accounts offshore

and you need to stay out of the country for a minimum duration over a three year period.

After that they 'May' agree to inform you in writing that you no longer need to fill in

an annual tax return.

Been there.

Naka.

not totaly true

you can still be classed as non resident but you have to claim any rental income on your property.

you can claim up to the minimum 4,200 GBP before they will tax you.general repairs are included in this amount so in short you can always keep below the tax figure.

90 day rule applies less days in transit 180 days if you have a seamans ticket.

but then again think its up to the individual authority.i have never been asked to prove my lenght of stays in the uk

got my non residence status in 18 months but that was 14 years ago , not aware that the goal posts have been moved

as for bank account why do you have to shift to an offshore account i still do all my banking in the uk why shift to offshore remember 7/11 lot of offshore banks (customers ) took the hit for that one /myself included

[briley]

Thanks - so all income from interest is tax free if you are Non-resident in the UK.

I have always said that the UK is an excellent 'offshore' tax haven for non-residents - better than most places as it has high interest rates and low tax and bank charges. With no tax it is even better.

For other investments, shares etc, there is no tax to pay as a non-resident (it is all in the notional tax paid bit that is not reclaimable - thanks Mr Brown).

Once you have been non-resident for over 5 years no capital gains to be paid either.

Why put money elsewhere?

[naka]

Briley.

In answer to your question ... Why put your money elsewhere ?

The Channel Islands and I.O.M. are genuine tax free havens for genuine non E.U. residents.

You know exactly where you stand with their legislation, whereas with the U.K.

there are many (probably deliberate) grey areas.

If I were not planning to return to U.K. anytime soon then I would divorce myself

as much as possible from their tax regime.

Also I have never, ever heard or ever read of anyone banking in these areas "taking a hit"

after (7/11).

Many of the worlds largest banks operate branches in these places and they have word class ratings.

Check Moody's etc.

Naka.

[briley]

Naka,

I just find the interest rates are 2-3% lower and charges for everything deposits, ATM, withdrawals etc. I was not impressed. Swiss banks were less gready!

But horses for course.

[naka]

Just trying to be helpful Briley. It's always a trade between a good nights sleep

and maxing out returns.

Oh! ... and if you find a better rate for a one year Sterling bond/fixed deposit in UK than at Irish Nationwide I.O.M.

then let us know, will ya.

Horses for courses ... Can't say fairer cobber

Naka.

Edited May 22, 2007 by naka

[briley]

IOM Irish Nationwide, 6% fixed rate 1 year bond, minimum investment £50,000

Birmingham Midshire 1 yr fixed rate 6.23% minimum investment £1

http://www.askbm.co.uk/savings/t/fixed/intro.asp

I know which one I prefer.

(Actually I prefer the variable instant access with ICICI or A&L with between 5.8% and 6.05% rate, instant access and will - hopefully - go up with the next rate rise)

Swapping ideas is always good, that is how I get most of my knowledge

I have used Abbey and Fsharp in the IOM, Abbey never got over about 50% of the UK rate and Fsharp shut up shop and never bothered to tell me. Does leave a sour taste in one's mouth.

Incidentally the Irish Nationwide IOM page has a very good summary of the European directive on taxation - well worth a read for those affected.

[Khun Bob]

A&L have yet to increase their rate on the directsaver following the last rate rise decision by the MPC. And even if they did increase their rates the same as the MPC it would only match what icici have to offer currently. Plus A&L's T&C's are more restrictive (any withdrawl in a month loses interest on the whole amount invested for that month - so best to move all your money out at the beginning of the month - which is what i'll be doing ) than icici's. Still time will tell the best and i dont know if icesave will stand by and watch, hopefully not. And who knows if there will be another outsider...

IOM Irish Nationwide, 6% fixed rate 1 year bond, minimum investment £50,000

Birmingham Midshire 1 yr fixed rate 6.23% minimum investment £1

http://www.askbm.co.uk/savings/t/fixed/intro.asp

I know which one I prefer.

(Actually I prefer the variable instant access with ICICI or A&L with between 5.8% and 6.05% rate, instant access and will - hopefully - go up with the next rate rise)

Swapping ideas is always good, that is how I get most of my knowledge

I have used Abbey and Fsharp in the IOM, Abbey never got over about 50% of the UK rate and Fsharp shut up shop and never bothered to tell me. Does leave a sour taste in one's mouth.

Incidentally the Irish Nationwide IOM page has a very good summary of the European directive on taxation - well worth a read for those affected.

[BalthazarBeefheart]

hqvneil - if non-resident you still pay tax on your bank interest if it is in an account in the UK.

The only benefit is that income earned outside the UK is not taxed.

You don't have to work outside the UK or prove no financial ties to be non resident. Non-residence is based solely on how many days a year you spend outside the UK.

Not so ! see link below.

R105 Form

I used this for many years.

Naka.

They are re-organising website new link for R105form is http://www.hmrc.gov.uk/forms/r105.pdf

[phibunmike]

I got out of the UK tax system many years ago, so things may have changed. But I do remember that it was important, not only how long you are out of the UK, but also to make sure there are two April 5ths within the time spent overseas. For example, April 6th 2006 to April 3rd 2008 is not even one year (although in reality it is nearly 2 years), but April 4th 2006 to April 6th 2007 is one year.

It might be worth checking this.

Cheers,

Mike

[JAS21]

IOM Irish Nationwide, 6% fixed rate 1 year bond, minimum investment £50,000

Birmingham Midshire 1 yr fixed rate 6.23% minimum investment £1

http://www.askbm.co.uk/savings/t/fixed/intro.asp

I know which one I prefer.

(Actually I prefer the variable instant access with ICICI or A&L with between 5.8% and 6.05% rate, instant access and will - hopefully - go up with the next rate rise)

Swapping ideas is always good, that is how I get most of my knowledge

I have used Abbey and Fsharp in the IOM, Abbey never got over about 50% of the UK rate and Fsharp shut up shop and never bothered to tell me. Does leave a sour taste in one's mouth.

Incidentally the Irish Nationwide IOM page has a very good summary of the European directive on taxation - well worth a read for those affected.

A&L International (IOM) are offering 6.15% instant access on their internet account..looks good

www.alil.co.im