£ Sterling Up Sh*t Creek?

[fletchsmile]

I always thought that if the money was paid into the UK you were taxed on it - thats why people keep it outside for at least a year after declaring domicile outside the UK?

I've worked overseas for 17 out of the last 19 years, my salary has always been paid into the UK. Apart from when I have worked in the UK I have never had my salary taxed in the UK.

I have of course paid tax where my assignment location dictates that I should (Italy being a case in hand) but I have a 'capping' agreement that limits my tax to no more than if I were in the UK.

This is all pretty standard for multinationals companies. As I have said before I think there is a lot of misguided information going around on Offshore Accounts.

Be careful when you finally relocate back to the UK and become resident/ retire. At that point in time having assets offshore can be very favourable in some circumstances - eg certain people taxed only on remittance bases have an ideal source of funding for those holidays outside the UK.

Secondly as mentioned before, even non-residents need to watch UK Capital Gains Tax on any investments held there. 9k per person per annum is not a big tax free allowance. If you use your wife and kid's allowances remember kids grow up, and have their own tax issues, plus unfortunately people sometimes die. They're not really big amounts for people in later stages of life with a high value investment portfolio.

Particularly if you want to take early retirement before your (taxable) pension kicks in. Also the way the UK government keeps putting back the pension ages, could also be an unpleasant surprise for some. Quite annoying they changed the age from 50 to 55 before I can take personal pension funds. Personally I wanted to take at 50 and invest tax free elsewhere to get it all out as quickly as possible. Annoying also for someone who develops a critical illness at 50, and is given 4 years to live!. Similarly a sad shame/poor return for those who buy an annuity and die early, unable to pass on the money to their kids. Income drawdown isn't always an answer either.

There are a lot of good things about UK investments, but there are quite a few pitfalls as well, where flexibility of offshore products can reduce risks, and be favourable. I'd keep an open mind

Edited January 11, 2008 by fletchsmile

[churchill]

I always thought that if the money was paid into the UK you were taxed on it - thats why people keep it outside for at least a year after declaring domicile outside the UK?

I've worked overseas for 17 out of the last 19 years, my salary has always been paid into the UK. Apart from when I have worked in the UK I have never had my salary taxed in the UK.

I have of course paid tax where my assignment location dictates that I should (Italy being a case in hand) but I have a 'capping' agreement that limits my tax to no more than if I were in the UK.

This is all pretty standard for multinationals companies. As I have said before I think there is a lot of misguided information going around on Offshore Accounts.

Be careful when you finally relocate back to the UK and become resident/ retire. At that point in time having assets offshore can be very favourable in some circumstances - eg certain people taxed only on remittance bases have an ideal source of funding for those holidays outside the UK.

Secondly as mentioned before, even non-residents need to watch UK Capital Gains Tax on any investments held there. 9k per person per annum is not a big tax free allowance. If you use your wife and kid's allowances remember kids grow up, and have their own tax issues, plus unfortunately people sometimes die. They're not really big amounts for people in later stages of life with a high value investment portfolio.

Particularly if you want to take early retirement before your (taxable) pension kicks in. Also the way the UK government keeps putting back the pension ages, could also be an unpleasant surprise for some. Quite annoying they changed the age from 50 to 55 before I can take personal pension funds. Personally I wanted to take at 50 and invest tax free elsewhere to get it all out as quickly as possible. Annoying also for someone who develops a critical illness at 50, and is given 4 years to live!. Similarly a sad shame/poor return for those who buy an annuity and die early, unable to pass on the money to their kids. Income drawdown isn't always an answer either.

There are a lot of good things about UK investments, but there are quite a few pitfalls as well, where flexibility of offshore products can reduce risks, and be favourable. I'd keep an open mind

I am 50 this year and was under the impression that I could start to draw my personal pension if I wished . Has this now changed ?

[fletchsmile]

I am 50 this year and was under the impression that I could start to draw my personal pension if I wished . Has this now changed ?

You're OK, you can still do at 50. It rises to 55 from 2010.

Edited January 11, 2008 by fletchsmile

[Ricardo]

I always thought that if the money was paid into the UK you were taxed on it - thats why people keep it outside for at least a year after declaring domicile outside the UK?

I suspect you meant non-residence, rather than domicile, here ?

It's fairly straight-forward to become non-resident for a year or two, much much less easy to lose your domicile, and those helpful chaps at HMRC refuse point-blank to give you any assistance or guidance, in achieving the latter.

[ray23]

http://www.bangkokpost.com/breaking_news/b...s.php?id=125055

Interesting read:

Anyone know what currency's the NEER formula is based on?

One thing I found confusing the information put out last year indicated the baht rate was harming exports. This reports say it has increased 1% already this year, with no harm to exports.

Sorry guys some where there is reality hard to find it here sometimes

[lannarebirth]

http://www.bangkokpost.com/breaking_news/b...s.php?id=125055

Interesting read:

Anyone know what currency's the NEER formula is based on?

One thing I found confusing the information put out last year indicated the baht rate was harming exports. This reports say it has increased 1% already this year, with no harm to exports.

Sorry guys some where there is reality hard to find it here sometimes

I think it is a nationalistic conceit when posters say the BOT is manipulating baht valuations against whatever the currency of their western country is. asian central banks try to manipulate their currenct to make ity weaker than other asian currencies, which are their competitir nations. Thailand has done a good job of that. So, while the baht may have strengthened agains some of our "home" currencies, it has stayed competitive against the Yuan, which is a good position for an asian exporter to be in. Additionally Thailand is blessed with producing agricultural crops that are increasingly in demand and in rising markets.

Edited January 11, 2008 by lannarebirth

[sonicdragon]

http://www.bangkokpost.com/breaking_news/b...s.php?id=125055

Interesting read:

Anyone know what currency's the NEER formula is based on?

One thing I found confusing the information put out last year indicated the baht rate was harming exports. This reports say it has increased 1% already this year, with no harm to exports.

Sorry guys some where there is reality hard to find it here sometimes

NEER is a trade-weighted exchange rate; I don't know the details of the calculations the BOT uses, but the normal calculation is a geometric weighted average of the individual exchange rates of the currency in question with each of it's trading partners, where the respective weights are based on the amount of trade with each country. Often exports are given extra weight to account for the effects of trade between trading partners (3rd market effects). A lot of the underlying methodology, although quite appealing in the abstract gets very bogged down, particularly when dealing with the 3rd market effects (for example, to handle this effect properly price elasticity of demand in foreign markets and price elasticity of supply from competitor nations, for each type of good or service, is needed, which is impractical in most cases). Thus, in practice, all exports are often just given a single multiplying factor.

As for the impact of the strengthening baht on exports, I think lannarebirth is spot on - exporters will always make a lot of noise about the effects of the strengthening currency on them for obvious reasons, but the effects are often less than expected - the baht has remained broadly in step with many of Thailand's competitor currencies, and demand is quite inelastic in many markets with respect to price.

[BalthazarBeefheart]

I'd be interested to hear where people think the alternative currencies they are investing in will be next year - just for the record like.

Funny thing is after careful thought and consideration of the facts including your own rants I decided the best solution was to do absolutely nothing and leave my savings in sterling and thb.

Ironically, I now gather the real demise of Sterling has been due to a massive outflow of Middle Eastern funds. It is going to be very weak for most of this year but the way I look at it is they will only drop interest rates around 50bp so I will still get a good return on my savings.

With a foreign currency deposit in the UK I would need to see currency appreciation of around 9% less charges and spreads to match my savings return. These are very uncertain times, now there is talk that the US and Japan are already in recession - Thailand is a managed float so I can hardly see the central bank allowing the BHT to appreciate against the currencies of their two biggest trading partners as demand for goods slows.

I think US interest rates are going to fall more considerably than the UK so the pound should not fall too much - a rate of 1.80 should still give around 60bht to sterling.

I think the days of 70 bht to the pound may well be never seen again but who know cos basically I don't give a hoot.

Cheers BB

[sonicdragon]

I'd be interested to hear where people think the alternative currencies they are investing in will be next year - just for the record like.

I don't like to make predictions, but at this point I hope to see CNY below 6.75, CHF below parity and SGD below 1.30

[mikethevigoman]

According to the doom mongers the £ is (apparently) going to tank big time.

An article in the Phuket Gazette has allegedly stated the £ is accurately forcast to dive down to the depths of the £1 = 50 baht.

If that happens I know the PI, S. America etc will certainly see a wee flood of expats from LOS!

I know I'm not the only one reliant on the strength of the £ so wonder what some of the other expats have heard or feel about this.

Incidentally I reckon if it does tank then the $ will almost certainly be on it's tail as well so the ramafications are deep indeed....

Knowing how shy some of the posters are I've pasted a poll for easy responses.

Mods, I've started this in the general forum as a similar subject on this matter was getting minimal viewing in the business and economy section. This concerns more the everyday forum user, as opposed to just the masters of the universe in there

might be something in it after all, i just got 63.5 ,in a bank

[chiang mai]

The decision by the BOE MPC on Thursday not to cut interest rates has done absolutely nothing to stop the slide of Sterling - the rot has set in and who knows where it will plateau. My best guess is that a majority of pollsters in this threads poll are in for a disappointment.

[BalthazarBeefheart]

The decision by the BOE MPC on Thursday not to cut interest rates has done absolutely nothing to stop the slide of Sterling - the rot has set in and who knows where it will plateau. My best guess is that a majority of pollsters in this threads poll are in for a disappointment.

The market has already priced in the cut which will occur next month. What matters to us in Thailand is the GBP/USD rate - the Fed is predicted to be more aggressive in cutting rates so hopefully the pound will not fall too much further.

I recall you mentioning diversifying into Chinese Yuan - which may disappoint as these are very uncertain times.

Cheers BB - Selling England by the Pound

[the gent]

My earlier fear that parity with the Euro was on the cards may well be realised sooner than I thought. Oh bugger!

[Prakanong]

I always thought that if the money was paid into the UK you were taxed on it - thats why people keep it outside for at least a year after declaring domicile outside the UK?

I suspect you meant non-residence, rather than domicile, here ?

It's fairly straight-forward to become non-resident for a year or two, much much less easy to lose your domicile, and those helpful chaps at HMRC refuse point-blank to give you any assistance or guidance, in achieving the latter.

Yes - you are correct.

I left Planet Thanet ;-) in 2002 for Belgium and on to Singapore in 2006

[Prakanong]

From Martin Woolf in Yesterdays FT - the full article is here or will be available for podcast soon

http://www.ft.com/cms/s/0/996a30e8-bfb3-11...?nclick_check=1

"

Should anybody worry about a continued slide in sterling? Definitely no, is my answer. Those used to cheap holidays abroad will be unhappy. But these were in effect financed on credit. That could not last. It is probable that the credit squeeze and associated correction in the housing market will weaken consumption sharply this year. But since the UK’s private sector is running a financial deficit of 3 per cent of GDP and household savings in the third quarter of 2007 were a mere 3.4 per cent of disposable incomes, this is also highly desirable.

In the short to medium run, such a correction is also likely to mean a significant slowdown in the economy, possibly even negative growth in one or more quarters. Offsetting fiscal action is virtually impossible, without scrapping the fiscal rules, though the automatic stabilisers might still work. Indeed, even if the rules were put to one side, fiscal action would be dangerous, since it could endanger the credibility of low inflation. But comments by Gordon Brown, prime minister, and Alistair Darling, chancellor of the exchequer, on prospects for inflation and monetary policy, of the kind heard this week, are at least as big a danger, particularly since reappointment of the governor of the Bank of England is still up in the air.

Yet I do not want to be too critical of Mr Brown, since he saved the UK from the euro. The difficulties of the next year or two will, no doubt, reawaken the pro-euro lobby. But if the UK had been in the eurozone and so experienced even lower interest rates, the credit boom would have been even bigger and the adjustment ahead even more painful.

The UK must now shift to an economy with lower real house prices, higher savings, a smaller current account deficit and a weaker real exchange rate. This adjustment is far better achieved through a decline in the nominal exchange rate than through the years of “competitive disinflation” that Spain, to take one example, is likely to suffer.

[chiang mai]

I think the Sterling correction is part of something that will be good for the UK in the medium to longer term although many will feel pain before things settle down again. But I think the impact on expats is likely to be severe, particularly those that rely on UK funds in offshore deposits and are not hedged against currency fluctuations such as the one at present. To be honest, as the poll shows, many, a vast majority in fact, believe that what's happening currently is just a blip and normal service will be resumed shortly. My crystal ball is kinda murky at present so I can't say that things won't return to "normal" but that's really not the point. The point is that there's a large number of expats in Thailand who are unaware of what is happening at present and what could easily happen to their income stream in the future. If nothing else this current exercise will be a wake up call for those who ignore such things and continue to dream blissfully on.

[BalthazarBeefheart]

I think the Sterling correction is part of something that will be good for the UK in the medium to longer term although many will feel pain before things settle down again. But I think the impact on expats is likely to be severe, particularly those that rely on UK funds in offshore deposits and are not hedged against currency fluctuations such as the one at present. To be honest, as the poll shows, many, a vast majority in fact, believe that what's happening currently is just a blip and normal service will be resumed shortly. My crystal ball is kinda murky at present so I can't say that things won't return to "normal" but that's really not the point. The point is that there's a large number of expats in Thailand who are unaware of what is happening at present and what could easily happen to their income stream in the future. If nothing else this current exercise will be a wake up call for those who ignore such things and continue to dream blissfully on.

All I can say is can we Brits show a little stoicism and refrain from bleeding heart posts similar to that should I stay or go now from an attention seeking American cousin.

I find far more offensive though the smug posts stating how people should manage their affairs better and gloating about how wonderful their own situation is - not everyone has had the benefit of advanced education or free acess to financial advice.

As everyone knows exchange rates are wildly unpredictable so what may seem lack of concern may just be acceptance of that fact.

Personally, I will decide how to hold my millions on a monthly basis - with the knowledge that I may be better off to do sweet f a or maybe invest in Phuket pies.

Cheers BB

[chiang mai]

I think the Sterling correction is part of something that will be good for the UK in the medium to longer term although many will feel pain before things settle down again. But I think the impact on expats is likely to be severe, particularly those that rely on UK funds in offshore deposits and are not hedged against currency fluctuations such as the one at present. To be honest, as the poll shows, many, a vast majority in fact, believe that what's happening currently is just a blip and normal service will be resumed shortly. My crystal ball is kinda murky at present so I can't say that things won't return to "normal" but that's really not the point. The point is that there's a large number of expats in Thailand who are unaware of what is happening at present and what could easily happen to their income stream in the future. If nothing else this current exercise will be a wake up call for those who ignore such things and continue to dream blissfully on.

All I can say is can we Brits show a little stoicism and refrain from bleeding heart posts similar to that should I stay or go now from an attention seeking American cousin.

I find far more offensive though the smug posts stating how people should manage their affairs better and gloating about how wonderful their own situation is - not everyone has had the benefit of advanced education or free acess to financial advice.

As everyone knows exchange rates are wildly unpredictable so what may seem lack of concern may just be acceptance of that fact.

Personally, I will decide how to hold my millions on a monthly basis - with the knowledge that I may be better off to do sweet f a or maybe invest in Phuket pies.

Cheers BB

Pies are going to get expensive, if paying in GBP I'm afraid.

[cmsally]

With the increase of the price of many food products they could be doubly expensive.

The pie index is in for a volatile year.

[GuestHouse]

I find far more offensive though the smug posts stating how people should manage their affairs better and gloating about how wonderful their own situation is - not everyone has had the benefit of advanced education or free access to financial advice.

It only seems that way with your own predilection for spite and envy.

If you actually took to time to listen to the ALTERNATIVE arguments being made you might get the idea that when people are being advised to move their wealth around it is a good idea for them to hear those ALTERNATIVE arguments.

There is a lot of very bad advice being given out on this and other threads - We are talking about people's life savings and life choices (not just choices today, but choices for the future).

And yes people should manage their affairs better - Smug?! Right! So a year or so ago a guy was telling us he was going to sell up and move to Thailand where he could live on a small amount of capital - Were warnings of the risks, the long term impact of inflation, the lack of work opportunities and the shakiness of his plan 'Smug' or a ''Caution to which he out to have paid attention'.

I too often get the idea that there are many expats in Thailand who are only too willing to encourage others to make the same mistake they themselves have - Perhaps they believe there's safety in numbers.

Life's not fair, so don't go rushing to make it harder on yourself.

(Feel free to attack my English in what is presumably your own acceptable form of smugness).

Edited January 12, 2008 by GuestHouse

[chiang mai]

Jeez guys, let's not go down that road - there's some helpful ideas and information coming out here.

[BalthazarBeefheart]

I find far more offensive though the smug posts stating how people should manage their affairs better and gloating about how wonderful their own situation is - not everyone has had the benefit of advanced education or free access to financial advice.

It only seems that way with your own predilection for spite and envy.

If you actually took to time to listen to the ALTERNATIVE arguments being made you might get the idea that when people are being advised to move their wealth around it is a good idea for them to hear those ALTERNATIVE arguments.

There is a lot of very bad advice being given out on this and other threads - We are talking about people's life savings and life choices (not just choices today, but choices for the future).

And yes people should manage their affairs better - Smug?! Right! So a year or so ago a guy was telling us he was going to sell up and move to Thailand where he could live on a small amount of capital - Were warnings of the risks, the long term impact of inflation, the lack of work opportunities and the shakiness of his plan 'Smug' or a ''Caution to which he out to have paid attention'.

I too often get the idea that there are many expats in Thailand who are only too willing to encourage others to make the same mistake they themselves have - Perhaps they believe there's safety in numbers.

Life's not fair, so don't go rushing to make it harder on yourself.

(Feel free to attack my English in what is presumably your own acceptable form of smugness).

Sorry I have no reason to feel any envy for the likes of you. I choose not to publish my own financial circumstances to strangers on open forums - but welcome discussion by others as a way to maintain my standard of living.

I am indebted to the likes of Chiang Mai for their input - foreign exchanges is incredibly unpredictable - alas you are not - continuously banging your drum about inflation being a problem for expats as if you have made some great discovery.

Anyway, I don't want to get drawn into silly arguments - I will only relay useful information in future.

Cheers BB

[JimsKnight]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

Edited January 12, 2008 by JimsKnight

[Naam]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

nobody knows nothing. those who claim they know, know even less than nothing (although that is mathematically impossible)

[chiang mai]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

The sound bites from various quarters suggest the hole may be quite deep. The US Fed is talking of cutting rates sooner than expected and by a larger amount than just a quarter per cent and the general consensus is that the BOE will almost certainly cut rates in February. The only positive news that I can see is that some Thai exporters are starting to feel the pinch as a result of the stronger Baht.

[lannarebirth]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

nobody knows nothing. those who claim they know, know even less than nothing (although that is mathematically impossible)

I knew it was going to fall. Against the $USD anyway. You're right that knowbody knows why, including me; but unfortunately everyone gets stuck trying to figure out why, which of course, it's totally unimportant.

[BalthazarBeefheart]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

nobody knows nothing. those who claim they know, know even less than nothing (although that is mathematically impossible)

I knew it was going to fall. Against the $USD anyway. You're right that knowbody knows why, including me; but unfortunately everyone gets stuck trying to figure out why, which of course, it's totally unimportant.

According to the FX technicals "GBP possibly forming a Significant Bottom" that is at Fridays close so maybe with the Fed looking to cut at the end of the month we will see some improvement.

I have looked into Foreign Exchange deposits with First Direct and wondered if others here had better alternatives please advise.

Anyway, I am off to the gyms in search of more significant bottoms.

Cheers BB

[JimsKnight]

BUMP!

[yabaaaa]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

nobody knows nothing. those who claim they know, know even less than nothing (although that is mathematically impossible)

So true Doc

[VegasVic]

Well I've actually listened to some of the so-called smug dudes / masters-of-money in here.

I've saved money because I listened to them.

At first I was in near-denial that the sterling would fall when the talk first started about two months ago, but fall the £ has.

How far down does the rabbit hole go?

nobody knows nothing. those who claim they know, know even less than nothing (although that is mathematically impossible)

I knew it was going to fall. Against the $USD anyway. You're right that knowbody knows why, including me; but unfortunately everyone gets stuck trying to figure out why, which of course, it's totally unimportant.

According to the FX technicals "GBP possibly forming a Significant Bottom" that is at Fridays close so maybe with the Fed looking to cut at the end of the month we will see some improvement.

I have looked into Foreign Exchange deposits with First Direct and wondered if others here had better alternatives please advise.

Anyway, I am off to the gyms in search of more significant bottoms.

Cheers BB

BB, While I can understand your effort to rationalize that a bottom has been put in for the pound, I really think that you are grasping at straws if you think that the FED will be lowereing rates at the next FOMC meeting! The FED will likely leave things put until January, but their next move will be up not down. I hope things went better at the gym!