Brits Tax Question

[ittybittybobcat]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

[terrier123]

I have tried not to pay UK tax for almost 8 years. Everytime the Inland Revenue (Cardiff) fall back on the old chestnut "UK sourced money" which is taxable. I have been through an appeal and only left with the independant arbitration office. I don't hold out much hope there either but would also welcome comments from others

[Ricardo]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?Yes, it did help, the IR sent me a letter acknowledging the date when I became non-resident, which is useful in replying to the annual-forms & automatic-fine letters which I continue to receive, some 4 years later !.

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? Yes, very important ! how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?The IR refuse to tell you, what you have to do to achieve non-domicile, I believe that one test is whether you have a UK-will, another is where do you want to be buried, and whether you have any UK-mainland (a.o.t offshore) bank-accounts still open ?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

The I.R. web-site has reams of obscure & unreadable bumf, to 'assist' you, it's at www.ir.gov.uk (apologies if posting this breaks forum-rules ... mods please remove it if it does !)

[joskydive]

I don't really know what those forms are for but when I sold up and left the UK several years ago, I just went to my bank who had set up a e-savers account for me and showed them my passport and told them not to charge me tax anymore because I don't live there.

I did have to sign some forms to that effect and supply a Solicitors letter to say my finances are legal from the sale of my assets not from the sale of drug or money laundering. They did that there and then and I can only presume that they informed the Tax department because I have never had a tax bill of any kind since.

[Penkoprod]

I am in the process of trying to sell up here, before moving to Thailand as soon (yeah, right) as i can sell my house here, so am VERY interested in this thread.

To the OP...what i HAVE learned from my research so far is it all depends on the TYPE of income you have, as to whether or not its taxable.

Income (above a certain ammount per year) from renting a house is taxable

Pension income is taxable (as it was deducted pre tax, and therefore no UK tax was ever paid on it)

Bank interest is taxable too (unless you deposit it in an offshre account)

If its just a big wedge of cash from a sale of something (like a house, for instance) i am advised to seek out a safe haven account in the likes of Ireland, where they guarantee the whole ammount deposited and not "only upto a certain ammount" like UK banks do.

What i think you (we) need to do is to pay a tax lawyer (prefeably on in the UK) a sum of money to give you the low-down on it.

Expensive, but could be worth it in the long run

Penkoprod

[Crossy]

You should talk to an accountant in the UK and explain what you want to achieve. He should be able to assist.

My chap (sadly now deceased) charged me a one off payment of 200 Squid (some years back). I've not received a tax form or nasty letter since nor have I paid any UK tax (I actually got a handsome and unexpected rebate of tax I'd paid whilst overseas). I'm registered for tax in Hong Kong and submit HK tax forms although I don't pay any there either as I'm non-resident.

Can't answer the domicile question though, never had an issue with inheritance as I have few UK based assets.

Edited December 18, 2008 by Crossy

[taxexile]

Bank interest is taxable too (unless you deposit it in an offshre account)

if your residential address ( proved by showing them certified translations of a thai driving licence or the immigration confirmation of address letter) as given to the bank is outside the uk or the eu , then tax is not payable on interest.

there is a simple form to fill out and give to the bank. its downloadable from the ir website.

there is a section of that site devoted to non resident affairs , and they are very helpful and efficient should you ever phone them for advice , as opposed to individual tax offices that are notoriously inefficient.

if you register as non resident with the non resident department ,( they used to be in liverpool , but may now be elsewhere ), and they accept it , they will send you a letter of confirmation and then they can notify your normal tax office of your status.

any accountant in the uk should be able to help you with this and deal with the ir on your behalf if you find it too frustrating to do yourself

tax is payable on pensions and rental income and any other uk sourced income.

keep old passports , airline tickets and boarding passes etc. to prove that you are not exceeding the 90 day rule , they can and do ask for proof .

[Hong Kong Phooey]

^ Listen to what other posters suggest: get professional advice if you decide to go the non-dom route !

The UK's HMRC can demand detailed evidence from you to prove that you do, indeed, qualify for non-dom status. Forms P85 and DOM1 (downloadable from their website) are starting points in their paperchase but get professional advice from a suitably qualified accountant on it. Bear in mind also that the UK Govt may be sneaky and introduce retrospective taxation laws.

[true blue]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

i filled in p85, last time i home and do get my interest paid gross on bank accounts.(i'm under the tax threshold.) tax guys informed me if want pensions paid gross, have to prove your paying tax in country of res. not sure about iht.

[PattayaParent]

To be a non resident for tax purposes you must have spent a full tax year out of UK except for 60 days, and the 1/6th rule may still be applicable.

To get non-domicile staus is difficult.

See

http://www.thaivisa.com/forum/Non-uk-Domiciled-t188938.html

and

http://www.thaivisa.com/forum/Tax-Financia...11#entry1717111

[Ricardo]

A further thought on the inheritance-tax issue, it is of course only charged on the excess above GBP300k, which may let many people out. And you can leave your money to your spouse, who may anyway be non-resident or non-domiciled or both, free of I.T.

[Maizefarmer]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

Its a complicated subject - with as many answers as their are ex-pats with differetn personal/business/employement circumstances - you really need to get professional advise.

But on a couple of poitns against the background of my own circumstances - so long as you follow the 90-day rule you are a non-resident/non-domicile - at least as far as personal income tax is concerned. On that point I am certain. Corporate taxes? - good question. I have never decleared much to the UK authorities.

As far as inheritance is concerned - the question really is: where are the assets that are been inherited located? If for e.g. its a house in the UK above the capital-gains exemption limit, then no - having non-res/non-domicile status does not exempt one from having to pay that nasty and rather high percentage. If the property is outside UK jurisdiction then the UK tax man has no claim, of that I am sure as its a point I have looked into very carefully for the benefit of my own 2 kids.

How to prove non-res status?

The UK has (or is just about) to start swiping everyone in/out of the UK, including UK citizens (using the magnetic stripe in their passports) - that will be sufficient proof. Over the years I have used my Thai entry/exit stamps and Thai PR status to demonstrate UK non-res status - and that has always been sufficient.

PS - I stand to be corrected but while one can claim domicle status in Thailand if you have a work permitt, I am not sure it exempts one entirely from income tax liability in the UK. It does not as far as Uncle Sam is concerned as all USA citizens working here will know!

The whole thing behind this non res rule, is that it is used primarily by high income earners to escape the the top of the range income tax bracket. If you don't fall into that bracket, then I am not sure just how much benefit one derives from exploiting the non res rule.

Holding PR status or holding a retiree visa - or living here on a marrige or similar visa, does - I think formally qualify one as a non-UK res. Staying here on a never-ending run of short term visas?? - mmmm .... not sure how that would go down on the UK side.

[Khonwan]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

Its a complicated subject - with as many answers as their are ex-pats with differetn personal/business/employement circumstances - you really need to get professional advise.

But on a couple of poitns against the background of my own circumstances - so long as you follow the 90-day rule you are a non-resident/non-domicile - at least as far as personal income tax is concerned. On that point I am certain. Corporate taxes? - good question. I have never decleared much to the UK authorities.

As far as inheritance is concerned - the question really is: where are the assets that are been inherited located? If for e.g. its a house in the UK above the capital-gains exemption limit, then no - having non-res/non-domicile status does not exempt one from having to pay that nasty and rather high percentage. If the property is outside UK jurisdiction then the UK tax man has no claim, of that I am sure as its a point I have looked into very carefully for the benefit of my own 2 kids.

How to prove non-res status?

The UK has (or is just about) to start swiping everyone in/out of the UK, including UK citizens (using the magnetic stripe in their passports) - that will be sufficient proof. Over the years I have used my Thai entry/exit stamps and Thai PR status to demonstrate UK non-res status - and that has always been sufficient.

PS - I stand to be corrected but while one can claim domicle status in Thailand if you have a work permitt, I am not sure it exempts one entirely from income tax liability in the UK. It does not as far as Uncle Sam is concerned as all USA citizens working here will know!

The whole thing behind this non res rule, is that it is used primarily by high income earners to escape the the top of the range income tax bracket. If you don't fall into that bracket, then I am not sure just how much benefit one derives from exploiting the non res rule.

Holding PR status or holding a retiree visa - or living here on a marrige or similar visa, does - I think formally qualify one as a non-UK res. Staying here on a never-ending run of short term visas?? - mmmm .... not sure how that would go down on the UK side.

Speaking as a Financial Planner and IFA for 20 years, previous to becoming a full-time farmer here, I can tell you this information is mostly incorrect. Particularly the assertion that inheritance tax depends upon the location of the assets and that the 90-day rule has any significance for domicility (100% wrong on both counts).

To the OP, proving non-residence (UK) is very easy but establishing non-domicility (UK) is very difficult. Once legally non-resident, a British citizen has no tax liability on income resulting from overseas earnings.

I came to Thailand in 1994, leaving my position as a senior manager with the then leading assurance company in UK to manage the Bangkok office of a large international IFA company. I immediately submitted my P85 and immediately obtained acknowledgement of my non-residency (plus tax refund) since I had enclosed a copy of my new contract evidencing my new status.

Seek professional advice from an accountant or lawyer on changing domicility.

[Ricardo]

As far as inheritance is concerned - the question really is: where are the assets that are been inherited located? If for e.g. its a house in the UK above the capital-gains exemption limit, then no - having non-res/non-domicile status does not exempt one from having to pay that nasty and rather high percentage. If the property is outside UK jurisdiction then the UK tax man has no claim, of that I am sure as its a point I have looked into very carefully for the benefit of my own 2 kids.

I suspect you meant Inheritance Tax, not Capital Gains Tax, here ?

Edited December 19, 2008 by Ricardo

[dominator]

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

My own circumstances, whilst still working in UK, but living in Thailand, 90 day rule applied, so I paid no tax. Now that I am retired, I have to pay tax on my pension...no getting away from that unfortunatly.

Still have bank accounts in UK, offshore and Thailand. Don't pay tax on UK interest.

Don't know about the other things.

[Tyke]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

I have done all this. The essence is that you need to be officially non-resident by sending off the P85 form to the inland revenue, otherwise you are liable for tax on ALL income, whether generated in the UK or not. When you have left the UK, you may not officially become non-resident immediately - I am not sure how long it takes but it depends on how many days you have been in the UK for the tax year you left the UK. I seem to remember that it took about 2 years or so after I left the Uk to become non-resident. The only way you will know is by completing a tax return form every year - they ask you each time how many days u spent in the Uk in the previous 2 years.

As a non-resident you will not have to pay any INCOME tax on income generated outside the UK, eg in offshore accounts like Isle of Man or Europe, but you will still be liable for income tax on any income generated in the Uk, like bank interest and rental income, and also any capital gains brought into the UK on investment accounts etc, but you are given the normal individual personal allowance on these and they will reimburse anything over this allowance. You must complete a UK tax return every year and there are tax agreements between thailand and the Uk.

I considered getting a tax adviser but eventually scrapped the idea - once you get used to the system it is easy. You also have to weigh up the possibility of losing the use of the NHS for years when you return to the UK as non-residents are not entitled to this except for emergency treatment and you don't become resident again for some time after returning, and certainly not when you return just for treatment (who wants to be put on the waiting list anyway!).

Hope this helps - the Inalnd revenue has downloadable info on the web site, are sometimes difficult to decipher. My investment management gave me free advice on my tax liabilities and that was my main difficulty.

[taxexile]

You also have to weigh up the possibility of losing the use of the NHS for years when you return to the UK as non-residents are not entitled to this except for

if you maintain registration with a uk gp , (and pay a yearly visit for a bp or cholesterol check) have a correspondence address in the uk , e.g. a relatives house , or you have a uk driving licence with a uk address on it then i doubt if the question of non residence would ever crop up if you needed health care in your home country.

i believe that from the day you return to the uk , and you say that you have returned to live there , then you are entitled to full access to the nhs system.

[PattayaParent]

As far as inheritance is concerned - the question really is: where are the assets that are been inherited located? If for e.g. its a house in the UK above the capital-gains exemption limit, then no - having non-res/non-domicile status does not exempt one from having to pay that nasty and rather high percentage. If the property is outside UK jurisdiction then the UK tax man has no claim, of that I am sure as its a point I have looked into very carefully for the benefit of my own 2 kids.

I suspect you meant Inheritance Tax, not Capital Gains Tax, here ?

It doesn't make any difference as he's totally incorrect as Khonwan has already pointed out.

[Maizefarmer]

As far as inheritance is concerned - the question really is: where are the assets that are been inherited located? If for e.g. its a house in the UK above the capital-gains exemption limit, then no - having non-res/non-domicile status does not exempt one from having to pay that nasty and rather high percentage. If the property is outside UK jurisdiction then the UK tax man has no claim, of that I am sure as its a point I have looked into very carefully for the benefit of my own 2 kids.

I suspect you meant Inheritance Tax, not Capital Gains Tax, here ?

It doesn't make any difference as he's totally incorrect as Khonwan has already pointed out.

So - a house inherited in the UK by a non-res person would be exempt from capital gains (if applicable), or inheritance tax? Have I understood that correctly?

And - if one is non-res, then property left to them overseas would be subject to inheritance or gains tax by the UK authorities?

Is that correct?

[Chaimai]

So - a house inherited in the UK by a non-res person would be exempt from capital gains (if applicable), or inheritance tax? Have I understood that correctly?

And - if one is non-res, then property left to them overseas would be subject to inheritance or gains tax by the UK authorities?

Is that correct?

Bar room lawyer stuff this (from me) but I was told that:-

(a) Exempt from CGT if you are non-res for tax purposes.

( Different - the IHT liability falls on the estate of the 'donor' and the beneficiary receives the asset AFTER IHT.

Edited December 19, 2008 by Chaimai

[Maizefarmer]

Chaimai, exact wording aside, and making a point of some or other fine print - that broadly speaking is also my take on it ( I dam_n hope so - I stand to inherite a house in RSA in some years time - I sure as hel_l don't want a bill from the Uk taxman for it).

[ittybittybobcat]

Thanks for the links PattayaParent.

There's some interesting stuff already discussed, and it seems that I must seek out professional advice on this issue.

Proving non-dom seems essential to avoiding inheritance tax, but a somewhat complicated process! I do not own property in the UK, but I still have bank accounts and a relative's postal address that I use - so I suppose that I must sever those ties completely.

Hmm... now can anyone recommend a good accountant?

[rgs2001uk]

not sure which forum to post this in, so am posting here.

have lived in Thailand for a few years now, and in order to exempt myself from UK tax, am curious how to go about it. Does just having lived away (ie, not spend 90 days in the tax year) automatically qualify you as non res? or must you fill out P85 form? has anyone living out here filled out the P85 form?

How does one establish a non-domicile status, which i believe is different to non res? and is it important to do so in terms of inheritance tax? how difficult it it to establish domicile status (here in thailand) to prove to the inland rev that you are no longer domiciled in the UK?

i'm confused about the issue, and should probably speak to someone who knows about these things, but i thought i'd try here first to see what other's experince is. any thoughts welcome. thanks.

I have done all this. The essence is that you need to be officially non-resident by sending off the P85 form to the inland revenue, otherwise you are liable for tax on ALL income, whether generated in the UK or not. When you have left the UK, you may not officially become non-resident immediately - I am not sure how long it takes but it depends on how many days you have been in the UK for the tax year you left the UK. I seem to remember that it took about 2 years or so after I left the Uk to become non-resident. The only way you will know is by completing a tax return form every year - they ask you each time how many days u spent in the Uk in the previous 2 years.

As a non-resident you will not have to pay any INCOME tax on income generated outside the UK, eg in offshore accounts like Isle of Man or Europe, but you will still be liable for income tax on any income generated in the Uk, like bank interest and rental income, and also any capital gains brought into the UK on investment accounts etc, but you are given the normal individual personal allowance on these and they will reimburse anything over this allowance. You must complete a UK tax return every year and there are tax agreements between thailand and the Uk.

I considered getting a tax adviser but eventually scrapped the idea - once you get used to the system it is easy. You also have to weigh up the possibility of losing the use of the NHS for years when you return to the UK as non-residents are not entitled to this except for emergency treatment and you don't become resident again for some time after returning, and certainly not when you return just for treatment (who wants to be put on the waiting list anyway!).

Hope this helps - the Inalnd revenue has downloadable info on the web site, are sometimes difficult to decipher. My investment management gave me free advice on my tax liabilities and that was my main difficulty.

has the law changed recently? the reason i ask is i filled out a P85 years ago and therefore have never paid tax on interest earned in a mainland bank.

i was in the uk recently and the various professional people i spoke to never mentioned any change to my tax status, or am i being wrongly advised?

[Chaimai]

Chaimai, exact wording aside, and making a point of some or other fine print - that broadly speaking is also my take on it ( I dam_n hope so - I stand to inherite a house in RSA in some years time - I sure as hel_l don't want a bill from the Uk taxman for it).

Not sure if you can pick up this link:-

http://www.hmrc.gov.uk/pdfs/ir20.pdf

It is a 55 page document (IR20) called Residents and Non-residents liability to rax in the UK. I shall try and wade through it later !

[Eff1n2ret]

If your only sources of income are from within the UK, (pensions, rental income), is it worth sending off P85?

Having paid the UK tax, does one then get a bill from the Thai Revenue authority? If there's an agreement, how do they know whether you've already paid or not?

Sorry if these are dumb questions