Double Taxation Agreements

[Popeye]

Hi

I am a bit confused about double taxation agreements.

I am living in Thailand but have an investment in a company in the UK which pays me about 1000 pounds per month. My question is where am I supposed to pay tax on this money and is there anyway of avoiding it. Can I re invest the money in the company for example ?

From my understanding of what I have read on the net I'm not liable in the UK but should declare it in Thailand but this seems a bit odd to me especially if I'm leaving it in my UK bank account

Any advice would be appreciated

[Rhys]

Hmmm... Well you have to jump the hoops if you want to dunk here.. But..... REALLY.. Do you want to keep your "pounds" in Thailand. They are not exactly, these regulations set in stone.. Since the Ministry of Interior.. seems to change the rules.. If you can.. Keep your money at home. Do what is required to stay..

Find your best tax break at home..

Party ON...

[paulfr]

Well if that investment was in the US, you would have to pay US taxes for sure. But I doubt in LOS. Don't know why UK would not tax you.

US has an $80,000 exemption such that earnings in LOS which qualify do not incur US taxes (US taxes you in general on your worldwide income)

I suspect UK is quite similar, but more replies will fill in the experiences of other Brits here.

[Popeye]

Looks like I've probably got it wrong , which is no suprise to me.

I now think the UK income should be taxed in the UK but I don't kow by how much or if I get any allowances. Would this regular income be considered as a dividend payment ?

[taxexile]

i think any money earned in the uk is liable for taxation in the uk ,

even if you are registered as a non resident for taxation purposes.

you should be able to claim the normal relief (about 4000) before the tax kicks in , so you wont be paying much tax on about 8000 p.a. after relief.

the inland revenue website will tell you all you need to know , and they will reply to any questions you e-mail to them. ( www.inlandrevenue.gov.uk )

if you are not paying tax and you should have been paying , then the penalties and fines are unfortunately draconian.

[sadman]

If it's a dividend (rather than consultancy fees, salary etc) then different taxation rules apply, as the company has already paid corporation tax on its profits. If you are a paid director of the company, it probably evens itself out, but if you are simply a shareholder, there may be some breaks. Personally, I'd speak to an accountant.

Also, there are massive tax breaks coming in next April in respect of personal pension schemes - you will no longer be limited to a proportion of income per annum going into your fund, which is affected by your age blah blah blah. You'll be able to put up to £217k per annum into your fund. A good way is for the company just to reward you by making deposits into your pension fund = no income tax. That's a bit simplistic, but its well worth following up with a proper pensions advisor.

Just another thought - you may wish to ensure that your National Insurance contributions are paid up, as it will impact on state pensions and the national health (if you have to go back).

[Khun Bob]

A related, but possibly interesting issue...

Its well worth while getting a statement of NI contributions as you can pay to make up any shortfalls in the last six years. But after that you need to have a good reasonn - like you can prove you received incone that NI was paid on that they dont have in there records. I missed 2 years along time ago and they didnt entertain the fact that they didnt inform me of the shortfall. It s a bummer as I can make it up now, but then I dont think I would have really card too much about a pension, even if I had known and understood what insufficient NI payment meant !

If you have access to the online gateway, you can request extra services through this - one useful service to try is the pension predictor. Thsi takes your paid NI years and any additional state pension (SERPS, Second State Pension) and tells you what you might get. May not be alot but, it is worthwhile to check the numbers to see if they make sense... You can get this without access to the online gateway but be prepared to do the telephone rounds in Sunderland and wait along time for something in the post...

[bkk_mike]

You need to say what the investments are:

But the general rule is, the double taxation agreement only comes into effect on income that would be taxable in both countries. If you're not a permanent resident or a Thai national, Thailand only taxes you on your Thai income, or worldwide income that you take into Thailand.

i.e. Assuming you're just here on a non-O, and you're leaving the money in the UK, it's not taxed in Thailand.

You need to give more details about what the income is to know if it's taxable in the UK or not.

i.e. Dividends are paid net of 20% tax, (and are treated as tax paid in the 23% band), so you would only have to pay tax if your UK income takes you into the 40% bracket. If it's income from property in the UK, then, after expenses such as mortgage interest, and any other costs associated with the property, you would be liable to UK tax.

The UK only taxes you on your worldwide income if you're resident in the UK, (unlike Americans who can't escape their IRS even if they don't live in the US), so if you can get the income offshore, you can avoid UK taxes too.