Pros And Cons Of Being Uk Non-resident?

[ChiangMaiFun]

I have been here two years - have my banks accounts here etc. but have not actually declared myself non-resident althought the tax office have my Thai address down as my official address - Im guessing I would have to apply - but what's the benefit?

[rixalex]

Never myself considered it a matter of weighing up the pros and cons, more a matter of complying with the laws. It's not like you get to choose whether to declare yourself as non-resident or not, assuming you are law-abiding - of course many here are not.

[wordchild]

Best to inform them, there is a form P85 for you to fill in.You can give them a call +44 1502102222 I have always found them to be v. helpfull. Unless you have come to work the revenue will not consider you fully non-res till you have been away 3 full tax years and have complied with the residency guidelines during that period eg number of days in the UK etc. If you inform them now it is possible that they will take into account the time you have already been away as long as they have no reason to disbelieve you, they tend to be quite reasonable about this sort of thing.

The main benefit is you can avoid UK taxation on certain kinds of income.

[ChiangMaiFun]

Best to inform them, there is a form P85 for you to fill in.You can give them a call +44 1502102222 I have always found them to be v. helpfull. Unless you have come to work the revenue will not consider you fully non-res till you have been away 3 full tax years and have complied with the residency guidelines during that period eg number of days in the UK etc. If you inform them now it is possible that they will take into account the time you have already been away as long as they have no reason to disbelieve you, they tend to be quite reasonable about this sort of thing.

The main benefit is you can avoid UK taxation on certain kinds of income.

well Ive been here just under 2 years - thanks for the replies - naturally I will comply - I assume (sort of) that they realise this as they have my address and send everyhting here etc.

[in2fridge]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

[BlueSmurf]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

Yes once you receive it and you live over here it will be frozen. Some peolple I hear try to make the tax man believe they are still in the Uk but if(when ) you get caught...... with our passports having the electronic chip in know its best to comply..if you back to live in the UK you can then get the yearly increases if there are any....

I pay tax in the uk but not NI payments as I have the 30 years in already to get my full state pension if they have any money to pay me in 13 years time!!! There was an advantage to declaring you were resident abroad in that you payed no tax on interest earned on your bank accounts but hey now with the rates <deleted>!!! lol

[chiang mai]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

Only if you are already receiving it.

[ChiangMaiFun]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

Yes once you receive it and you live over here it will be frozen. Some peolple I hear try to make the tax man believe they are still in the Uk but if(when ) you get caught...... with our passports having the electronic chip in know its best to comply..if you back to live in the UK you can then get the yearly increases if there are any....

I pay tax in the uk but not NI payments as I have the 30 years in already to get my full state pension if they have any money to pay me in 13 years time!!! There was an advantage to declaring you were resident abroad in that you payed no tax on interest earned on your bank accounts but hey now with the rates <deleted>!!! lol

I am the same - pay tax on rented property but no NI. If you go back to Uk you get the back-dated increases or just from thereon in?

[PattayaParent]

Pros are no tax on your income or on interest generated from your savings and also the possibility to become non-domiciled in the future.

[IsaanAndy]

Not sure some of the comments here are correct.

I have lived here for 2 years and the HMRC have alreday confirmed (in writing) that for their purposes (tax) I am not resident or not ordinarily resident in the UK. Don't ask me to tell you what the difference is.

Also, I have in writing from HMRC that ALL income arising from within the UK is subject to UK tax law.

I therefore pay UK tax on my company pension at the relevant rate(s).

[AyG]

Unless you are non-resident you must pay UK income tax upon your worldwide income, including any income in Thailand. Become non-resident and you only pay income tax on your UK income (earned and unearned).

Until you've been non-resident for 5 full tax years you are still subject to UK capital gains tax.

If non-resident you still have your normal UK tax allowance, so if your income is below the income tax threshold you can claim to have bank account interest paid gross. In any case, you can fill in an annual tax return and reclaim tax deduced from interest (but not dividends).

The only pros of being UK-resident that I can think of are that you can continue to contribute to a UK personal pension (maximum £3,600 a year if you have no relevant UK earnings) indefinitely and open an ISA each year. If you are non-resident you can't open a new ISA, and can contribute to a personal pension and claim tax relief for a maximum of five full tax years.

[rixalex]

If you are non-resident you can't open a new ISA

My understanding was that existing ISAs that were opened before you became non-resident were not allowed either. Am i wrong?

[wordchild]

Not sure some of the comments here are correct.

I have lived here for 2 years and the HMRC have alreday confirmed (in writing) that for their purposes (tax) I am not resident or not ordinarily resident in the UK. Don't ask me to tell you what the difference is.

Also, I have in writing from HMRC that ALL income arising from within the UK is subject to UK tax law.

I therefore pay UK tax on my company pension at the relevant rate(s).

The normal policy,i believe, is for the revenue to take what you say about your residency at face value unless they have reason to think otherwise but, if you did not come to work ,and you returned within 3 years the revenue could take the view that you have in fact been only temporarily non-resident and still ordinarily resident during that period, (with potential unpleasant tax consequences) ref HMRC6.

I dont know what you mean by having it in writing ,but it might be worth looking again at the rules or getting some advice but not all income arising in the UK is subject to UK tax for a non-resident eg UK dividend income is not subject to tax. Your private pension is subject to UK tax while you are in Thailand because pensions are specificaly excluded from the UK/Thailand double taxation treaty.

Edited March 31, 2010 by wordchild

[fatfather]

The benefit is to be out of the system, including tax and social insurance. Health insurance, even world wide, is cheaper to do private than to pay the offical rates. The frozen pension can be avoided by paying in a minimum sum per month voluntary. The disadvantage is to be out of the system. You are on your own, nobody will help you. So it is up to you to decide how your situation is. You are strong and self-confident, quit residence. You are not sure what is going on, stay registered. Just trust yourself, there is no common answer.

[fredob43]

No one seem's to have mentioned it. But you loose your national health benefit, But like TIT it's TI England dont cancel you doctor. (you dont have to) if you have a problem no one will check it. As there's so many emigrants, claiming if you speek English your in.

[somtampet]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

Wrong

When you are 65 and claim for your pension and are non resident thats when its frozen,the day you get your first payment,unless of course you havent paid the full contributions then you get a percentage,still frozen

[ronwparker]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

Wrong

When you are 65 and claim for your pension and are non resident thats when its frozen,the day you get your first payment,unless of course you havent paid the full contributions then you get a percentage,still frozen

But there are considerable incentives for delaying state pension either as a lump sum or increased pension and you do not have to do anything until you want payments to start only then does it get frozen.

Also my wife will get widowed parents pension plus all the state pension owing to me paid in Thailand if I die before the boys(British registered) are 19.

All checked with the office in the uk

[endure]

If you are non-resident you can't open a new ISA

My understanding was that existing ISAs that were opened before you became non-resident were not allowed either. Am i wrong?

Yes - any ISAs/PEPs that you opened while you were still resident are allowed. You aren't allowed to open any during years that you are non-resident.

[endure]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

It depends on the country that you are living in. Thailand is one of those countries where your pension is frozen.

[IsaanAndy]

Not sure some of the comments here are correct.

I have lived here for 2 years and the HMRC have alreday confirmed (in writing) that for their purposes (tax) I am not resident or not ordinarily resident in the UK. Don't ask me to tell you what the difference is.

Also, I have in writing from HMRC that ALL income arising from within the UK is subject to UK tax law.

I therefore pay UK tax on my company pension at the relevant rate(s).

The normal policy,i believe, is for the revenue to take what you say about your residency at face value unless they have reason to think otherwise but, if you did not come to work ,and you returned within 3 years the revenue could take the view that you have in fact been only temporarily non-resident and still ordinarily resident during that period, (with potential unpleasant tax consequences) ref HMRC6.

I dont know what you mean by having it in writing ,but it might be worth looking again at the rules or getting some advice but not all income arising in the UK is subject to UK tax for a non-resident eg UK dividend income is not subject to tax. Your private pension is subject to UK tax while you are in Thailand because pensions are specificaly excluded from the UK/Thailand double taxation treaty.

I agree with your comment, get some advice from a tax expert, which I am certainly not.

I reply to my queries, HMRC have told me, as you say, that pension income is taxable in the UK, they stated this in a letter (in writing) concerning my tax status. I complete a self assessment form and therefore declare items such as dividends etc which is then taken into account by HMRC when I file my return.

[alfieconn]

I believe that your UK state pension is frozen from the time you declare you are a non resident,does anyone know different ?

Yes once you receive it and you live over here it will be frozen. Some peolple I hear try to make the tax man believe they are still in the Uk but if(when ) you get caught...... with our passports having the electronic chip in know its best to comply..if you back to live in the UK you can then get the yearly increases if there are any....

I pay tax in the uk but not NI payments as I have the 30 years in already to get my full state pension if they have any money to pay me in 13 years time!!! There was an advantage to declaring you were resident abroad in that you payed no tax on interest earned on your bank accounts but hey now with the rates <deleted>!!! lol

I am the same - pay tax on rented property but no NI. If you go back to Uk you get the back-dated increases or just from thereon in?

There's a 5 year rule on the selling of your properties but i'm not sure which is the correct one from the following :

A. You can sell a property with no tax liability once you are non-resident for 5 complete tax years.

B. You can sell a property anytime after leaving the UK but cannot return to the UK permantly within 5 years to be non liable for capital gains tax.

[ChiangMaiFun]

after all of this I'm not exactly sure what I am... (or where I am sometimes) - thanks for all the good info everyone

[Chaimai]

There's a 5 year rule on the selling of your properties but i'm not sure which is the correct one from the following :

A. You can sell a property with no tax liability once you are non-resident for 5 complete tax years.

B. You can sell a property anytime after leaving the UK but cannot return to the UK permantly within 5 years to be non liable for capital gains tax.

If the property is your main residence you will be exempt from CGT.