Uk Pension

[ableguy]

Hi guys , just curious to know if any of you retirees are being taxed on your UK state pension, just got to that stage and hmg informed I will be taxed on everything over 2000 pounds at 20% because I live out of the country. If indeed this is the case any suggestions on how to bring this down. I should add I also rent my property out in the UK through an agent and hmg were good enough to advise me that I will be taxed on that at 20% too. Combined the two incomes relief is only 2000 pounds the rest at 20%or if only either one of the two incomes coming in is sole income same rate applies, appreciate anyone passing on information.

[chiang mai]

I've never heard of a 20% UK tax on earnings over £2,000, living outside the UK doesn't make any difference in that respect - certainly there's nothing written about this in HMRC6 so perhaps you can add some more detail? If you have a UK home that you rent out you are UK resident although you might also be not ordinarily resident also. That being the case you have a tax free allowance each year which is currently around £6,400 for a single person hence your figure of £2,000 confuses the picture. There is a £2,500 rule for savings tax whereby savings interest alone that is below that figure is taxed at 10%.

[smokie36]

Worried about the cost of your season ticket??

[garrfeild]

Sounds like you need to talk to an accountant.

Edited July 12, 2010 by garrfeild

[Eff1n2ret]

I don't know where you got the £2000 threshold from. If you're over 65 (as you presumably are if you're drawing the state pension)the allowance before tax is payable is around £9000. I've never heard that this is reduced because you're living abroad. However, if your combined pensions and house rental income exceed £22000, the allowance is progressively reduced down to the standard taxpayer's allowance of around £6700. The exact figures for all that are available on the HMRC website if you can be bothered to go find them.

I retired last autumn and came out to LOS, but haven't yet decided whether to declare myself non-resident. I phoned up HMRC when I was visiting the UK last month, and they explained that the way it works in my case is that my state pension is paid to me gross. The balance of the ~9000 allowance is applied to one of my occupational pensions, and the other pensions and annuities come to me 20% tax deducted, as does my house-rental income.

I found the HMRC helpline quite helpful.

[cardholder]

Simplistically, your allowance is used up against your state pension + dependent's allowance (no longer available).

Therefore, any other income in the UK (quite rightly) is taxed at the appropriate rates.

[ableguy]

I don't know where you got the £2000 threshold from. If you're over 65 (as you presumably are if you're drawing the state pension)the allowance before tax is payable is around £9000. I've never heard that this is reduced because you're living abroad. However, if your combined pensions and house rental income exceed £22000, the allowance is progressively reduced down to the standard taxpayer's allowance of around £6700. The exact figures for all that are available on the HMRC website if you can be bothered to go find them.

I retired last autumn and came out to LOS, but haven't yet decided whether to declare myself non-resident. I phoned up HMRC when I was visiting the UK last month, and they explained that the way it works in my case is that my state pension is paid to me gross. The balance of the ~9000 allowance is applied to one of my occupational pensions, and the other pensions and annuities come to me 20% tax deducted, as does my house-rental income.

I found the HMRC helpline quite helpful.

my combined income in total for the year was 8547 pounds from the uk , and this was my total income period, here is how the income came in

proffit form house rental 2985 pound

private pension 1302 pound

total 4287 taxed at 20% 857 pound

state pension lump sum as I did not claim it earlier 4742 p0unds taxed at 20% 948 pounds

total oweing 1805 pounds

they also want the same money to be be paid for next year on Jan 2011

I have written to them but no reply, I too thought tax free allowance was around 9000 pounds but they inform me if living abroad it is only 2000 pounds

thanks for your comments

[chiang mai]

I don't know where you got the £2000 threshold from. If you're over 65 (as you presumably are if you're drawing the state pension)the allowance before tax is payable is around £9000. I've never heard that this is reduced because you're living abroad. However, if your combined pensions and house rental income exceed £22000, the allowance is progressively reduced down to the standard taxpayer's allowance of around £6700. The exact figures for all that are available on the HMRC website if you can be bothered to go find them.

I retired last autumn and came out to LOS, but haven't yet decided whether to declare myself non-resident. I phoned up HMRC when I was visiting the UK last month, and they explained that the way it works in my case is that my state pension is paid to me gross. The balance of the ~9000 allowance is applied to one of my occupational pensions, and the other pensions and annuities come to me 20% tax deducted, as does my house-rental income.

I found the HMRC helpline quite helpful.

my combined income in total for the year was 8547 pounds from the uk , and this was my total income period, here is how the income came in

proffit form house rental 2985 pound

private pension 1302 pound

total 4287 taxed at 20% 857 pound

state pension lump sum as I did not claim it earlier 4742 p0unds taxed at 20% 948 pounds

total oweing 1805 pounds

they also want the same money to be be paid for next year on Jan 2011

I have written to them but no reply, I too thought tax free allowance was around 9000 pounds but they inform me if living abroad it is only 2000 pounds

thanks for your comments

"if living abroad it is only 2000 pounds" - this is simply not true, end of story.

Edited July 13, 2010 by chiang mai

[billd766]

I don't know where you got the £2000 threshold from. If you're over 65 (as you presumably are if you're drawing the state pension)the allowance before tax is payable is around £9000. I've never heard that this is reduced because you're living abroad. However, if your combined pensions and house rental income exceed £22000, the allowance is progressively reduced down to the standard taxpayer's allowance of around £6700. The exact figures for all that are available on the HMRC website if you can be bothered to go find them.

I retired last autumn and came out to LOS, but haven't yet decided whether to declare myself non-resident. I phoned up HMRC when I was visiting the UK last month, and they explained that the way it works in my case is that my state pension is paid to me gross. The balance of the ~9000 allowance is applied to one of my occupational pensions, and the other pensions and annuities come to me 20% tax deducted, as does my house-rental income.

I found the HMRC helpline quite helpful.

my combined income in total for the year was 8547 pounds from the uk , and this was my total income period, here is how the income came in

proffit form house rental 2985 pound

private pension 1302 pound

total 4287 taxed at 20% 857 pound

state pension lump sum as I did not claim it earlier 4742 p0unds taxed at 20% 948 pounds

total oweing 1805 pounds

they also want the same money to be be paid for next year on Jan 2011

I have written to them but no reply, I too thought tax free allowance was around 9000 pounds but they inform me if living abroad it is only 2000 pounds

thanks for your comments

"if living abroad it is only 2000 pounds" - this is simply not true, end of story.

Ask for a written reply quoting their claim at 2000 pounds.

AFAIK you have a tax free allowance depending on if you are retired or a bit less if not.

It makes no difference where you live in the world as long as your income is below that threshold.

I believe that the next threshold is around 21,000 pounds and you are taxed at 20% on the difference between the two.

As the thresholds increase, the amount of tax you pay is increased but ONLY on income sourced in the UK (at least at this time).

[chiang mai]

I don't know where you got the £2000 threshold from. If you're over 65 (as you presumably are if you're drawing the state pension)the allowance before tax is payable is around £9000. I've never heard that this is reduced because you're living abroad. However, if your combined pensions and house rental income exceed £22000, the allowance is progressively reduced down to the standard taxpayer's allowance of around £6700. The exact figures for all that are available on the HMRC website if you can be bothered to go find them.

I retired last autumn and came out to LOS, but haven't yet decided whether to declare myself non-resident. I phoned up HMRC when I was visiting the UK last month, and they explained that the way it works in my case is that my state pension is paid to me gross. The balance of the ~9000 allowance is applied to one of my occupational pensions, and the other pensions and annuities come to me 20% tax deducted, as does my house-rental income.

I found the HMRC helpline quite helpful.

my combined income in total for the year was 8547 pounds from the uk , and this was my total income period, here is how the income came in

proffit form house rental 2985 pound

private pension 1302 pound

total 4287 taxed at 20% 857 pound

state pension lump sum as I did not claim it earlier 4742 p0unds taxed at 20% 948 pounds

total oweing 1805 pounds

they also want the same money to be be paid for next year on Jan 2011

I have written to them but no reply, I too thought tax free allowance was around 9000 pounds but they inform me if living abroad it is only 2000 pounds

thanks for your comments

"if living abroad it is only 2000 pounds" - this is simply not true, end of story.

Ask for a written reply quoting their claim at 2000 pounds.

AFAIK you have a tax free allowance depending on if you are retired or a bit less if not.

It makes no difference where you live in the world as long as your income is below that threshold.

I believe that the next threshold is around 21,000 pounds and you are taxed at 20% on the difference between the two.

As the thresholds increase, the amount of tax you pay is increased but ONLY on income sourced in the UK (at least at this time).

I stand corrected, I apologise, I just found the link (it was bugging me). Here it is:

http://www.hmrc.gov.uk/migrantworkers/tax-non-uk.htm

What the OP appears not to have mentioned in his posts is that he may have elected to be taxed on the remittance basis and may not be domiciled in the UK? Those things being true then the OP only has a tax free allowance of £2k per year hence yes, the UK pension would be taxable at 20%. The only alternative to the above is for the OP to claim non-residency would which allow him a tax free allowance of circa £9k (assuming he is over 65) but would require that he sells his UK property.

Edited July 13, 2010 by chiang mai

[Eff1n2ret]

my combined income in total for the year was 8547 pounds from the uk , and this was my total income period, here is how the income came in

proffit form house rental 2985 pound

private pension 1302 pound

total 4287 taxed at 20% 857 pound

state pension lump sum as I did not claim it earlier 4742 p0unds taxed at 20% 948 pounds

total oweing 1805 pounds

they also want the same money to be be paid for next year on Jan 2011

I have written to them but no reply, I too thought tax free allowance was around 9000 pounds but they inform me if living abroad it is only 2000 pounds

thanks for your comments

"if living abroad it is only 2000 pounds" - this is simply not true, end of story.

Ask for a written reply quoting their claim at 2000 pounds.

AFAIK you have a tax free allowance depending on if you are retired or a bit less if not.

It makes no difference where you live in the world as long as your income is below that threshold.

I believe that the next threshold is around 21,000 pounds and you are taxed at 20% on the difference between the two.

As the thresholds increase, the amount of tax you pay is increased but ONLY on income sourced in the UK (at least at this time).

I stand corrected, I apologise, I just found the link (it was bugging me). Here it is:

http://www.hmrc.gov.uk/migrantworkers/tax-non-uk.htm

What the OP appears not to have mentioned in his posts is that he may have elected to be taxed on the remittance basis and may not be domiciled in the UK? Those things being true then the OP only has a tax free allowance of £2k per year hence yes, the UK pension would be taxable at 20%. The only alternative to the above is for the OP to claim non-residency would which allow him a tax free allowance of circa £9k (assuming he is over 65) but would require that he sells his UK property.

Now you've got me worried. On a quick reading of the link you provided, there can't have been any advantage to the OP in electing to be taxed on the remittance basis if he's generating no income abroad? And if he chooses not to declare himself non-resident, can't he just remain within the UK tax system (and in his case pay virtually no tax) even though living abroad? As my house is rented out and I can't go on for ever having mail forwarded, I was planning to write to HMRC and give them my Thailand address for future correspondence. Will they dump my allowance down to £2000?

[chiang mai]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

[Eff1n2ret]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

Thank you for your clarity. My entire income is pensions and rental income from the UK, so I take it that I can continue to pay UK tax on the current basis, even after informing HMRC of my current address in LOS. Also, as long as I own a house in the UK and rent it out I can't declare myself non-resident.

Edited July 13, 2010 by Eff1n2ret

[ableguy]

<BR>The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point. <BR><BR><BR>In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.<BR>

<BR><BR><BR>I can assure you I have no other income

[ableguy]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

Thank you for your clarity. My entire income is pensions and rental income from the UK, so I take it that I can continue to pay UK tax on the current basis, even after informing HMRC of my current address in LOS. Also, as long as I own a house in the UK and rent it out I can't declare myself non-resident.

This is exactly the same as my case.

[chiang mai]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

Thank you for your clarity. My entire income is pensions and rental income from the UK, so I take it that I can continue to pay UK tax on the current basis, even after informing HMRC of my current address in LOS. Also, as long as I own a house in the UK and rent it out I can't declare myself non-resident.

That is my understanding of the rules however I am not a tax advisor, you may want to seek a professional opinion on this. Rest assured that if I'm wrong on these points, someone will come along shortly and tell us!

[chiang mai]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

Thank you for your clarity. My entire income is pensions and rental income from the UK, so I take it that I can continue to pay UK tax on the current basis, even after informing HMRC of my current address in LOS. Also, as long as I own a house in the UK and rent it out I can't declare myself non-resident.

This is exactly the same as my case.

Then I don't understand why you are only allowed £2,000 tax free allowance, are you considered to be UK resident or not?

[MB1]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

I'm of the understanding that you can be a non-resident of the UK and still own and rent property in the UK, one of the ways is to join the NRL scheme which enables non residents of the UK to own, rent and pay tax on the property. I stand to be corrected.?.

Have a read of the below link I've posted and let me know what your assessment is of the information whithin.

When you move from the UK and become non-res but retain a home in the UK and income is earned from it then you'll probably be liable to pay UK tax on income generated in the UK so be prepared to fill out tax forms.

People really need to contact advisors/accountants regarding these issues as they IMO are very important ones for those wanting to make a new life for themselves abroad.

http://www.hmrc.gov.uk/cnr/nr_landlords.htm

HTH.

OP a link you may have an interest in reading.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_078445

Edited July 13, 2010 by MB1

[chiang mai]

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident. Also, the OP doesn't state that he doesn't have overseas income, the presumption must be that he does, otherwise I agree that it makes no sense for him to choose the remittance basis. The only other option available to the OP is to chose the "arising" basis of taxation on worldwide income, that would give him the full tax allowances but would generate a tax bill on his non-UK earnings, only the OP can clarify that point.

In your case the answer will depend on where you generate income and how much. If the UK rental property is your only source of income then you are fine, you can keep your normal rate of tax free allowance - but if you have investments etc outside the UK that create income and you do not report this, HMRC will not be best pleased when/if they find out, logically they will want to know on which basis you want to be taxed on those earnings, the "arising" or "remittance" basis, if it's the latter then yes, your tax free allowance will be reduced.

I'm of the understanding that you can be a non-resident of the UK and still own and rent property in the UK, one of the ways is to join the NRL scheme which enables non residents of the UK to own, rent and pay tax on the property. I stand to be corrected.?.

Have a read of the below link I've posted and let me know what your assessment is of the information whithin.

When you move from the UK and become non-res but retain a home in the UK and income is earned from it then you'll probably be liable to pay UK tax on income generated in the UK so be prepared to fill out tax forms.

People really need to contact advisors/accountants regarding these issues as they IMO are very important ones for those wanting to make a new life for themselves abroad.

http://www.hmrc.gov.uk/cnr/nr_landlords.htm

HTH.

OP a link you may have an interest in reading.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_078445

ํำThe heart of the issue involved here is residency or non-residency for tax purposes and the associated tax free allowances. I agree that there are a couple of ways for non-residents to own property but which ever way it's done there's a tax implication, NRL is just one of those ways although it's useful that you posted the link because it will allow many UK ex-pats better understand their options.

It's perhaps useful here to refer to Gainnes/Cooper and the lengths that HMRC will go to to determine UK residency for tax purposes, the other reference is of course HMRC6 (easily Googled and downloaded) which describes the Revenue rules on all of this.

My understanding is that there are really only two sets of rules as far as tax free allowances are concerned and these are determined by the residency test: if resident then normal allowances apply, if not resident the issue of "arising" vs "remittance" comes into play and it's only in the latter example that the £2,000 allowance applies.

I look forward to hearing back from the OP as to his UK tax status, resident or not, he might also wish to declare if he is a UK citizen also.

[ableguy]

Yes I am a UK citizen, this year I just filled in my usual tax return, not knowing about none residency, first year here and I got hit with the tax bill, I thought at the time my tax free allowance was 9000 gbp,

I would like to thank once again all you guys for your help. Today I will write to tax office asking if indeed I can go onto the remmitance basis as I

[chiang mai]

Yes I am a UK citizen, this year I just filled in my usual tax return, not knowing about none residency, first year here and I got hit with the tax bill, I thought at the time my tax free allowance was 9000 gbp,

I would like to thank once again all you guys for your help. Today I will write to tax office asking if indeed I can go onto the remmitance basis as I

I hope you meant to say the "arising" basis, otherwise you will have to pay a fee of £30,000 per year! But yes I agree, writing to them and setting out your circumstances is probably the best way forward and should clear things up nicely - it sounds as though when you filled out your tax return you checked a box stating that you were not resident hence the allowance deduction is what it is.

[Eff1n2ret]

Yes I am a UK citizen, this year I just filled in my usual tax return, not knowing about none residency, first year here and I got hit with the tax bill, I thought at the time my tax free allowance was 9000 gbp,

I would like to thank once again all you guys for your help. Today I will write to tax office asking if indeed I can go onto the remmitance basis as I

I hope you meant to say the "arising" basis, otherwise you will have to pay a fee of £30,000 per year! But yes I agree, writing to them and setting out your circumstances is probably the best way forward and should clear things up nicely - it sounds as though when you filled out your tax return you checked a box stating that you were not resident hence the allowance deduction is what it is.

If you write you could be in limbo for ages, paying tax all the while. Many government departments seem incapable of dealing with correspondence, but have helplines which function fairly well,and they seem to prefer you to phone them rather than write to them. Certainly that was my experience with the DWP, and as I said previously I spoke to a very helpful chap at the tax department a month ago, who was able to call up my computer record, talk it through with me, adjust a couple of double-entry glitches and assure me that they had a correct record of my circumstances and that I was paying the correct amount of tax.

If you go back to the second of MB1's links that he provided above, and scroll down near the bottom, there's a link to something like "HMRC contact details". The number I got from that is +44 135 5359022. It'll cost you a bob or two but you may get on the right road a lot quicker.

It would be instructive if you could post and let us know how you get on.

[MB1]

@Chiang Mai

I agree that there are a couple of ways for non-residents to own property

Thank you , so we now agree that a Non-Resident can own and rent property in the UK, as you had posted earlier...

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident.

You can even get a morgage in the UK as a non resident.

Am posting a couple more useful links to anyone interested, the first link is relating to Income Tax when leaving the UK and has useful tools to use such as registering for self assessment online,filing your tax returns online and a whole load of other tools and useful info.

http://www.hmrc.gov.uk/incometax/tax-leave-uk.htm

The second link below relates to allowances for Non-residents of the UK.

http://www.hmrc.gov.uk/cnr/allow_nonres.htm

Edited July 14, 2010 by MB1

[chiang mai]

@Chiang Mai

I agree that there are a couple of ways for non-residents to own property

Thank you , so we now agree that a Non-Resident can own and rent property in the UK, as you had posted earlier...

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident.

You can even get a morgage in the UK as a non resident.

Am posting a couple more useful links to anyone interested, the first link is relating to Income Tax when leaving the UK and has useful tools to use such as registering for self assessment online,filing your tax returns online and a whole load of other tools and useful info.

http://www.hmrc.gov.uk/incometax/tax-leave-uk.htm

The second link below relates to allowances for Non-residents of the UK.

http://www.hmrc.gov.uk/cnr/allow_nonres.htm

My apologies for my imprecision, when I wrote the words "resident" and "non-resident" I should have added the words "for tax purposes" to both, I took it for granted that was understood since the topic under discussion is tax allowances. The quote you highlighted, "The OP can't be non-resident because he owns rental property in the UK from which he derives an income", refers to the same and remains true, HMRC will not allow a UK citizen to non-residence status for tax purposes, whilst owning property in the UK, that does not however preclude them from being non-resident and owning property also, if all of that makes sense.

Edited July 14, 2010 by chiang mai

[GingerLing]

@Chiang Mai

I agree that there are a couple of ways for non-residents to own property

Thank you , so we now agree that a Non-Resident can own and rent property in the UK, as you had posted earlier...

The OP can't be non-resident because he owns rental property in the UK from which he derives an income, if he were to sell it then he could become non-resident.

You can even get a morgage in the UK as a non resident.

Am posting a couple more useful links to anyone interested, the first link is relating to Income Tax when leaving the UK and has useful tools to use such as registering for self assessment online,filing your tax returns online and a whole load of other tools and useful info.

http://www.hmrc.gov....ax-leave-uk.htm

The second link below relates to allowances for Non-residents of the UK.

http://www.hmrc.gov....llow_nonres.htm

My apologies for my imprecision, when I wrote the words "resident" and "non-resident" I should have added the words "for tax purposes" to both, I took it for granted that was understood since the topic under discussion is tax allowances. The quote you highlighted, "The OP can't be non-resident because he owns rental property in the UK from which he derives an income", refers to the same and remains true, HMRC will not allow a UK citizen to non-residence status for tax purposes, whilst owning property in the UK, that does not however preclude them from being non-resident and owning property also, if all of that makes sense.

Chiang Mai, isn't this the definition of domicile, although I tend to confuse these.

If you have any connection with the UK (presuming a UK citizen) then you are regarded domcile UK even though you made resident elsewhere.

e.g. you could retire to live in Thailand (which makes you resident in Thailand), but by simply retaining a UK bank account (property in the OP's case) you remain domicile UK.

In this scenario you would need to provide TAX returns to both UK and Thailand, it doesn't sound like £2000 allowance is correct for the OP on that basis.

It would be interesting if someone else in this scenario who has already resolved their TAX issues and could post here. Unsually you'd have to pay an International TAX advisor alot of money to find out

[chiang mai]

Domicile and residency are two very separate things, residency can be changed fairly easily and HMRC6 describes that in detail. But a persons domicile is, as was once said, "not a raincoat that can be put on and taken off at will". It's not simple to change your domicile, in the case of the UK it means giving up virtually all connections with that country, no bank accounts, property ownership, visits and more - it also means establishing a settled lifestyle in another country for an extended period of time, a family, property, bank accounts etc, failure to tackle both halves of the domicile equation will likely result in HMRC proving that you are indeed domiciled in the UK.

[JAS21]

Well, when I left the UK some three plus years ago now I elected to be Non resident and Not normally resident..that is for tax purposes. Also I organised to be a NRL ( None Resident Landlord). That allows me to have my rent paid gross (no tax taken off).

Each year I fill in an on line tax return. Actually I don't use the IR one but a Tax Calc one..yes I buy it £25 each year.

My allowances etc are the same as any other UK Person (same tax bands). I pay my extra tax in Jan and July..it's much easier for me to understand than having my tax code changed. I have a company pension, rental and investment income.

[MB1]

Am posting three links relating to domicile issues for anyone interested in reading.

http://www.hmrc.gov.uk/cnr/residencedomicile.htm

http://www.taxationweb.co.uk/1-minute-guides/property-tax/residence-and-domicile.html

http://www.ecademy.com/node.php?id=50478

HTH.

[garyk]

This has nothing to do with the OP post. But I would like to ask a question. I meet a retired Brit and he is a good guy. He was telling me since he lives in thailand his monthly pension is cut some. I do not understand. And i do not want to bring it up as a question to him. Can someone explain this to me. I am not from England and do not know the rules.

It seems to me like if you work and retire and then are penalized for wanting to live somewhere else that is kinda wrong...

Thanks in advance

[topt]

Sorry I cannot post the specific quotes - not sure yet how to do it

Just posting to add my experience. Whilst not retired I am non resident for tax purposes and still own a house in the UK which I am renting. As the rental comes to less than the personal allowance I receive the gross amount without any tax taken off - which is supposed to be the case. As one of the posters suggested it is much better (and quicker) to call the relevant office and ask for information rather than write.

There has been some talk recently about HMRC changing the rules about residency and being able to own/rent out a property in the UK but I am not aware that anything formal has actually been enshrined in any way. My arrangements were all discussed with HMRC and all the relevant forms (available online) filled in and sent off.

In terms of the original info a tax advisor from HMRC actually rang me back on a foreign mobile as there was no one available when I called. He was very helpful and open about all possibilities.