Uk Pension

[chiang mai]

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

The "cut" he is referring to has to do with the annual cost of living increases granted to all pensioners, your friend doesn't get them because he lives in Thailand and in effect his pension is frozen until such time as he moves back to the UK or to a country where the increase is paid. There's a separate useful but slightly emotional thread on this subject running presently in this forum.

[astral]

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.

That is not correct.

I have been "non-resident" and "not ordinarily resident" for over 25 years

and until a couple of years ago owned two properties in the UK.

Income was taxed after deduction of my personal allowance, 6700 sounds right, and expenses.

The OP definitely needs to read the tax rules and fill in his return himself or get an accountant,

not listen to bar gossip.

Secondly the UK does not tax on income generated outside the UK.

The US does.

Domicile is irrelevant in this discussion, and only takes on meaning when you die.

[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.

That is not correct.

I have been "non-resident" and "not ordinarily resident" for over 25 years

and until a couple of years ago owned two properties in the UK.

Income was taxed after deduction of my personal allowance, 6700 sounds right, and expenses.

The OP definitely needs to read the tax rules and fill in his return himself or get an accountant,

not listen to bar gossip.

Secondly the UK does not tax on income generated outside the UK.

The US does.

Domicile is irrelevant in this discussion, and only takes on meaning when you die.

HMRC seems to have changed over time the way it treats property owners in respect of residency and non-residency. In the late 1990's my accountants fought tooth and nail with HMRC in trying to get me declared non-resident since I hadn't lived in the UK for the preceding five years. HMRC's position was that until I sold my UK property (which incidentaly I did not rent out) I could not be declared a non-resident, eventually I sold it and officially became non-resident for tax purposes.

I suspect that 25 years ago it was somewhat easier to own property and become non-resident. The recent trend however has been that HMRC is making it harder and harder to become non-resident and own UK property (unless the property is declared under the non-resident scheme), the Gainnes/Cooper case is a perfect example - in that example the couple lived in the Channel Islands and were never in the UK for more than 90 days each tax year. HMRC ruled against them because their children went to school in the UK and then came up with a new angle whereby residency was determined by a range of factors including lifestyle.

I get the idea that one of the things HMRC is trying to do is to prevent people who own UK property, declaring themselves non-resident and then setting up offshore bank accounts using their overseas address and then returning to live in the UK whilst continuing to receive investment income free of tax (offshore banks don't even have to report information on UK citizens who are non-resident). It's for reason such as that one HMRC is making harder to be both non-resident and a UK home owner, unless it is declared through a property management company and forms a part of the official HMRC scheme.

Finally, just for clarification, the UK does tax "residents" on income that arises outside the UK on either the arising or remittance basis, non-residents are indeed not taxed in the same way.

Edited July 15, 2010 by chiang mai

[astral]

If the rules changed I wonder why existing Non Residents where not queried?

I only sold up 2 years ago..............

[chiang mai]

If the rules changed I wonder why existing Non Residents where not queried?

I only sold up 2 years ago..............

Simply I have no idea but I suspect that HMRC ceased caring about an ex-pat who has been absent from the UK for 25 years and has not appeared on their radar for any other reason in that time. I know that when I first moved to Thailand in 2002 all my HMRC correspondence was generated from the HMRC Risk Dept. so maybe there's a clue there about how HMRC manages different people under different circumstances, at different points in time, something like profiling perhaps, dunno.

For anyone who's interested in the detail and forming their own views on UK tax matters, here's the link to the latest HMRC bible, a riveting read.

http://www.hmrc.gov.uk/cnr/hmrc6.pdf