UK pensioner expat or remain UK resident

[James207]

Suggested that I post this here.

Are there any spread sheets, graphs that show remaining UK resident and paying tax on a investments verses going off shore and losing the state pension increments. Seems a no brainer to me and that the investments would have be very small to make keeping the incremental increases worth while. The next question is a what point is it worth taking the tax hit on cashing in the pension under the new budget rules to then get a tax free off shore investment but becoming non UK resident. Anybody done the sums?

[PattayaPhom]

CPI at less than 2%, is it worth the trouble, not forgetting if you dont inform HMRC you are residing in Thailand, you are infact commiting a crime and can be prosecuted. Research QOPS also

[SheungWan]

If you are retired you should consider the implications for your NHS entitlement. No small matter.

[DefaultName]

I don't think you can cash in the state pension anyway, there's no "pot" there to cash in. The budget referred to private pensions.

[SheungWan]

I don't think you can cash in the state pension anyway, there's no "pot" there to cash in. The budget referred to private pensions.

You are right but I think the idea is to use a current wheeze being pushed by some (ahem) foreign financial advisors to cash up private pensions by relocating offshore. Nice earner for them and the temptation of having cash in one's hands, but financially dubious and ill-advised.

[i claudius]

CPI at less than 2%, is it worth the trouble, not forgetting if you dont inform HMRC you are residing in Thailand, you are infact commiting a crime and can be prosecuted. Research QOPS also

Yes its a crime and judging by the sentences the dole cheats are getting in the UK for scamming 20/30/40 thousand pounds you will get a stay on the naughty step and perhaps even a slapped wrist.

[James207]

I don't think you can cash in the state pension anyway, there's no "pot" there to cash in. The budget referred to private pensions.

I wasn't referring to cashing in the state pension, just the private pension under the new budget rules.

[chiang mai]

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

I've done the sums many times and for me it's more cost effective to remain an expat although the very valid point was made earlier, the value of medical care and free NHS treatment is something that needs much careful thought.

Not difficult to model a spreadsheet on this over say a twenty year period and it might just show up some things you hadn't spotted previously.

[James207]

CPI at less than 2%, is it worth the trouble, not forgetting if you dont inform HMRC you are residing in Thailand, you are infact commiting a crime and can be prosecuted. Research QOPS also

Well wouldn't that depend on what the definition of residing is. Living 6 months in Thailand and 6 months in the UK but remaining a UK resident for tax purposes to my mind makes you just having a long holiday.

If you become an expat then by definition you are residing out of the UK and you would notify HMRC so that your offshore funds were UK tax exempt.

I am not sure were you got the idea I was trying to pull the wool over the eyes of HMRC. It is a straight stay UK resident, lose the tax advantages or become an expat and lose the increments. As I see it with low inflation the increments are hardly worth having but the tax savings are. Plus there is the other advantages of avoiding crippling council tax and death duties.

[James207]

If you are retired you should consider the implications for your NHS entitlement. No small matter.

Not sure I get your point. NHS entitlement is based on where you reside, not on where you pay tax, although is to some extent based on where you reside. If you return to the UK then you are UK resident and entitled to NHS treatment.

I suppose unless you are chronically ill it wouldn't matter, if you were chronically then you would stay in the UK.

[James207]

I don't think you can cash in the state pension anyway, there's no "pot" there to cash in. The budget referred to private pensions.

You are right but I think the idea is to use a current wheeze being pushed by some (ahem) foreign financial advisors to cash up private pensions by relocating offshore. Nice earner for them and the temptation of having cash in one's hands, but financially dubious and ill-advised.

Was that financial advice based on some knowledge. Why would advice from say Lloyds UK differ from Lloyds International?

[uptheos]

CPI at less than 2%, is it worth the trouble, not forgetting if you dont inform HMRC you are residing in Thailand, you are infact commiting a crime and can be prosecuted. Research QOPS also

Yes its a crime and judging by the sentences the dole cheats are getting in the UK for scamming 20/30/40 thousand pounds you will get a stay on the naughty step and perhaps even a slapped wrist.

Or if they're in a really bad mood that day, you might even get the comfy chair and soft cushions!

[chiang mai]

Don't loose sight of the fact that older age and poor health can creep up on you, once you've gone to the trouble of becoming an expat it's sometimes quite hard to become a resident again and as the rules change over time, re attaining NHS eligibility will become even more difficult. My vote would be, unless you have substantial assets, go the 6 months in and 6 months out route.

[alfieconn]

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

Why does it depend on your taxable assets that arise in the UK ? weather your an expat or a uk resident the tax liability on the above is exactly the same so this doesn't come into the equation at all !!!!

[James207]

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

I've done the sums many times and for me it's more cost effective to remain an expat although the very valid point was made earlier, the value of medical care and free NHS treatment is something that needs much careful thought.

Not difficult to model a spreadsheet on this over say a twenty year period and it might just show up some things you hadn't spotted previously.

Well now a private pension can be cashed in the only funds that can't be offshored is the state pension and any rental if you rent out your home. State pension would be within your tax allowance but I am not sure how that works if you are an expat. I can't see state pensions rising dramatically over the next 20 years as inflation is low.

Even if you lived in Thailand and paid UK tax you are not resident in the UK so wouldn't get NHS treatment anyway. It still seems to be a no brainer unless you are chronically ill then why would you live in Thailand anyway.

I mentioned cashing in the pension to my financial advisor then taking it off shore but he seemed to poo poo the idea but I got the impression it was sour grapes for losing the business.. Next year or the year after my ISAs should exceed my pension. It seems to make no sense to me to leave the private pension in the UK. The ISAs I could do what I liked with. There would be a tax liability to cash it in verses the tax to be paid if it was left in the UK and vanishes on death anyway, well a small amount paid in pension to your wife.

[chiang mai]

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

Why does it depend on your taxable assets that arise in the UK ? weather your an expat or a uk resident the tax liability on the above is exactly the same so this doesn't come into the equation at all !!!!

If your taxable assets that arise in the UK are below the value of the annual personal allowance, the argument for becoming an expat is perhaps more compelling, it certainly was in my case. But if however the value is higher than the allowance it means that paying tax is inescapable, the degree to which it is inescapable will depend on the percentage of retirement income derived from onshore pension investments and the percentage derived from other potentially movable sources.

In my case the larger percentage of my retirement income was derived from offshore cash whilst only a smaller amount came from UK pension sources, had it been the other way around I would almost certainly have concluded that there was no real benefit to becoming a permanent expat, especially considering that I would loose NHS eligibility also.

[alfieconn]

I mentioned cashing in the pension to my financial advisor then taking it off shore but he seemed to poo poo the idea but I got the impression it was sour grapes for losing the business

I was wondering if you transfer your pension to a QROPS then cashing in would there be any tax advantages ?

[SheungWan]

If you are retired you should consider the implications for your NHS entitlement. No small matter.

Not sure I get your point. NHS entitlement is based on where you reside, not on where you pay tax, although is to some extent based on where you reside. If you return to the UK then you are UK resident and entitled to NHS treatment.

I suppose unless you are chronically ill it wouldn't matter, if you were chronically then you would stay in the UK.

If you are a non-resident expat, you cannot now just automatically expect to jump on a plane to the UK and be treated immediately without cost.

[alfieconn]

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

Why does it depend on your taxable assets that arise in the UK ? weather your an expat or a uk resident the tax liability on the above is exactly the same so this doesn't come into the equation at all !!!!

If your taxable assets that arise in the UK are below the value of the annual personal allowance, the argument for becoming an expat is perhaps more compelling, it certainly was in my case.

Taxable assets that are below the annual personal allowance are treated exactly the same weather you are an Expat or resident I.E nil per cent !!! so why is it more compelling to become an expat ?

Edited April 3, 2014 by alfieconn

[chiang mai]

Exactly, it now takes a couple of years to get out of the system but it also takes time to get back in.

[SheungWan]

I mentioned cashing in the pension to my financial advisor then taking it off shore but he seemed to poo poo the idea but I got the impression it was sour grapes for losing the business

I was wondering if you transfer your pension to a QROPS then cashing in would there be any tax advantages ?

You mean compared to the loss of a an indexed monthly pension income stream? On the other hand you could use that money to buy a bar in Pattaya and live happily ever after.

[chiang mai]

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

Why does it depend on your taxable assets that arise in the UK ? weather your an expat or a uk resident the tax liability on the above is exactly the same so this doesn't come into the equation at all !!!!

If your taxable assets that arise in the UK are below the value of the annual personal allowance, the argument for becoming an expat is perhaps more compelling, it certainly was in my case.

Taxable assets that are below the annual personal allowance are treated exactly the same weather you are an Expat or resident !!! so why is it more compelling to become an expat ?

I see you're having comprehension difficulties this morning, the rest of the post provided the answer, but once again:

If the split of your retirement assets were say 75% onshore pension assets that couldn't be moved, and, 25% offshore cash assets, the argument for remaining onshore is more compelling since the UK tax element is inescapable, this is especially true where NHS eligibility is retained.

But if the split were the other way around, for example, that would mean that the larger percentage of total assets, 75% in this example, could be moved to escape UK tax.

Clear now?

.

[alfieconn]

I mentioned cashing in the pension to my financial advisor then taking it off shore but he seemed to poo poo the idea but I got the impression it was sour grapes for losing the business

I was wondering if you transfer your pension to a QROPS then cashing in would there be any tax advantages ?

You mean compared to the loss of a an indexed monthly pension income stream? On the other hand you could use that money to buy a bar in Pattaya and live happily ever after.

No I mean, transferring to a QROPS then taking the full amount in cash or taking the full amount in cash from a UK pension scheme !

[chiang mai]

QROPS needs a pot of at least 100k to be viable;

QROPS has developed a bad name, my guess is it will be closed at some point fairly soon;

Taking the full amount from your pension fund means its taxable at basic rate, probably not that smart to do for a number of reasons, not the least of which is that most people can't manage their money well..

[SheungWan]

I mentioned cashing in the pension to my financial advisor then taking it off shore but he seemed to poo poo the idea but I got the impression it was sour grapes for losing the business

I was wondering if you transfer your pension to a QROPS then cashing in would there be any tax advantages ?

You mean compared to the loss of a an indexed monthly pension income stream? On the other hand you could use that money to buy a bar in Pattaya and live happily ever after.

No I mean, transferring to a QROPS then taking the full amount in cash or taking the full amount in cash from a UK pension scheme !

You seem to be disregarding the loss of income stream part of the equation.

[alfieconn]

Taxable assets that are below the annual personal allowance are treated exactly the same weather you are an Expat or resident !!! so why is it more compelling to become an expat ?

I see you're having comprehension difficulties this morning, the rest of the post provided the answer, but once again:

If the split of your retirement assets were say 75% onshore pension assets that couldn't be moved, and, 25% offshore cash assets, the argument for remaining onshore is more compelling since the UK tax element is inescapable, this is especially true where NHS eligibility is retained.

But if the split were the other way around, for example, that would mean that the larger percentage of total assets, 75% in this example, could be moved to escape UK tax.

Clear now?

.

Your waffling again, originally you said

It depends on the value of your taxable assets that arise in the UK that simply can't be offshored, (rental income, UK pension payments and also private pension that can't be QROP'd or easily cashed in).

First of all your talking about something that can't be offshored and then your talking about moving to escape UK tax !!!!!!!!!!!!!!!!

[uptheos]

Exactly, it now takes a couple of years to get out of the system but it also takes time to get back in.

In law about 1-3 months, which is not really bad, but in practice probably quicker depending on circumstances, particularly if you are vulnerable or there are emergency health problems.

Some interesting rulings on HRT by Judge E Jacobs 2004 File Number CIS 4474 2003

The danger of overemphasising viability is this. A claimant needs to establish habitual residence in order to claim an income-related benefit. A claim would not be necessary if the claimant has a guaranteed source of funds sufficient for survival. The danger is that the only claimants who can establish habitual residence will be those who have sufficient access to funds not to need it. That cannot be right. Habitual residence is a test of entitlement, not a bar to entitlement. It must be applied in a way that allows for the possibility of a claimant establishing both habitual residence and an entitlement to income support.

Perhaps the best way of taking viability into account is as an evidential aspect of proof of intention. If the claimant has no apparent means of financial support, that is relevant to whether the person really had an intention to settle here. But its significance must be assessed in the context of the whole of the evidence on intention.

What is an appreciable period depends on the circumstances of the particular case. But I agree with the Secretary of State that in the general run of cases the period will lie between one and three months. I would certainly require cogent reasons from a tribunal to support a decision that a significantly longer period was required.

I have only posted this for those Citizens who would like to return to UK but are fearful because they have no assets. Paragraph one should ease concerns a little.

Edited April 3, 2014 by uptheos

[James207]

If you are retired you should consider the implications for your NHS entitlement. No small matter.

Not sure I get your point. NHS entitlement is based on where you reside, not on where you pay tax, although is to some extent based on where you reside. If you return to the UK then you are UK resident and entitled to NHS treatment.

I suppose unless you are chronically ill it wouldn't matter, if you were chronically then you would stay in the UK.

If you are a non-resident expat, you cannot now just automatically expect to jump on a plane to the UK and be treated immediately without cost.

Are you suggesting that a UK passport holder returning to the UK needs to go through a qualifying period. My wife arrived in the UK and the same day qualified for NHS treatment.

[sms747]

CPI at less than 2%, is it worth the trouble, not forgetting if you dont inform HMRC you are residing in Thailand, you are infact commiting a crime and can be prosecuted. Research QOPS also

Yes its a crime and judging by the sentences the dole cheats are getting in the UK for scamming 20/30/40 thousand pounds you will get a stay on the naughty step and perhaps even a slapped wrist.

And have the added punishment of not having to pay it back, but if it were a pensioner they probably would make them. I don't consider it a crime not to tell them you are not living in the UK so not a drain on the health care and social services. Anyone know what UKIPS policy is on uprating pensions?

[James207]

QROPS needs a pot of at least 100k to be viable;

QROPS has developed a bad name, my guess is it will be closed at some point fairly soon;

Taking the full amount from your pension fund means its taxable at basic rate, probably not that smart to do for a number of reasons, not the least of which is that most people can't manage their money well..

But most of it would be taxable at basic rate when it was drawn as a pension. I guess the trade off is how long you actually expect to draw a pension. Taking it as cash does mean you can pass it on eventually. Not everybody of course is incapable of managing money.