UK expats to pay tax on their rented houses back home

[Baerboxer]

I know quite a few people living here on retirement extensions who survive on a combination of State pension plus a Company Pension.

No rental income involved.

These people already pay UK tax, I guess because the pensions are paid in the UK and the sum total exceeds the annual allowance.

I am reading that the said allowance could become zero for those out of the UK more than 6 months, certainly nearly all those I know.

A potential loss of £40 pw or £170 a month for a single person.

Some are struggling now.

Am I getting anything wrong here?

No, I think you're spot on. I currently have a company pension and investment income on which I pay UK income tax. If implemented, the proposals would make me £2,000 worse off (more as the nil rate band increases over time) or about 9,000 baht per month.

It seems to me that the UK government is treating its ex-pats as 4th rate citizens. I cost the government zero in health costs with visits to the doctor (and potentially hospital) plus I won't get a free bus pass when I'm 60 next year. Then, when I qualify for the state pension, the amount paid will never increase.

Alan

I agree Alan - the UK government doesn't see the expat community as anything like first class citizens.

By abolishing the personal allowance we will have to pay tax on all investment income, rental income and any other income such as pensions. Every penny will be subject to tax. If the Capital Gains tax rules are changed, we will have to pay CGT when we sell our home in the UK, even if it is our main residence.

Presumably we will still be able to claim tax relief on the expenses associated with renting out properties?

Are the rules around ISA's also going to be changed? Will we be stripped of those tax benefits too regardless of how long we've held the investment?

Are we still going to suffer the frozen state pension?

The current government are simply hitting anyone the see as soft targets and use the excuse of "well other countries do it". Yet the big boys will continue to find ways around this and be applauded by the same government for their "innovation".

Strange response......why do you think expats are, or even should be, treated like 'first class citizens'?

You, like myself probably chose to leave the UK because there were more opportunities and a better life to be had overseas. I don't consider myself as being 'first class' compared to people living in the UK and paying full taxes etc. and unfortunately tax loop holes are dropping like crazy, country by country.

What is even more worrying to come in the UK, is the same tax regime as they have in the USA.......whereby you have to pay 'full' taxes on global income regardless if you live in the UK or not. Its coming for sure....because the UK spends way too much money, actually it gives most of it away to all these failed states in aid.

Problem there is, if you don't pay, or they suspect you of not paying, they freeze your passport so you cannot move around, and force you to report to an embassy where they slap you with an inflated tax bill and some fines.

Not strange at all. Firstly, I find the idea of treating British Citizens differently based on how much tax they pay reprehensible and unacceptable. Secondly, most retirees will have paid tax for a considerable number of years in the UK and many continue to do so.

I took very little out over many years of contributions - good health (thankfully) and always paid my full dues. Should the changes force me back to the UK I will take every single benefit I can, as others here have also said.

I find your notion that someone paying tax should be treated above others strange. It's the same as suggesting that those in work are somehow better than those who are not.

Those who created the financial crisis don't suffer - they make sure others continue to pay. Higher retirement age and continued tax increases through creative ideas whilst lowering services to the public.

Edited August 14, 2014 by Baerboxer

[OJAS]

I have also now commented on the Treasury's consultation exercise - see de-personalised version attached.

Despite the loaded questions, I think I've managed to get all the points I wanted to make across OK!

OJAS comments.docx

[cmsally]

http://www.telegraph.co.uk/finance/personalfinance/tax/10742723/New-statements-to-show-how-your-tax-money-was-spent.html

So this is apparently how income tax gets spent. It is perhaps mindblowingly obvious that the average expat doesn't use quite a lot of those services. You are still going to get the contributions of people who go over their allowance limit (even though they live abroad) but doing away with the allowance for those who have less income seems like absolute robbery.

And yet again it seems they are absolutely powerless to tax the multinationals.

[chiang mai]

National Debt Interest, Ooo-er missus!

[OJAS]

If the government were to restrict non-residents entitlement to the Personal Allowance, it would intend this to apply to types of income which are taxable both in the UK and overseas (such as that from immovable property) but to retain the Personal Allowance on income that is taxable exclusively in the UK.[/size]

I voiced an opinion along these lines in the other thread. I believe we will see the HMRC introduce the term "Allowable income"

This is what we need to get sorted out - "taxable exclusively in the UK".

As you know, Thailand taxes a UK pension on a "remittance" basis - they tax it if you take it into Thailand (in the year you earn it).

What does HMRC intend "taxable exclusively in the UK" to mean in the context of a remittance basis? Do they mean that the income is prima facie taxable in the other country (in our case, Thailand), with the amount being quantified by reference to the amount remitted, or do they mean just the amount remitted, i.e. the amount that should be taxed?

Obviously, if it is the first, it will have a massive impact on people with British pensions in Thailand.

Altering the word "taxable" to "taxed" would solve the problem.

As I said in my response to this consultation exercise, the Government really shouldn't get too hung up on whether or not various income sources are exclusively taxed in the UK given the lack of consistency between the various tax treaties which have been negotiated with other countries. Far better, I think, for a case-by-case approach to be adopted on the basis of information reported in annual self-assessment returns.

The critical factor in determining whether or not we shall continue to be eligible for the personal allowance will, I think, depend on the outcome of the proposed "economic connection to the UK strength" test which the Government seem to favour applying to each non-resident. But we need to be certain on what types of UK-generated income will be included in the percentage calculation (i.e. sandyf's "allowable income"). Certainly the Government's stated intention is that pension income will be included in the reckoning. So if UK occupational and state pensions are your sole source of income you should still be OK as regards continued eligibility for the personal allowance.

On the other hand, if you are also in receipt of rental income derived from property you own in the UK and the Government decide NOT to include this in the "economic connection to the UK strength" test percentage calculation, then you could be in trouble. In my case, 58% of my income is made up of an occupational pension and the remaining 42% of rental income. So I would fail this test even if the percentage threshold were set at 75% rather than 90% and, hence, no longer be eligible for the personal allowance.

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

Edited August 15, 2014 by OJAS

[GavinK]

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK

Or....if you have a spouse with no overseas income that would be taxable in the UK and is entitled to reside in the UK and is someone you trust...transfer the ownership of the property into the name of said spouse and don't claim that she is non-resident when you complete the UK tax return (or use the statutory residence rules for her to be deemed UK resident) so as least one of you can use the personal allowance. Of course there are IHT issues to consider.

[jacky54]

so how would they know you are an expat and not at home if you have a home address, registered with a GP, registered with banks at home, do not transfer money and are on the electoral roll, but are in fact full time abroad?

[chiang mai]

so how would they know you are an expat and not at home if you have a home address, registered with a GP, registered with banks at home, do not transfer money and are on the electoral roll, but are in fact full time abroad?

Electoral roll, income tax returns, proof of address such as a utility bill etc. During the younger years a person may be able to get around those things by virtue of their parents address, not a problem. In the middle years it can be much harder when there is no UK base that is firm. In the older years, especially when the NHS want s to see proof of residency and you are statistically more likely to become unwell and need NHS services, it's going to be tough.

[partington]

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

If you sold up before April next year you wouldn't be subject to capital gains tax, as the law still exempts non-residents from CGT until then.

Moreover, when the law is introduced, capital gains for non-residents will be calculated from the property value in April 2015. Then if you stay non-resident and decide to sell sometime in the next say, 4-5 years, it is possible that you will pay little or no tax, as the value may remain stable or even diminish.

I'm thinking about this too, as I will lose about £1400 pa if rental income is not included as UK connected income for assessment of eligibility to retain the personal allowance.

Also there will be an election between now and when this policy is due to come into effect, so Call me Dave and his smug old Etonian cohorts may very well be kicked out to to focus on their own multimillion pound fortunes rather than our couple of thousand quid, and it's just possible the policy may be delayed or even abandoned...

Edited August 15, 2014 by partington

[shoppeacenquiet]

It looks like this is going to happen. If it does then there is no advantage to being a private individual owning the property over a company format. So if one is thinking to pass on their property to their children then they can avoid inheritance tax at least by opening an off shore company to own the UK property in an off shore jurisdiction where there is no inheritance tax such as HK, BVI, Caymans etc. This is perfectly legal. So you make a will to leave your shares to your children and the shares change ownership off shore tax free while the property ownership on the land registry remains the same as it is the same company still owning it.

HMRC have just taken away the only incentive not to do this. Company set up costs about 100 pounds and 600 per year there after. A minor if you have or are building a portfolio.

0 tax on earnings (other than the UK tax at source), no capital gains tax (if selling the company shares rather than the UK property- UK property sale would be taxable at source) , no inheritance tax on the transfer of shares.

[shoppeacenquiet]

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

If you sold up before April next year you wouldn't be subject to capital gains tax, as the law still exempts non-residents from CGT until then.

Moreover, when the law is introduced, capital gains for non-residents will be calculated from the property value in April 2015. Then if you stay non-resident and decide to sell sometime in the next say, 4-5 years, it is possible that you will pay little or no tax, as the value may remain stable or even diminish.

I'm thinking about this too, as I will lose about £1400 pa if rental income is not included as UK connected income for assessment of eligibility to retain the personal allowance.

Also there will be an election between now and when this policy is due to come into effect, so Call me Dave and his smug old Etonian cohorts may very well be kicked out to to focus on their own multimillion pound fortunes rather than our couple of thousand quid, and it's just possible the policy may be delayed or even abandoned...

I don't believe they can calculate the vale at April 2015. How would they?

I think they are saying this and being ambiguous about it all so as not to cause a rush to sell. Then after the date has passed they will announce that due to the difficulty of determining values they actually will be taxing any gains from purchase price.

We will see.

[shoppeacenquiet]

A company in sole ownership would also be much safer than puttin things in trust, and the gov also announced recently they want to put a stop to trusts also.

I am not an expert but am looking in to the options just now personally. Am I missing something? Thoughts welcome.

[partington]

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

If you sold up before April next year you wouldn't be subject to capital gains tax, as the law still exempts non-residents from CGT until then.

Moreover, when the law is introduced, capital gains for non-residents will be calculated from the property value in April 2015. Then if you stay non-resident and decide to sell sometime in the next say, 4-5 years, it is possible that you will pay little or no tax, as the value may remain stable or even diminish.

I'm thinking about this too, as I will lose about £1400 pa if rental income is not included as UK connected income for assessment of eligibility to retain the personal allowance.

Also there will be an election between now and when this policy is due to come into effect, so Call me Dave and his smug old Etonian cohorts may very well be kicked out to to focus on their own multimillion pound fortunes rather than our couple of thousand quid, and it's just possible the policy may be delayed or even abandoned...

I don't believe they can calculate the vale at April 2015. How would they?

I think they are saying this and being ambiguous about it all so as not to cause a rush to sell. Then after the date has passed they will announce that due to the difficulty of determining values they actually will be taxing any gains from purchase price.

We will see.

They don't do it, you do, when you fill in your tax self-assessment form for the year you sell.

If you are wise you will get a valuation of your house done by an agent on or around April 2015, and then if your tax return is queried, you will have this as a record, just as you should be keeping tax records for every important financial transaction.

Expattaff1308 in post #5 has provided a very useful link to the government consultation document on this issue. https://www.gov.uk/g... ... -residents

In the introduction it says:

"The government recognises that this change is not straightforward to introduce. For this reason, the charge will apply from April 2015, and only to gains arising from that date. We will ensure, as far as possible, that the extended CGT charge is fair and sustainable, without imposing unnecessary or intrusive burdens on non-residents."

Up to you whether you believe this or not, of course.

[sandyf]

so how would they know you are an expat and not at home if you have a home address, registered with a GP, registered with banks at home, do not transfer money and are on the electoral roll, but are in fact full time abroad?

Electoral roll, income tax returns, proof of address such as a utility bill etc. During the younger years a person may be able to get around those things by virtue of their parents address, not a problem. In the middle years it can be much harder when there is no UK base that is firm. In the older years, especially when the NHS want s to see proof of residency and you are statistically more likely to become unwell and need NHS services, it's going to be tough.

Why would the NHS want proof of residency. My NHS address is a flat I vacated 6 years ago. I see the doctor about once a year and he knows I live in Thailand, prescriptions are 6 monthly and it is not a problem.

[rwdrwdrwd]

You, like myself probably chose to leave the UK because there were more opportunities and a better life to be had overseas. I don't consider myself as being 'first class' compared to people living in the UK and paying full taxes etc. and unfortunately tax loop holes are dropping like crazy, country by country.

What is even more worrying to come in the UK, is the same tax regime as they have in the USA.......whereby you have to pay 'full' taxes on global income regardless if you live in the UK or not. Its coming for sure....because the UK spends way too much money, actually it gives most of it away to all these failed states in aid.

Problem there is, if you don't pay, or they suspect you of not paying, they freeze your passport so you cannot move around, and force you to report to an embassy where they slap you with an inflated tax bill and some fines.

Don't believe they wouldn't do it. Leaving the UK and becoming non tax resident may have built an empire,but there is no longer an empire.

Oh well, always liked the idea of Uruguay anyway. No huge desire to maintain British citizenship here beyond the passport itself, would genuinely renounce it once I had a reasonable backup passport from elsewhere.

Edited August 15, 2014 by rwdrwdrwd

[shoppeacenquiet]

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

If you sold up before April next year you wouldn't be subject to capital gains tax, as the law still exempts non-residents from CGT until then.

Moreover, when the law is introduced, capital gains for non-residents will be calculated from the property value in April 2015. Then if you stay non-resident and decide to sell sometime in the next say, 4-5 years, it is possible that you will pay little or no tax, as the value may remain stable or even diminish.

I'm thinking about this too, as I will lose about £1400 pa if rental income is not included as UK connected income for assessment of eligibility to retain the personal allowance.

Also there will be an election between now and when this policy is due to come into effect, so Call me Dave and his smug old Etonian cohorts may very well be kicked out to to focus on their own multimillion pound fortunes rather than our couple of thousand quid, and it's just possible the policy may be delayed or even abandoned...

I don't believe they can calculate the vale at April 2015. How would they?

I think they are saying this and being ambiguous about it all so as not to cause a rush to sell. Then after the date has passed they will announce that due to the difficulty of determining values they actually will be taxing any gains from purchase price.

We will see.

They don't do it, you do, when you fill in your tax self-assessment form for the year you sell.

If you are wise you will get a valuation of your house done by an agent on or around April 2015, and then if your tax return is queried, you will have this as a record, just as you should be keeping tax records for every important financial transaction.

Expattaff1308 in post #5 has provided a very useful link to the government consultation document on this issue. https://www.gov.uk/g... ... -residents

In the introduction it says:

"The government recognises that this change is not straightforward to introduce. For this reason, the charge will apply from April 2015, and only to gains arising from that date. We will ensure, as far as possible, that the extended CGT charge is fair and sustainable, without imposing unnecessary or intrusive burdens on non-residents."

Up to you whether you believe this or not, of course.

Hi

Obviously- You / I would not do it ourselves on our April 2015 tax return because CGT is still tax free this tax year.

Next tax year "they" will advise how "we" or our accountants should calculate it. This gives them plenty window after the date of application to decide how exactly. I doubt very much they just let people pick a number out of the air. They are always saying they will not revalue properties council tax bands because it is far too complicated. Doesn't this same problem apply to this equation also. The revenue would have no idea what was a fair estimate or not across all the countries local markets; to check it all would be hugely expensive. Maybe they will trust in the public honesty- who knows. All documents so far are just "consultations", nothing set in stone, so wide open for them to do as they please; this is what I mean by "ambiguous".

I agree that a survey would be a good idea just in case, but personally it's not worth the risk or hassle any longer, especially with the likely removal of the personal allowance for non residents also. Bank the nice gains and move on to greener more tax efficient pastures is my view. If want to buy back in for the long haul then can do so as a company so mitigating inheritance tax at least.

Up to you if you believe the HMRC/ UK government will be generous to you or not. Bare in mind they are doing everything now to squeeze the cash out of us all. Frozen pensions, increased stamp duties, withdrawal of CGT exemption, withdrawal of Personal Allowance, reduction of 40% threshold etc. all these thing point to a high chance of non generosity. I don't "believe" anyone; I calculate probabilities.

[MJP]

Good. Time for the BTL brigade to cough up. They've been screwing the younger generations out of affordable housing and tax dodging for far too long.

Hope interest rates rise too. Should see an end to the madness of the price bubble.

Flame away. I'm not changing my views.

EDIT: I don't mean those folks renting out their only home in Blighty.

Edited August 15, 2014 by MJP

[chiang mai]

so how would they know you are an expat and not at home if you have a home address, registered with a GP, registered with banks at home, do not transfer money and are on the electoral roll, but are in fact full time abroad?

Electoral roll, income tax returns, proof of address such as a utility bill etc. During the younger years a person may be able to get around those things by virtue of their parents address, not a problem. In the middle years it can be much harder when there is no UK base that is firm. In the older years, especially when the NHS want s to see proof of residency and you are statistically more likely to become unwell and need NHS services, it's going to be tough.

Why would the NHS want proof of residency. My NHS address is a flat I vacated 6 years ago. I see the doctor about once a year and he knows I live in Thailand, prescriptions are 6 monthly and it is not a problem.

Because the new rules, which are slowly being implemented, state that a person must be UK resident for the preceding six months, if they were not they are ineligible for free NHS treatment. It doesn't matter that a person owns property in the UK. This point has been discussed ad nauseum in this forum and there are even threads dedicated to it, perhaps worth taking a look.

[sandyf]

so how would they know you are an expat and not at home if you have a home address, registered with a GP, registered with banks at home, do not transfer money and are on the electoral roll, but are in fact full time abroad?

Electoral roll, income tax returns, proof of address such as a utility bill etc. During the younger years a person may be able to get around those things by virtue of their parents address, not a problem. In the middle years it can be much harder when there is no UK base that is firm. In the older years, especially when the NHS want s to see proof of residency and you are statistically more likely to become unwell and need NHS services, it's going to be tough.

Why would the NHS want proof of residency. My NHS address is a flat I vacated 6 years ago. I see the doctor about once a year and he knows I live in Thailand, prescriptions are 6 monthly and it is not a problem.

Because the new rules, which are slowly being implemented, state that a person must be UK resident for the preceding six months, if they were not they are ineligible for free NHS treatment. It doesn't matter that a person owns property in the UK. This point has been discussed ad nauseum in this forum and there are even threads dedicated to it, perhaps worth taking a look.

I wasn't quite right in the previous post, I actually meant GP address as opposed to NHS which is different.

About a year ago I had an invitation directly from the NHS to participate in a bowel cancer screening program. I have had these previously but they were local, not national.

The invitation came to the address used by HMRC, This address is unique and the NHS must have been advised of the address by HMRC. This would imply that if you are registered with HMRC you are also registered with NHS at the same address. This is not surprising given the relationship between NI contributions and the NHS.

It could well be that how you conduct your tax affairs may have some bearing on any future relationship with the NHS.

Basically what you are saying is when I have my appointment next week, the doctor will refuse to renew my prescription. Time will tell, it usually does.

[shoppeacenquiet]

Good. Time for the BTL brigade to cough up. They've been screwing the younger generations out of affordable housing and tax dodging for far too long.

Hope interest rates rise too. Should see an end to the madness of the price bubble.

Flame away. I'm not changing my views.

EDIT: I don't mean those folks renting out their only home in Blighty.

It's the single home owners/ renters who will feel this the worst.

Thailand- no capital gains tax, no council tax, no inheritance tax, Same like numerous other countries - why do we need so much tax on us in the UK/ west? Is the population any happier for all the "benefits" they receive? Are crime levels better or worse?

The difference in housing costs between Thailand and the UK is not about tax ; Thai tax is minimal; it is about over regulation and planning laws stifling / obstructing the UK market mechanism.

Interest rates may play a part but if rates rose all of a sudden now it would just make bargains for the cash rich, rental funds etc, while the average youth would still be unable to afford the home because the loans would cost more than their disposable income- especially with the real wage declines and high cost of living.

So the desired results of more private housing available and affordable (which I agree is needed and would welcome) is not achievable by crashing the market; it is only possible by increasing the supply and maintaining economic health at the same time. A construction boom should do wonders for the economy, employment etc too; could force the unemployed work shy to get trained up and build low cost housing.

[shoppeacenquiet]

Make a government work program in a way like Henry ford; where the workers can afford to buy what they are building.

[ThaiPauly]

Good. Time for the BTL brigade to cough up. They've been screwing the younger generations out of affordable housing and tax dodging for far too long.

Hope interest rates rise too. Should see an end to the madness of the price bubble.

Flame away. I'm not changing my views.

EDIT: I don't mean those folks renting out their only home in Blighty.

I can't see that by reducing the number of homes available for rent will affect house prices. If there are 10 people in the town my properties are in sell up because letting is no longer financially practical then rental prices will RISE because of lack of availability.

I am seriously considering offloading mine now as it looks very likely that the taxation of rentals will happen, couple that with the CGT that is coming in next year and my money is better off in a tax free offshore bond.

I don't really want to sell but I don't see what choice I have?

[chiang mai]

Electoral roll, income tax returns, proof of address such as a utility bill etc. During the younger years a person may be able to get around those things by virtue of their parents address, not a problem. In the middle years it can be much harder when there is no UK base that is firm. In the older years, especially when the NHS want s to see proof of residency and you are statistically more likely to become unwell and need NHS services, it's going to be tough.

Why would the NHS want proof of residency. My NHS address is a flat I vacated 6 years ago. I see the doctor about once a year and he knows I live in Thailand, prescriptions are 6 monthly and it is not a problem.

Because the new rules, which are slowly being implemented, state that a person must be UK resident for the preceding six months, if they were not they are ineligible for free NHS treatment. It doesn't matter that a person owns property in the UK. This point has been discussed ad nauseum in this forum and there are even threads dedicated to it, perhaps worth taking a look.

I wasn't quite right in the previous post, I actually meant GP address as opposed to NHS which is different.

About a year ago I had an invitation directly from the NHS to participate in a bowel cancer screening program. I have had these previously but they were local, not national.

The invitation came to the address used by HMRC, This address is unique and the NHS must have been advised of the address by HMRC. This would imply that if you are registered with HMRC you are also registered with NHS at the same address. This is not surprising given the relationship between NI contributions and the NHS.

It could well be that how you conduct your tax affairs may have some bearing on any future relationship with the NHS.

Basically what you are saying is when I have my appointment next week, the doctor will refuse to renew my prescription. Time will tell, it usually does.

No, that's basically not what I am saying!

One more time: UK citizens who have not been living under a rock or exiled to the Pitcairns will likely know that the NHS has been introducing new rules aimed primarily reducing medical tourism. The problems and potential solutions were first described in a Green Paper two years ago which was floated on this forum for discussion, proposals were subsequently agreed and issued in a White Paper reflecting government policy.

One of the recommendations that was agreed is that UK citizens must be resident in the UK for six months each year in order to qualify for free NHS treatment, this was an improvement over the previous requirement where a maximum absence of 90 days was allowed. It is the responsibility of individual PCTs' to phase in the recommendations contained in the green paper, some PCTs' are more advanced than others in this respect.

Emergency care remains free to everyone under the NHS although follow up care does not. A concession has been/is being granted (unsure of current status) whereby citizens in receipt of the state pension and who have paid a minimum of nine years NI contributions will also remain eligible for free NHS treatment, regardless of residency.

Finally, exactly how individual GP's will manage the transition remains unclear, many people have reported that they are still on the books of the GP and that they do not encounter problems getting prescriptions filled or being seen, despite being overseas resident for many years, that scenario is liable to change at some point, under the new guidelines. Indeed I was able to visit my old GP in Oxfordshire in March, despite having not seen her for ten years, one suspects that if the visit to the surgery is simple, there wont be an immediate problem. If however that visit results in the need to undergo testing or treatment in hospital, there may well be a problem.

Finally finally: there is no firm relationship between residency for tax purposes and and eligibility for NHS treatment. A citizen can become tax resident within thirty days of being absent for several years, NHS eligibility does not follow the same structure and the six month residency rule applies.

[EmptyHead]

Guald, what is this?

Britain out to get expats more and more these days. Thailand out to get aliens more and more these day.

[icare999]

The headline is somewhat misleading. I have 6 rented properties and pay tax on net earnings from all of them, have done for years

but if your a uk citizen you get full personal allowance which can be used against any income rents or otherwise For example my children own property in UK which is let out and weach as UK citizens pays no tax on rental income since net its below their personal allowance. They have dual nationality and live here so change will mean they will loose 20% of their income. I wish people would stop posting BS this is major change

[icare999]

I can tell you having sold and bought industrial property recently in the UK, that HMRC wants your National Insurance number so that they can check if tax has been paid on rental income and to check if any capital gains tax is due.

It's the end of "slush money" as we used to call it.

CGT tax is and was not payable if you are non resident but thats due to change next April THe exception was one of main reasons i became no resident but when it changes next April I might return and claim everything I can since its well over 5 years since i sold or transferred to my this wife my last property in UK. If they introduce also no tax allowance for my other income from investments that will be last straw. I know several ex pats who have returned to UK because they can't afford school fees medical and rest and now Ii've of state with their rent paid for.

Actually i probably wont return since my kids are nearly finished with their education and while my health care costs are very high at over 5000 gbp a year here id not really want to subject myself to lottery of NHS. On other hand I could get main stuff done here like operations and get UK to pay my over 15-20,000 baht a month medicine costs.

[icare999]

If the government were to restrict non-residents entitlement to the Personal Allowance, it would intend this to apply to types of income which are taxable both in the UK and overseas (such as that from immovable property) but to retain the Personal Allowance on income that is taxable exclusively in the UK.[/size]

I voiced an opinion along these lines in the other thread. I believe we will see the HMRC introduce the term "Allowable income"

This is what we need to get sorted out - "taxable exclusively in the UK".

As you know, Thailand taxes a UK pension on a "remittance" basis - they tax it if you take it into Thailand (in the year you earn it).

What does HMRC intend "taxable exclusively in the UK" to mean in the context of a remittance basis? Do they mean that the income is prima facie taxable in the other country (in our case, Thailand), with the amount being quantified by reference to the amount remitted, or do they mean just the amount remitted, i.e. the amount that should be taxed?

Obviously, if it is the first, it will have a massive impact on people with British pensions in Thailand.

Altering the word "taxable" to "taxed" would solve the problem.

As I said in my response to this consultation exercise, the Government really shouldn't get too hung up on whether or not various income sources are exclusively taxed in the UK given the lack of consistency between the various tax treaties which have been negotiated with other countries. Far better, I think, for a case-by-case approach to be adopted on the basis of information reported in annual self-assessment returns.

The critical factor in determining whether or not we shall continue to be eligible for the personal allowance will, I think, depend on the outcome of the proposed "economic connection to the UK strength" test which the Government seem to favour applying to each non-resident. But we need to be certain on what types of UK-generated income will be included in the percentage calculation (i.e. sandyf's "allowable income"). Certainly the Government's stated intention is that pension income will be included in the reckoning. So if UK occupational and state pensions are your sole source of income you should still be OK as regards continued eligibility for the personal allowance.

On the other hand, if you are also in receipt of rental income derived from property you own in the UK and the Government decide NOT to include this in the "economic connection to the UK strength" test percentage calculation, then you could be in trouble. In my case, 58% of my income is made up of an occupational pension and the remaining 42% of rental income. So I would fail this test even if the percentage threshold were set at 75% rather than 90% and, hence, no longer be eligible for the personal allowance.

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

if you sell it before April next year and are non resident then no CGT is due Id recommend anyone with significant gain on property do this anyway and then buy back to get a higher base but in long term any moneys left in UK will be targeted for more and more tax and landlords are easy targets

I've already sold all or given to my Thai wife many years ago but we now need to carefully consider weather to simply sell before next April her property and our children's in UK and simply give up trying to generate income in UK. Next I'm sure they will attack CGT exception for shares for non residents and generally attack all pensions

[icare999]

Therefore the only way in which I could retain the personal allowance would be to sell my property in the UK, when would presumably then lead to me being clobbered for capital gains tax. As always when tossing coins with the jolly old taxman it's a case of "heads I win, tails you lose", I'm afraid.

If you sold up before April next year you wouldn't be subject to capital gains tax, as the law still exempts non-residents from CGT until then.

Moreover, when the law is introduced, capital gains for non-residents will be calculated from the property value in April 2015. Then if you stay non-resident and decide to sell sometime in the next say, 4-5 years, it is possible that you will pay little or no tax, as the value may remain stable or even diminish.

I'm thinking about this too, as I will lose about £1400 pa if rental income is not included as UK connected income for assessment of eligibility to retain the personal allowance.

Also there will be an election between now and when this policy is due to come into effect, so Call me Dave and his smug old Etonian cohorts may very well be kicked out to to focus on their own multimillion pound fortunes rather than our couple of thousand quid, and it's just possible the policy may be delayed or even abandoned...

i dont think you can claim prop;arty will be revalued particularly since details are still being considered If like my wife property was aquaria 20 years ago and its not revalued which is quite possible their are massive tax implications I think better safe than sorry so she's put her UK property on market and then well decide weather to rebut or just withdraw money from UK before they also introduce a tax for withdrawing money such as in SA and other countries or ban it entirely as in 70's

[shoppeacenquiet]

Icare999 has the most sensible thinking.

These steps are just the beginning.

Think about the precedent being set for all these tax rises. This by a conservative government. How you think labour will get stuck in if they win the next election. They already basically declared they will declare war on landlords.

[Eneukman]

Be careful about selling and repurchasing any property you may own in the UK as there is likely to be a time limit in which this will be treated as being tax avoidance and therefore not allowed. In that event the Inland Revenue would treat the original purchase price (after allowing for any improvements) to be the purchase price for capital gains tax purposes rather than the new, higher, purchase price.

When the acquisition price of an asset for capital gains tax was index-linked some 30+ years ago, you could elect (for all assets) to have the value for capital gains tax to be either the original purchase price or the value as at a certain date (6th April 1981 if my memory is correct). When indexation was subsequently removed, I think you were allowed to make a further election but my memory is a bit vague on that.

I suspect therefore that if the exemption from capital gains tax is removed for non-resident tax payers, there will be a similar option to elect for either the original purchase price or the value as at a specific date - perhaps 6th April 2015?

Alan