A Heads up For UK Expats

[GuestHouse]

Classic Carpet Bagger tactics.

The Government announce proposals to change the tax laws and the Carpet Baggers in the offshore financial industry immediately start scaring people that they are going to be robbed.

Well maybe they will be robbed, but the chances are increased dramatically by using the services of unregulated Carpet Baggers.

FACT

The changes to the tax laws are due to be confirmed in the Autumn budget

FACT

The Government white paper on the proposed changes states that the favoured measure to determine if an individual shall maintain a personal tax allowance is the measure of the percentage of total income derived from the UK. A cut-off point of between 70~80% of income from the UK is suggested as the most like and most favoured measure of whether an individual shall maintain their tax allowance.

With these facts in mind:

How does moving a pension off shore improve the chances of an individual maintaining their right to a tax allowance? (Moving a pension offshore will reduce the percentage of income from the UK - The exact opposite of good advice).

How is someone going to realistically sell property in the UK before these changes come in? (Is it even wise to do so, given the security of homeownership in the UK).

Other observations

We have advice in this thread to move private pensions of 100K offshore. - If your only pension is the state pension and a 100K pot then moving your 100K pot offshore will immediately split your income streams and loose you your tax allowance in the UK.

If you are renting property in the UK an using only your personal tax allowance to protect your income from taxes you need to get some better advice. The tax laws covering private rental allow a whole rack of tax deductibles against which your rental income can be charged AND in the current market, the income is only part of the equation - price growth is almost certainly going to outstrip the income. - So what's all this "Panic - and sell" nonsense.

As for QROPS

Once again and again and again.

QROPS might be the right choice for people with very large pension pots who absolutely know they are never going back to the UK - but even then why move pension savings into a high cost QROPS until you absolutely have to?

QROPS for small pension pots (by my reckoning anything below around 250K but certainly anything below 100K - you will almost certainly be worse off with a QROPS).

Get the wrong Carpet Bagger advising you and you might wind up penniless.

Pensions - Savings we made for when we are too old to work, money that if lost can never be replaced.

Classic Conman Trick - Play to greed - convince your 'Mark' that s/he can make more money, avoid taxes, take their eye of the ball and rob them of their money.

Edited August 30, 2014 by GuestHouse

[chiang mai]

This subject has been discussed at length over many months on TV, conclusions are that PROBABLY, rental income for expats will be taxable, pension income likely not, other investment income may be taxed also. Best not to panic until the jury comes in. Some of us also think that the trade off will be that cost of living increases will be allowed to all expat pensions, as a trade of - it's all guess work of course at this stage.

[jacky54]

I heard about this one. One thing I'm not sure about is - If I keep UK residency I can still have my tax allowance?

As most of my income will be taxed at source anyway (civil service + state pensions) that would be best for me. So, I suppose the question I'll need answered is; do I HAVE to be a non-resident just because I'm living abroad? I won't have an address in the UK.

Anyone know the answer to this one?

Oh and yes, thieving ba$tard$!

You need a UK address if you want to be resident and also be able to satisfy the new residency rules. If you are already non resident and taxed on anything above the 10,000 allowance there is no benefit in changing.You will not loose your allowance. If you try to use a false address in the UK, you will be more than likely found out and you run the risk of loosing your pensions.

How can they find out? and they cannot take your pension away, merely make you pay back the overpayments. However looking at what they do to benefit cheats you would get about 200 years to pay it back anyway, Screw the theiving xxxxxx'ds

[GuestHouse]

In the interest of transparency and disclosure:

Can the OP please confirm or deny that he is connected to the Financial Services Industry?

[chiang mai]

Dunk him in the village pool and see if he lives.

[fletchsmile]

As a expat living on my income from property in the UK this would affect me and my two children I have here. Goal posts always being moved. Problem is the expat community had no voice. Ask someone in the street in the UK if they care about expats and they would say "if they live abroad then don't give them any tax allowances"! My pension was stolen by Equitable Life well about 50% of it. And as I took it at age 50 because I thought they would steal the rest of it I cannot get compensation from the government. I cannot take my wife back to the UK only my children as I do not have a large enough income. Now they may take my tax allowances away. This would hurt my family. Not happened yet and I hope sense will prevail. Always the same those of us who have paid their way and are still paying always have to pay more.

Unfortunately the UK govt will keep moving the goalposts given the trouble the country is in, in several areas. Not to say other places aren't as bad or worse.

One problem ironically is that for people who consider they "paid their way" in the past, it's very clear now that what was paid in the past when they were "paying their way" wasn't enough under the UK system. In particular on pensions a large number of people (baby boomers) paying only small contributions for those before them (their living parents were fewer in number particularly after WW2). This is the problem of the UK paying pensions as it goes along. Unfortunately as that large group now retires there are fewer working people to pay for them. So in reality they actually had it easy by a lot of them paying for a much smaller number of those that went before. Now the fewer can't pay for the lot In reality the baby boomer generation should have paid more, and this should have been saved for their futures

All means that people living here really need to consider how they are protecting yourself against these, including if you are going to live in Thailand, building assets here that won't be subject to UK govt moving goalposts. You need to take charge. Play the hands you're dealt. Thailand is worse for some things, but better on others, so consider moving appropriate assets here.

BTW You should follow up on Equitable Life. Google their website etc. My parents had already started taking their pensions but were compensated. I moved my pensions away and got some compensation 10 years+ later. It was only 22% of the loss, but at least something. Basically if you had them apply that "market value adjustment" to your with profits fund and dip into your pension fund, you should be entitled to some compensation, regardless of when you then started drawing pension or if you subsequently moved it. Perhaps your problem may be they couldn't contact you.

Cheers

Fletch

[denby45]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

In the interest of transparency and disclosure:

Can the OP please confirm or deny that he is connected to the Financial Services Industry?

Please chalk your eyes and read the OP again. Anyone can see it is an extract from the movechannel. Even with a link embedded. However I can confirm that I am nothing to do with that website and further more my profession is Control System Engineering. Hope this helps.

Den

[Brian Corrigan]

I heard about this one. One thing I'm not sure about is - If I keep UK residency I can still have my tax allowance?

As most of my income will be taxed at source anyway (civil service + state pensions) that would be best for me. So, I suppose the question I'll need answered is; do I HAVE to be a non-resident just because I'm living abroad? I won't have an address in the UK.

Anyone know the answer to this one?

Oh and yes, thieving ba$tard$!

You need a UK address if you want to be resident and also be able to satisfy the new residency rules. If you are already non resident and taxed on anything above the 10,000 allowance there is no benefit in changing.You will not loose your allowance. If you try to use a false address in the UK, you will be more than likely found out and you run the risk of loosing your pensions.

You do not need a UK address to be tax resident.

What the regulations will be under the new rules is not known, it's a subject that is currently under consultation.

You do not need a UK address to be tax resident.

You do not need a UK address to pay tax in the UK. Correct. You do however, need a UK address to be resident in the UK and spend more than 183 days at that address.

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.

Civil service and State pensions are taxable in the UK unless there are reciprocal agreements in force with the country of residence. There are no reciprocal pension arrangements for Thailand.

[chiang mai]

I heard about this one. One thing I'm not sure about is - If I keep UK residency I can still have my tax allowance?

As most of my income will be taxed at source anyway (civil service + state pensions) that would be best for me. So, I suppose the question I'll need answered is; do I HAVE to be a non-resident just because I'm living abroad? I won't have an address in the UK.

Anyone know the answer to this one?

Oh and yes, thieving ba$tard$!

You need a UK address if you want to be resident and also be able to satisfy the new residency rules. If you are already non resident and taxed on anything above the 10,000 allowance there is no benefit in changing.You will not loose your allowance. If you try to use a false address in the UK, you will be more than likely found out and you run the risk of loosing your pensions.

You do not need a UK address to be tax resident.

What the regulations will be under the new rules is not known, it's a subject that is currently under consultation.

You do not need a UK address to be tax resident.

You do not need a UK address to pay tax in the UK. Correct. You do however, need a UK address to be resident in the UK and spend more than 183 days at that address.

No, you need 30 days at at an address in the UK that you own which you declare to be your only home. Your didn't read the link I provided earlier, did you! Here it is again:

http://www.cambridgetax.co.uk/ctp/New_Residence_Rules.html

[sandmike]

Perhaps one crumb of comfort to those with property in the UK who are concerned about Capital gains Tax .. (and that includes me)

The consultancy document on CGT appears to say that CGT will only be due in the INCREASE in value from the day the legislation comes into effect (anticipated to be April 2015). Of course this only applies if the property is your primary residence in the UK. AFAIK other rental properties have always been subject to CGT on their sale. Others more wise than me can perhaps comment on this.

The consultancy document notes that having the property valued immediately prior to the legislation coming into force will establish a baseline value from which CGT will be calculated in the future.

The sky is not about to fall in just yet ...

[partington]

Perhaps one crumb of comfort to those with property in the UK who are concerned about Capital gains Tax .. (and that includes me)

The consultancy document on CGT appears to say that CGT will only be due in the INCREASE in value from the day the legislation comes into effect (anticipated to be April 2015). Of course this only applies if the property is your primary residence in the UK. AFAIK other rental properties have always been subject to CGT on their sale. Others more wise than me can perhaps comment on this.

The consultancy document notes that having the property valued immediately prior to the legislation coming into force will establish a baseline value from which CGT will be calculated in the future.

The sky is not about to fall in just yet ...

If you are renting out your house, even if it is your only property in the UK, then you are not entitled to the primary residence relief on capital gains tax for any periods that you are renting it. Only periods where it was not let are entitled to complete relief from CGT, so you work out on a pro rata basis how much of any gain is completely exempt from CGT.

For all periods where your home is rented there is a letting relief, which is unfortunately not a complete exemption from CGT. There are three possible methods to work out how much of any gain during a period of letting is entitled to tax relief. You must choose the method which gives the lowest figure, and the maximum possible amount of gain entitled to relief during a period when the property is let is capped at £40,000.

Mostly relevant to expats intending to return home and then sell their single property, but will be applicable to non-residents too after next April, now that CGT will be payable by non UK residents as well.

This is clearly explained here: www.hmrc.gov.uk/helpsheets/hs283.pdf

‎

[sandmike]

Partington,

That helpsheet is very clear. Many thanks

[arisaje]

I am an offshore worker. I do not come from the UK nor do I work there but I get paid out of the UK so I guess my source income comes from there. Does anyone know if I will now be liable to pay income tax in the UK?

No you don't, but be careful they do not decide to 'hypo-tax' you.......as part of the tax-equalisation policies. That is of course, you would have to pay tax in the country where you come from?

[54321]

This is one of many issues in the UK, and its not about paying a fair wack of tax, its about the government raising cash because they are pouring it down the drain elsewhere. No matter who you vote in they are all clowns and career politicians feeding from the trough

(tonge in cheek) I wish the military in the UK could show some guts and replicate the fantastic work going on in Thailand, we have been governed by morons for so long and there are so many basics they just don't know where to begin, so a new intelligent broom is needed to sweep clean

[Hugh Jarse]

I read this report a number of weeks ago ,if it were to happen it would take a number of years to introduce by then there could well be another Government in power and I am sure that it would be challenged in the court of human rights. It would not effect everyone if I understand correctly it would effect those who are in receipt of a government pension retired civil servant, police, fire, military this would mean the government would be clawing money back into there own coffers it would also effect property owners who rent out there property whilst living abroad , if in the other hand you were receiving your OAP pension and that was your only income then it would not effect you , as stated I do not think it will happen for a number of years if at all if it did then I would have to consider moving back to the UK as I pay a substantial amount of tax to the UK HMRC every month.

I hope you are right as those on modest amounts of unearned income would be forced to return and avail themselves of free medical care and other state benefits. Too many returnees would become a burden on government and self defeating, me thinks. The tax grabs in the UK are becoming overburdonsome for many UK residents also. Such is the rotten state of the UK's finances.

[chiang mai]

Perhaps somebody can explain that link to me? In my case my primary residence (for tax purposes) is in the UK but I live for nine months of the year in Thailand where I rent my condo., I do not rent out my UK property.

Does the above mean that because I do not occupy my UK property for more than a couple of months each year that I am liable to CGT on its sale (given the allowable deductions such as the last three years etc)?

[GuestHouse]

Perhaps somebody can explain that link to me? In my case my primary residence (for tax purposes) is in the UK but I live for nine months of the year in Thailand where I rent my condo., I do not rent out my UK property.

Does the above mean that because I do not occupy my UK property for more than a couple of months each year that I am liable to CGT on its sale (given the allowable deductions such as the last three years etc)?

I think the issue is in the definition of "occupy" - your property in the UK is almost certainly your "primary residence where I presume you keep personal possessions, maintain as your official address, is the only home you own, or if you own other property is your elected home, and where you pay council taxes.

Further down in the notes the definition of allowable absence is given.

You need to be careful if your total absence exceeds 3 years, unless you are claiming relief on council taxes while on holiday I can't see how your absence can be counted.

Edited August 31, 2014 by GuestHouse

[chiang mai]

Perhaps somebody can explain that link to me? In my case my primary residence (for tax purposes) is in the UK but I live for nine months of the year in Thailand where I rent my condo., I do not rent out my UK property.

Does the above mean that because I do not occupy my UK property for more than a couple of months each year that I am liable to CGT on its sale (given the allowable deductions such as the last three years etc)?

I think the issue is in the definition of "occupy" - your property in the UK is almost certainly your "primary residence where I presume you keep personal possessions, maintain as your official address, is the only home you own, or if you own other property is your elected home, and where you pay council taxes.

Further down in the notes the definition of allowable absence is given.

You need to be careful if your total absence exceeds 3 years, unless you are claiming relief on council taxes while on holiday I can't see how your absence can be counted.

Thanks for your feedback GH.

If I understand it correctly, three years absence is allowed plus the last three years are excused for CGT accounting purposes, plus periods of residency added on, it looks as though this doesn't potentially become a problem for a further six or seven years at the earliest, until they change the rules again that is!.

[partington]

Perhaps somebody can explain that link to me? In my case my primary residence (for tax purposes) is in the UK but I live for nine months of the year in Thailand where I rent my condo., I do not rent out my UK property.

Does the above mean that because I do not occupy my UK property for more than a couple of months each year that I am liable to CGT on its sale (given the allowable deductions such as the last three years etc)?

I think the issue is in the definition of "occupy" - your property in the UK is almost certainly your "primary residence where I presume you keep personal possessions, maintain as your official address, is the only home you own, or if you own other property is your elected home, and where you pay council taxes.

Further down in the notes the definition of allowable absence is given.

You need to be careful if your total absence exceeds 3 years, unless you are claiming relief on council taxes while on holiday I can't see how your absence can be counted.

Thanks for your feedback GH.

If I understand it correctly, three years absence is allowed plus the last three years are excused for CGT accounting purposes, plus periods of residency added on, it looks as though this doesn't potentially become a problem for a further six or seven years at the earliest, until they change the rules again that is!.

Unfortunately they have changed the rules already! It is now only the last eighteen months that are excused for CGT, not three years.

I can't give the HMRC link , because I lost it, but it will be on the site somewhere. The eighteen month period is however referred to in this recent Guardian advice column on the topic:

http://www.theguardian.com/money/2014/aug/21/capital-gains-tax-on-let-property

[chiang mai]

Thank you Partington, I'm grateful for that.

[TommyUK1960]

Taken off Gov site;

Pensioners

Pensioners who live overseas are a significant group of British national expatriates, estimated by DWP at around 1,200,000 individuals. Most UK national pensioners living overseas would not be affected by any restriction on non-residents entitlement to the Personal Allowance. This is because:

• some are still resident in the UK for tax purposes and so would not be affected by any change
• provisions of tax treaties generally mean that UK state pensions, personal pensions or private sector occupational pensions are only taxable in recipients’ states of residence and not in the UK
• many non-resident UK national pensioners do not have any other income (i.e. employment or property) which is taxable in the UK and would not be affected by losing their Personal Allowance

However, under double tax treaties, UK sourced government service pensions (a wide category which includes, amongst others, some NHS staff and those employed by local authorities) are generally only taxed in the UK, regardless of recipients’ residence status. This can also be the case with some other forms of income under specific treaties. The withdrawal of the UK personal allowance from non-residents in receipt of a UK government service pension would result in them paying more tax overall as there is no overseas tax liability against which the additional UK tax could be relieved.

The government is concerned that individuals, like those in receipt of government service pensions, who are not eligible for double taxation relief, would be disproportionately affected by the removal of the UK Personal Allowance.

The government does not intend to raise taxes on vulnerable groups or in situations where the UK is the principal taxing authority and an individual has no recourse to relief as a result of the UK having sole taxing rights under a tax treaty. 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.

[AnotherOneAmerican]

Any one with a UK private pension paid from a UK source should consider moving it off shore........NOW!

Only a fool would move a UK private pension offshore.

Better to pay UK tax, than lose all your pension protection.

[Jip99]

Any one with a UK private pension paid from a UK source should consider moving it off shore........NOW!

Only a fool would move a UK private pension offshore.

Better to pay UK tax, than lose all your pension protection.

Agreed.

To move it now would be really stupid. Wait for the changes to be revealed

[chiang mai]

"The government does not intend to raise taxes on vulnerable groups".

Let's review this again in the new tax tax year, shall we!

[elliottm]

ah more of your money to feed, house the new immigrants in your old country ...

but you people are still lucky to get (such high) pensions, as some countries state : you do not live here anymore, so no social security, no pension, no (free / included) health care, even you come back , you as a person who might have paid whole his life, you will have to wait at least 6 months for any things we give away for free to people who just came here, never worked, never paid taxes

Some of us worked for over 50 years to get our pension and are still paying tax on our forward planning for our retirement.

60% of all British citizens are net recipients of benifits (Office For National Statistics - think education/healthcare/child beifit/infrastructure & myriad of other benifits. So there is every chance that expat pensioners were and still are a net claimant on other tax payers.

[GuestHouse]

Deleted

Edited November 19, 2014 by GuestHouse

[GuestHouse]

I've deleted my post here because I've said most of it before.

But before anyone considers sending their pension to Thailand - Think very very carefully.

The UK has one of the most regulated and safest pension investment markets in the world

Consider the corruption in Thailand at all levels of society, the unwillingness of the police to get involved in any dispute between foreigners and the long hard battle to get even the most meager of settlements in the Thai courts.

If you are over 55 you can access your pension in the UK

You can get 25% tax free and up to GBP10,000 tax free per year.

Why ever take the risk?