Living in Thailand and UK Tax.

[JimGant]

none of which is liable to tax in the UK beyond any deducted at source.

KK, do you have withholding at source on your interest and dividends? If so, is this at the tax treaty rates (10%/15%)?

[KittenKong]

KK, do you have withholding at source on your interest and dividends? If so, is this at the tax treaty rates (10%/15%)?

All my UK interest is paid gross.

UK dividends are taxed at source (though it isn't income tax) but this tax can never be reclaimed. What the concession avoids is the possibility of being liable to more tax at a higher marginal rate.

[JimGant]

All my UK interest is paid gross.

UK dividends are taxed at source (though it isn't income tax) but this tax can never be reclaimed. What the concession avoids is the possibility of being liable to more tax at a higher marginal rate.

What did you have to do to not have anything withheld on your interest? Also, what's the withholding rate on your dividends.

Thanx.

[KittenKong]

What did you have to do to not have anything withheld on your interest? Also, what's the withholding rate on your dividends.

Interest: form R105.

UK dividends are not taxed like that.

https://www.gov.uk/tax-on-dividends/how-dividends-are-taxed

[JimGant]

Good stuff, KK. Thanks for taking the time. Now, to cure my headache, think I'll revert to some light reading, like the US Internal Revenue Code.

[KittenKong]

This week's budget contained some interesting changes to the way savings income (interest) will be taxed in the UK.

Whilst the details have not been announced, there will be a new tax-free allowance of GBP1000 of savings income. As this apparently covers 90+% of all those receiving savings income (I was surprised by that figure, though I suppose they dont include savings income that is already tax-free) they also announced that to simplify things withholding tax will be scrapped and that interest will be paid gross at source, and those whose savings income is above the allowance will have some tax to pay later.

If this actually happens as announced then the need for the R105 may disappear, which would be good news as not all banks accept them. So the choice of accounts paying interest gross to non-residents may be much greater in the future.

We will have to wait and see what actually happens, and as usual the devil will be in the detail. I think the measure is for April 2016 anyway.

Either way gilts should still be a valid alternative, but of course with interest rates at an all-time low they may produce a capital loss in the medium term if/when rates rise.

We live in interesting times.

[Eff1n2ret]

.....those whose savings income is above the allowance will have some tax to pay later.

We live in interesting times.

As a tax consultant on one of the tv news programmes said yesterday - "With people having amounts salted away in forgotten accounts, how are they going to know?"

That said, I think it's a very enlightened proposal. I wonder if they'll include the new "pensioner bonds", and pay the interest gross on those.

[lelapin]

I have just received my new tax code yesterday from the UK and it includes a personal tax allowance of pounds 10,600

[JB300]

All my UK interest is paid gross.

UK dividends are taxed at source (though it isn't income tax) but this tax can never be reclaimed. What the concession avoids is the possibility of being liable to more tax at a higher marginal rate.

What did you have to do to not have anything withheld on your interest? Also, what's the withholding rate on your dividends.

Thanx.

Withholding tax in UK is 10% & this cannot be claimed back irrespective of your Tax status or whether you're below the Personal Allowance.

However the good new is that this is all you have to pay irrespective of whether the income from dividends takes you above the higher rate thresholds.

Edited March 20, 2015 by JB300

[Jip99]

This week's budget contained some interesting changes to the way savings income (interest) will be taxed in the UK.

Whilst the details have not been announced, there will be a new tax-free allowance of GBP1000 of savings income. As this apparently covers 90+% of all those receiving savings income (I was surprised by that figure, though I suppose they dont include savings income that is already tax-free) they also announced that to simplify things withholding tax will be scrapped and that interest will be paid gross at source, and those whose savings income is above the allowance will have some tax to pay later.

If this actually happens as announced then the need for the R105 may disappear, which would be good news as not all banks accept them. So the choice of accounts paying interest gross to non-residents may be much greater in the future.

We will have to wait and see what actually happens, and as usual the devil will be in the detail. I think the measure is for April 2016 anyway.

Either way gilts should still be a valid alternative, but of course with interest rates at an all-time low they may produce a capital loss in the medium term if/when rates rise.

We live in interesting times.

Looks like R85's and R105's will be a thing of the past.

The end of tax deduction at source on interest

Due to the changes to the starting rate for savings and the introduction of a Personal Savings Allowance, many individuals will no longer need to pay tax on their savings income. Currently, 20% income tax is automatically deducted from most interest on savings excluding ISAs.

From April 2016, the automatic deduction of 20% income tax by banks and building societies on non-ISA savings will cease.

[KittenKong]

As a tax consultant on one of the tv news programmes said yesterday - "With people having amounts salted away in forgotten accounts, how are they going to know?"

That said, I think it's a very enlightened proposal. I wonder if they'll include the new "pensioner bonds", and pay the interest gross on those.

I also wondered about the pensioner bonds. The investment is capped at a fairly low maximum, but the return on the long ones is quite high when compared with banks etc. and so well worth having. I see no reason why they should not be included. I have several years to go before I qualify though.

I suspect that the scrapping of the withholding tax may go hand in hand with the new "online tax account" also announced in the budget. Something on the lines of "if you want your interest paid gross you have to have an online account and give your ID number to the bank/building society". The chancellor did mention that the data in the online tax account would be uploaded in advance by HMRC, so that might be a clue.

That would suit me fine as I'm already registered for UK tax online but never have anything to pay.

We shall see.

[KittenKong]

Withholding tax in UK is 10% & this cannot be claimed back irrespective of your Tax status or whether you're below the Personal Allowance.

However the good new is that this is all you have to pay irrespective of whether the income from dividends takes you above the higher rate thresholds.

That 10% tax isnt really a withholding tax at all, which is why it cant be reclaimed.

But you are wrong about the liability for higher rate tax payers:

https://www.gov.uk/tax-on-dividends/overview

[KittenKong]

Looks like R85's and R105's will be a thing of the past.

The end of tax deduction at source on interest

Due to the changes to the starting rate for savings and the introduction of a Personal Savings Allowance, many individuals will no longer need to pay tax on their savings income. Currently, 20% income tax is automatically deducted from most interest on savings excluding ISAs.

From April 2016, the automatic deduction of 20% income tax by banks and building societies on non-ISA savings will cease.

That may all be the case, as I mentioned, but I prefer to wait for the detail of how it will work.

I do suspect that there will be some type of registration involved.

[Jip99]

Looks like R85's and R105's will be a thing of the past.

The end of tax deduction at source on interest

Due to the changes to the starting rate for savings and the introduction of a Personal Savings Allowance, many individuals will no longer need to pay tax on their savings income. Currently, 20% income tax is automatically deducted from most interest on savings excluding ISAs.

From April 2016, the automatic deduction of 20% income tax by banks and building societies on non-ISA savings will cease.

That may all be the case, as I mentioned, but I prefer to wait for the detail of how it will work.

I do suspect that there will be some type of registration involved.

My post simply conveyed the comments from UK accountancy firms in their budget summaries.

Personally, I think a sensible view has been taken that it is not worth messing around with gross interest declarations; and the banks will just be told to scrap income tax deduction at source. Makes sense given the sums involved and the new savings threshold.

[JB300]

Withholding tax in UK is 10% & this cannot be claimed back irrespective of your Tax status or whether you're below the Personal Allowance.

However the good new is that this is all you have to pay irrespective of whether the income from dividends takes you above the higher rate thresholds.

That 10% tax isnt really a withholding tax at all, which is why it cant be reclaimed.

But you are wrong about the liability for higher rate tax payers:

https://www.gov.uk/tax-on-dividends/overview

Not if you're a non-UK resident for Tax purposes http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

"The effect is that the liability of a non-UK resident in respect of savings and investment income is limited to the income tax deducted from it or treated as deducted or paid in respect of it (at the savings rate, dividend rate, or basic rate, as appropriate - SAIM1080), or the tax credit it carries".

Edited March 20, 2015 by JB300

[Jip99]

Withholding tax in UK is 10% & this cannot be claimed back irrespective of your Tax status or whether you're below the Personal Allowance.

However the good new is that this is all you have to pay irrespective of whether the income from dividends takes you above the higher rate thresholds.

That 10% tax isnt really a withholding tax at all, which is why it cant be reclaimed.

But you are wrong about the liability for higher rate tax payers:

https://www.gov.uk/tax-on-dividends/overview

Not if you're a non-UK resident for Tax purposes http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

"The effect is that the liability of a non-UK resident in respect of savings and investment income is limited to the income tax deducted from it or treated as deducted or paid in respect of it (at the savings rate, dividend rate, or basic rate, as appropriate - SAIM1080), or the tax credit it carries".

Agree.

There is no liability, for a UK Non-resident, to higher rate tax on dividends.

[KittenKong]

Withholding tax in UK is 10% & this cannot be claimed back irrespective of your Tax status or whether you're below the Personal Allowance.

However the good new is that this is all you have to pay irrespective of whether the income from dividends takes you above the higher rate thresholds.

That 10% tax isnt really a withholding tax at all, which is why it cant be reclaimed.

But you are wrong about the liability for higher rate tax payers:

https://www.gov.uk/tax-on-dividends/overview

Not if you're a non-UK resident for Tax purposes http://www.hmrc.gov.uk/manuals/saimmanual/saim1170.htm

"The effect is that the liability of a non-UK resident in respect of savings and investment income is limited to the income tax deducted from it or treated as deducted or paid in respect of it (at the savings rate, dividend rate, or basic rate, as appropriate - SAIM1080), or the tax credit it carries".

Of course. I pointed it out much earlier in the thread.

[JB300]

Apologies, I must have missed that & would mention that I'm no expert but learnt this fact from another thread on this site so had that link saved away should a miracle happen & my UK stocks start returning anywhere near putting me in the upper tax bracket.

(I'm one of those "Fortunate" souls who's had to do a Tax Return since he was 18 (31 years ago), I put it down to my 1st serious girlfriend being a Tax Inspectors daughter )

Edited March 20, 2015 by JB300