Advice pls; Retirement on a UK Pension

[billd766]

To Add:

Your private pension may or may not be UK taxable, that depends on whether or not the total of your UK arising income exceeds your personal allowance.

Having a private pension does not mean that you lose your state pension, there is really no connection between the two and both are very separate things.

Technically, any income earned AND remitted to Thailand during the same financial year, is subject to Thai tax, this include private pensions.

Any income from a private pension is normally taxed in the UK IF the HMRC deems that it was earned from a UK source. I worked offshore for 7 years but the company was UK based and therefore I pay UK tax on part of the pension. Similarly I get a UK Armed Forces pension which is also taxable.

What HMRC do is add up all my pensions to see if I am over the tax threshold, then tax my company pension at the standard rate and adjust the tax rate on my Forces pension to sort out the tax codes.

[JB300]

Anybody know what happens re UK Capital Gains Tax if you sell your house?

I know the UK changed the rules around primary residence a few years back so it looks like I might need to pay it, but as I've spent over 5 complete Tax Years as a non-resident for Tax purposes, I don't pay Capital Gains on any share sales.

So would I need to pay it if I sold my house (it's the only one I own & was my primary residence for 9 years before I left the UK & where I stayed for visits for 3 1/2 years afterwards until I got sick of paying council tax/utilities etc... & started renting it out 3 years ago).

[middlesexMDS]

Thanks for all the advice & opinions guys (& girls?). It's a bit of a mine field in some ways, but there seems to be a number of strategies depending on your situation.

I think with capital gains tax (looking at that site that someone added a link for) if you not a UK resident anymore the tax isn't liable within the UK but in your host country of the land of smiles. I may have read wrong, and I'm sure many here have first hand experience to conform for us?

[alfieconn]

From consultation document.

1.1 At Autumn Statement 2013 the government announced that it will charge capital gains tax (CGT) on gains made by non-residents disposing of UK residential property, from April 2015. The charge will come into effect in April 2015 and apply only to gains arising from that date.

1.2 Unlike other countries that collect tax on gains relating to disposals of residential property located within their jurisdiction, the UK does not generally charge CGT on disposals by non-residents. This means that any gain made by a non-resident individual on UK residential property is either taxed in the individual’s country of residence, or not taxed at all. In contrast, UK resident individuals are subject to CGT on disposals of any residential property that is not their primary residence, including on the gains made on any residential property they own abroad. The taxation of gains made on residential property that is owned in other ways by UK persons – through trusts, companies and funds – is either subject to UK CGT, or UK corporation tax (CT), depending on the nature of the investment and the structure involved.

1.3 The government believes that this situation is unfair and has decided to rectify it so that, going forward, non-residents making gains on UK residential property will be subject to UK CGT in a comparable way to UK residents. The government recognises that non-residents hold UK property through various structures and for various purposes. Charging non-residents on the gains that they make on UK residential property is a significant change for the UK CGT regime and the government is keen to consult on how best to introduce this over the course of this year, to refine the initial design.

1.4 This consultation sets out the government’s proposed approach to introducing the charge on non-residents disposing of UK residential property, and seeks views on the proposed design and the likely impact. Following this consultation, the government will confirm the scope and structure of the new regime, and may hold a further consultation on some more detailed and technical aspects of the design of the CGT charge.

1.5 The overarching objectives that the government will seek to achieve through the extended CGT regime are set out in Box 1.A. The government will consider all aspects of the new regime against these objectives.

Edited April 16, 2015 by alfieconn

[alfieconn]

From consultation document.

1.1 At Autumn Statement 2013 the government announced that it will charge capital gains tax (CGT) on gains made by non-residents disposing of UK residential property, from April 2015. The charge will come into effect in April 2015 and apply only to gains arising from that date.

1.2 Unlike other countries that collect tax on gains relating to disposals of residential property located within their jurisdiction, the UK does not generally charge CGT on disposals by non-residents. This means that any gain made by a non-resident individual on UK residential property is either taxed in the individual’s country of residence, or not taxed at all. In contrast, UK resident individuals are subject to CGT on disposals of any residential property that is not their primary residence, including on the gains made on any residential property they own abroad. The taxation of gains made on residential property that is owned in other ways by UK persons – through trusts, companies and funds – is either subject to UK CGT, or UK corporation tax (CT), depending on the nature of the investment and the structure involved.

1.3 The government believes that this situation is unfair and has decided to rectify it so that, going forward, non-residents making gains on UK residential property will be subject to UK CGT in a comparable way to UK residents. The government recognises that non-residents hold UK property through various structures and for various purposes. Charging non-residents on the gains that they make on UK residential property is a significant change for the UK CGT regime and the government is keen to consult on how best to introduce this over the course of this year, to refine the initial design.

1.4 This consultation sets out the government’s proposed approach to introducing the charge on non-residents disposing of UK residential property, and seeks views on the proposed design and the likely impact. Following this consultation, the government will confirm the scope and structure of the new regime, and may hold a further consultation on some more detailed and technical aspects of the design of the CGT charge.

1.5 The overarching objectives that the government will seek to achieve through the extended CGT regime are set out in Box 1.A. The government will consider all aspects of the new regime against these objectives.

Iv'e just seen that this has now been confirmed.

[JB300]

Thanks Alfie, I thought I'd read somewhere that it had changed, but good to get confirmation (even if it wasn't the news I wanted to hear :|)

Cheers

JB

[Orac]

Anybody know what happens re UK Capital Gains Tax if you sell your house?

I know the UK changed the rules around primary residence a few years back so it looks like I might need to pay it, but as I've spent over 5 complete Tax Years as a non-resident for Tax purposes, I don't pay Capital Gains on any share sales.

So would I need to pay it if I sold my house (it's the only one I own & was my primary residence for 9 years before I left the UK & where I stayed for visits for 3 1/2 years afterwards until I got sick of paying council tax/utilities etc... & started renting it out 3 years ago).

As I understand it, you must stay out of the UK/be non-resident for 5 years after making a capital gain which is taxable. If you become a UK resident before the five years is up you have to pay a portion of the CGT dependant on how long you have been away.

[JB300]

Anybody know what happens re UK Capital Gains Tax if you sell your house?

I know the UK changed the rules around primary residence a few years back so it looks like I might need to pay it, but as I've spent over 5 complete Tax Years as a non-resident for Tax purposes, I don't pay Capital Gains on any share sales.

So would I need to pay it if I sold my house (it's the only one I own & was my primary residence for 9 years before I left the UK & where I stayed for visits for 3 1/2 years afterwards until I got sick of paying council tax/utilities etc... & started renting it out 3 years ago).

As I understand it, you must stay out of the UK/be non-resident for 5 years after making a capital gain which is taxable. If you become a UK resident before the five years is up you have to pay a portion of the CGT dependant on how long you have been away.

I believe it's 5 complete Tax years so if you left UK today, you'd need to wait until 6th April 2021.

But as has been highlighted above, your house is treated differently than assets like Stocks & Shares and you need to pay CGT on it irrespective of how long you've spent as a non-resident [emoji17]

Edited April 17, 2015 by JB300

[ThaiPauly]

As of April 5th this year CGT will be payable on properties owned by ex-pats,the amount will range from 15-35% so far as I am aware.

I have just had to cough up over 440 quid for valuations by a chartered surveyor of my two properties in the UK.

So if you own property in the UK but are domiciled here you may wish to get a valuation done or risk the valuation that HMRC will put on it at this date, you can bet they will value it less than it was worth !!

[rayongchelsea]

As of April 5th this year CGT will be payable on properties owned by ex-pats,the amount will range from 15-35% so far as I am aware.

I have just had to cough up over 440 quid for valuations by a chartered surveyor of my two properties in the UK.

So if you own property in the UK but are domiciled here you may wish to get a valuation done or risk the valuation that HMRC will put on it at this date, you can bet they will value it less than it was worth !!

Or go on zoopla and find the last sale of an equivalent property.

You have given the absolute best advice here.

If you have rented property the managing agent will do it for you - free.

But you must have a base cost and evidence on which to argue your case or they will screw you.

The first 11600 on any gain after 5th April is deductible ,plus any improvements made thereafter, so keep all records.

[ThaiPauly]

My managing agents said they could not do it, they negotiated a discount for the chartered surveyors to do it, but of course at a cost.

I don't know what is acceptable to HMRC ? I have seen nothing in print about it in the papers or the net.

[nong38]

Do a pros and cons test, UK versus Thailand. The costs will be less here in most cases for everyday living but you have to also factor in a few things as well. Transport and infrastructure here are not as good as the UK, you will not have a bus bus to help either.

You also need to consider where you live and what your life style will be, so go and have a good look at where you are thinking about living.

Everyone's State Pension is different so we do not know what you have available, you need to do your sums and dont forget you health. This is where its difficult to calculate what the costs are, Insurance for over 60's is not easy and it get harder the older you get, the cost rise and rise so maybe you will think about self insurance then if you dont use it you can leave it someone can use it to have a better life over the long time, hopefully. Going back to the UK I have not had a problem, so far. GP's are all private but they get money for the umber of people on there panel, so, if you like I am a sleeping patient who get a prescription once a year. If you get a bill at reception that is really bad and they have stuffed you and lost a patient, not long term thinking for educated people.

O lot will also have a private pension from an employer, you should look into this, the State pension may be enough, depending on life style, drink at home, eat at home, not many holidays it is still possible but the elephant in the room is health.

You pay tax in the UK or here not both, if you py some tax here, like bank interest you can claim it back, so look into it.

I think overall you will have a better standard of living here than in the UK providing you can eat/drink and live Thai with not to much Western food/drink.

Good Luck.

[alfieconn]

As of April 5th this year CGT will be payable on properties owned by ex-pats,the amount will range from 15-35% so far as I am aware.

I have just had to cough up over 440 quid for valuations by a chartered surveyor of my two properties in the UK.

So if you own property in the UK but are domiciled here you may wish to get a valuation done or risk the valuation that HMRC will put on it at this date, you can bet they will value it less than it was worth !!

It is 18%-28% depending on if you are a higher tax payer or not !

[alfieconn]

My managing agents said they could not do it, they negotiated a discount for the chartered surveyors to do it, but of course at a cost.

I don't know what is acceptable to HMRC ? I have seen nothing in print about it in the papers or the net.

It is your valuation that goes on the tax return, so perhaps the HMRC accept your valuation unless it is miles out of course !

Edited April 19, 2015 by alfieconn

[alfieconn]

As of April 5th this year CGT will be payable on properties owned by ex-pats,the amount will range from 15-35% so far as I am aware.

I have just had to cough up over 440 quid for valuations by a chartered surveyor of my two properties in the UK.

So if you own property in the UK but are domiciled here you may wish to get a valuation done or risk the valuation that HMRC will put on it at this date, you can bet they will value it less than it was worth !!

To be fair,i would imagine just because the valuation was carried out by a Chartered Surveyor doesn't necessary mean the HMRC will accept this valuation ! for me the easiest way for anyone to work out a price is from the Land Registery data.

[JohnC]

Getting back to the original op, retiring on a UK state pension, as always there is some misleading comments. A UK state pension is taxable, however they are unable to deduct this at source therefore HM Customs and excise offset your state pension against your tax free allowance (£10,600) the remainder becomes your tax code for any other UK earned income which is taxed at 20% BR (basic rate) or if over the threshold 40% for the element over the threshold ( I think the current threshold is just over £34K) but check. To give you an example if your state pension was £7500 they would deduct that amount from your tax allowance giving you a balance of £3100 tax free allowance which would be reflected in your tax code (310) which would be given to your main income provider who deducts that amount before applying tax as shown above.

[Eff1n2ret]

Getting back to the original op, retiring on a UK state pension, as always there is some misleading comments. A UK state pension is taxable, however they are unable to deduct this at source therefore HM Customs and excise offset your state pension against your tax free allowance (£10,600) the remainder becomes your tax code for any other UK earned income which is taxed at 20% BR (basic rate) or if over the threshold 40% for the element over the threshold ( I think the current threshold is just over £34K) but check. To give you an example if your state pension was £7500 they would deduct that amount from your tax allowance giving you a balance of £3100 tax free allowance which would be reflected in your tax code (310) which would be given to your main income provider who deducts that amount before applying tax as shown above.

I've just received my coding notice for 2015-16.

Para 1 includes the sentence:- "£10600 is the Personal Allowance for people who are between 68 and 77 on 5 April 2016 with a total yearly income of over £27700 or where we do not know your total income." I find that a bit confusing because whilst there used to be a higher allowance for OAPs which was reduced if your income exceeded a certain figure, I thought that had been dropped and this year the allowance is 10600 for everybody, so the significance of the 27700 figure escapes me.

Para 3 confirms the tax bands as 20% on the first £31785

40% on income between £31786 and £150000

45% on anything over £150000

Perhaps I'll raise the query about Para 1 when I phone them about my coding. The HMRC computer seems to assume that everyone gets the State Retirement Pension increase, so once again I'll have to remind them that I am one of the outcasts who don't, and get them to jack up my tax code accordingly. They never make a fuss about it, but it's clear evidence that the HMRC and DWP databases are not really linked up.

[billd766]

Getting back to the original op, retiring on a UK state pension, as always there is some misleading comments. A UK state pension is taxable, however they are unable to deduct this at source therefore HM Customs and excise offset your state pension against your tax free allowance (£10,600) the remainder becomes your tax code for any other UK earned income which is taxed at 20% BR (basic rate) or if over the threshold 40% for the element over the threshold ( I think the current threshold is just over £34K) but check. To give you an example if your state pension was £7500 they would deduct that amount from your tax allowance giving you a balance of £3100 tax free allowance which would be reflected in your tax code (310) which would be given to your main income provider who deducts that amount before applying tax as shown above.

I've just received my coding notice for 2015-16.

Para 1 includes the sentence:- "£10600 is the Personal Allowance for people who are between 68 and 77 on 5 April 2016 with a total yearly income of over £27700 or where we do not know your total income." I find that a bit confusing because whilst there used to be a higher allowance for OAPs which was reduced if your income exceeded a certain figure, I thought that had been dropped and this year the allowance is 10600 for everybody, so the significance of the 27700 figure escapes me.

Para 3 confirms the tax bands as 20% on the first £31785

40% on income between £31786 and £150000

45% on anything over £150000

Perhaps I'll raise the query about Para 1 when I phone them about my coding. The HMRC computer seems to assume that everyone gets the State Retirement Pension increase, so once again I'll have to remind them that I am one of the outcasts who don't, and get them to jack up my tax code accordingly. They never make a fuss about it, but it's clear evidence that the HMRC and DWP databases are not really linked up.

If you do the self assessment online tax return as I do please be aware that it is NOT checked by HMRC and if you get it wrond as I did last year the first thing you will know about it is when you get your tax coding.

I just pulled this off the website which may help some people.

https://www.gov.uk/income-tax-rates

[KittenKong]

If a person is resident for tax purposes they are taxed on their worldwide income, if non-resident they are are only taxed on income arising in the UK, subject of course to the limitations of the personal allowance - ergo, interest income that is earned offshore whilst non-UK resident for tax purposes is not taxable in the UK.

Some income (interest and dividends) arising in the UK is also exempt, by concession. Non-residents who also have taxable UK income may find the concession somewhat less generous, but I have no taxable UK income and so am very happy with it.

[AyG]

If a person is resident for tax purposes they are taxed on their worldwide income, if non-resident they are are only taxed on income arising in the UK, subject of course to the limitations of the personal allowance - ergo, interest income that is earned offshore whilst non-UK resident for tax purposes is not taxable in the UK.

Some income (interest and dividends) arising in the UK is also exempt, by concession. Non-residents who also have taxable UK income may find the concession somewhat less generous, but I have no taxable UK income and so am very happy with it.

Whilst it's the case that for non-residents no further tax is due on dividend income (beyond the 10% tax which is automatically deducted from dividend payments) even if one is a higher rate tax payer, there is no concession for interest payments. All interest is taxable, unless from within a tax-privileged accounts such as an ISA. It is possible in some cases for interest to be paid gross, but once you pass the £10,600 tax threshold you have to pay tax upon it.

[KittenKong]

Whilst it's the case that for non-residents no further tax is due on dividend income (beyond the 10% tax which is automatically deducted from dividend payments) even if one is a higher rate tax payer, there is no concession for interest payments. All interest is taxable, unless from within a tax-privileged accounts such as an ISA. It is possible in some cases for interest to be paid gross, but once you pass the £10,600 tax threshold you have to pay tax upon it.

No, that's wrong.

Tax liability for non-residents on dividends and interest is limited to that deducted at source, so any interest paid gross (as all mine is) is not taxable.

But to qualify for that exemption you have to give up the personal allowance. This doesn't bother me as I have no taxable UK income at all, but it might bother some.

Obviously you have to do your own individual calculation to work out whether you are better off keeping the PA and paying tax on your interest and your dividends over your threshold, or losing the PA and paying no tax on any interest or dividends. I certainly am hugely better off in the second category and would still be even if I was old enough to claim my state pension.

[AyG]

Whilst it's the case that for non-residents no further tax is due on dividend income (beyond the 10% tax which is automatically deducted from dividend payments) even if one is a higher rate tax payer, there is no concession for interest payments. All interest is taxable, unless from within a tax-privileged accounts such as an ISA. It is possible in some cases for interest to be paid gross, but once you pass the £10,600 tax threshold you have to pay tax upon it.

No, that's wrong.

Tax liability for non-residents on dividends and interest is limited to that deducted at source, so any interest paid gross (as all mine is) is not taxable.

But to qualify for that exemption you have to give up the personal allowance. This doesn't bother me as I have no taxable UK income at all, but it might bother some.

Interesting (and a new one on me). Do you have any information about how one goes about giving up one's personal allowance? And any reference that confirms that if you do so that gross interest is not taxable?

[KittenKong]

Interesting (and a new one on me). Do you have any information about how one goes about giving up one's personal allowance? And any reference that confirms that if you do so that gross interest is not taxable?

I've commented on it a couple of times on here (usually to cries of disbelief).

This explains it: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323719/hs300.pdf

The relevant part is this: "How is investment income charged to tax?

With the exception of income from property in the UK and investment

income connected to a trade in the UK through a permanent establishment,

the tax charge for non-residents on investment income arising in the UK

is restricted to the amount of tax, if any, deducted at source. If the tax charge

is limited in this way, personal allowances will not be given against other

income."

So your allowance is simply discounted if you want to have your dividends or interest disregarded. You don't actually give it up as such.