Uk Tax Position

[JAS21]

Can anyone tell me what they think is the best tax solution for me. Has anyone been in a similar situation?

Me UK born, wife thai with uk citizenship. I have a company pension and rent out more than one house in the UK. Am selling my main residence as we have a house in Thailand but will keep rental houses in UK.

Soon go to retire in Thailand. Will keep most of money in UK. Most in wifes name, as she doesn’t pay UK Tax. My pension is above what is required to get retirement visa.

The IR tell me that I will continue to pay UK tax as now and that I can elect to receive rental income untaxed. Then pay some tax ‘on account’ each year for the next year. Anyone know any better option please?

[naka]

As long as you have a UK pension or income from a UK rental(s) then the tax

folks will consider you to be 'Ordinarily Resident' for tax purposes.

Simply put, you have to close all financial ties with the UK in order to be classified otherwise.

And even then it may take years for them to agree to a new tax status.

Naka.

[briley]

No - ordinary resident does not have any interest to the tax man.

You are either resident for tax purposes or non-resident for tax purposes. To become non-resident you have to be out of the UK for one full TAX year (5 April to 5 April aprox). You are allowed to visit the UK for less than 183 days in any one tax year or an average of 92 days a tax year over the last 4 tax years. (All days about, always forget 181 or 182 or 183 - gettting old!)

So long as you get a letter from the tax people you can get the rental paid without the agent/tennant witholding the tax but you do have to declare it, along with all other UK income each year. Tax man can ask for payment on account to make sure he gets his money. You can appeal against this. I've found that if your tax affairs are in order I've always been allowed to NOT pay anything on account.

I note your selling your principle residence in the UK. If you can make one of your rented properties your princple residence for a bit (about 6 months or so) it can make big CGT savings. A house that has been your principle residence and is then rented out benefits from: No CGT for the period of residence plus 36 months. Exception on the first £40,000 of capital gains tax due in addition to the normal annual tax allowance.

Note your wife gets the interest from savings to offset against her personal allowance. If it doesn't use up all her allowance and 10% tax band worth giving her half a house or so so you can then increase her income to use up these allowances. Giving things to a wife doesn't attract CGT or any other tax.

After 5 years of non-residence you are free of CGT but not too sure if this applies to houses. Must check on that!

[easy_jim]

Can anyone tell me what they think is the best tax solution for me. Has anyone been in a similar situation?

Me UK born, wife thai with uk citizenship. I have a company pension and rent out more than one house in the UK. Am selling my main residence as we have a house in Thailand but will keep rental houses in UK.

Soon go to retire in Thailand. Will keep most of money in UK. Most in wifes name, as she doesn’t pay UK Tax. My pension is above what is required to get retirement visa.

The IR tell me that I will continue to pay UK tax as now and that I can elect to receive rental income untaxed. Then pay some tax ‘on account’ each year for the next year. Anyone know any better option please?

What the IR is telling you is the best option I know. Rental income from property in the UK is taxable in the UK. You need to get yourself registered as a non-resident landlord (there is an application form on the IR website I think).

If you are not registered as a non-resident landlord then you will pay tax on rental income as soon as it is received (the letting agency will deduct it from your payment). If you are claiming back any expenses (insurance, groundrent, etc) then you have to wait until the end of the year to claim them back from the IR.

If you are a non-resident landlord then you keep all your rental income and make a tax declartion at the end of the year deducting any expenses you are claiming. You will make your tax payment for the previous year and also usually an amount 'on account' for the next year. You should check out what expenses you can claim - trips to the UK to check your property are claimable.

One other advantage of non-resident landlord status - after 6 years you are no longer liable to pay capital gains tax if you should decide to sell your properties.

[naka]

Here's a good link for peole leaving the UK.

Uk Tax Issues

Naka.

Edited December 31, 2006 by naka

[JAS21]

Here's a good link for peole leaving the UK.

Uk Tax Issues

Naka.

Thanks guys

I'm filling in form NRL1 now...about this non-resident landlord for six years...does this mean that capital gains up to when I registered as a NRL are ignored or only starting from the house value when I registered

Thanks

[briley]

Non-residents of over 5 years standing do not pay CGT - period (as our cousins say).

I checked the Inland revenue CGT1 book for that.