tax free investments when living out of UK

[lockwood74]

Looking for advice........

I am planning to work in the far east.

If I have investments in the UK ie, property let out with rental income, do I need to pay tax.

If the income went to an off shoe account outside the Uk is this a way of
not paying tax.

Any tax experts out there ????

Regards JOHN

[lomuamart]

I've rented my property out since I came here and yes, you do need to pay tax. However, there's a lot you can do to reduce your liability.
Firstly, apply to the IR for the status "Non-resident Landlord living abroad". This is simple and once you have that status your letting agents (assuming you use one) pay your rent to you gross - less their commission, obviously. Most agents will want you to get this, otherwise they have to deduct tax first and they won't want to be getting involved with your tax affairs. Much better for your cash flow. You can be in the UK for up to 90 days in any one tax year.
Once a year, you do your tax return. Deductable are your personal allowance, agents fees, interest on any mortgage you may have, all the money you may have spent on maintenance and 10% off the top line for wear and tear.
The final bill can therefore be pretty minimal. For instance I pay around 250 pounds a year.
I'm afraid I don't know about putting the money off-shore. Never looked into that.
PS - must admit that I havn't done a return for some years now - bad boy!!! I assume they'll catch up with me eventually. I was told to keep receipts for flights home. I'm going to check my property, after all and therefore it's a legitimate business expense. I've got 3 return flights to claim, but havn't done so yet. It's certainly got to be worth trying. They can only say no.

[johnnyk]

You can open an offshore account easy-peasy with any of the big banks or building socs. without even going to IOM or CI. It can be done by post and I'm sure the info is on their websites.

Money can be paid in by cheque but if I remember right it can't be deposited directly into your offshore account from the high street branch.

With the banks you can also have interest-bearing accounts in different currencies (US$, Euro etc) if you wish, building socs I think only sterling.
Once offshore you can log on to check balance, transactions etc and you can set up scheduled payments as well. I had good service for more than 15 years from LloydsTSB and a friend had good service from Barclay's. No charges save for electronic transfers.

Building soc., I got surly, slow and inefficient service from The Derbyshire ... a nightmare transferring funds to France. On two occasions what should have been done within 2-3 working days took weeks. Finally closed it out and happy to add to the reputation these twats have built.

[Mack111]

Lomuamart advice is good and exactly what I’ve done but just to add to it a little bit, to be a full blown non resident the house must be on a long term lease or up for sale, that was in Scotland anyways.

Sticking money offshore if pretty easy, the Abbey International have got a good deal going just now that if you stick you cash there untouched for 2 years they’ve got a projected return of 22.5% (not guaranteed) look at there website for more details.

The 90 days lomu is talking about also extends to your income tax but I think its actually 180 days over 2 years, so you need lots of time HH or at least out of the UK

These tax consultants are pretty cheap now adays its well wroth getting one of them to sort it all out for you as if you get it wrong you might end up with a big bill in the future

Hope this helps

cheers

[JimboPSM]

These tax consultants are pretty cheap now adays its well wroth getting one of them to sort it all out for you as if you get it wrong you might end up with a big bill in the future

Unfortunately, as with most things in life, you get what you pay for, there is a lot of very poor tax advice out there.

IMHO, before taking advice from a consultant, verify their qualifications and check that they have Professional Indemnity Insurance, if they can afford to pay it they probably know what they are talking about.

Be very, very careful about relying on things like 90 days in a year or 180 days in two years, the tax authorities have extensive resources and are highly skilled in discovering why "you" don't fit the rules and will be liable to tax

[niall]

I am a tax adviser and no good ones are not cheap.

This is not an area where you should economise.

Please also note that real tax advisers are all qualified accountants who went on to specialise post qualification in taxation such as myself.

Others tend to be salesmen posing as advisers and the golden rule for sensible investing is never take investment advice from someone trying to sell you something.

[JimboPSM]

I am a tax adviser and no good ones are not cheap.

This is not an area where you should economise.

Please also note that real tax advisers are all qualified accountants who went on to specialise post qualification in taxation such as myself.

Others tend to be salesmen posing as advisers and the golden rule for sensible investing is never take investment advice from someone trying to sell you something.

with "niall", I am a qualified accountant (retired) and know enough about tax to know I don't know enough about tax.

If I want tax advice I go to one of the big firms that I have dealt with for many years, it costs, but saves money in the long term.

It normally takes a few years to discover you've had bad advice and by then it's too late

[johnnyk]

All I know about tax is that I hate paying it!

[lockwood74]

I am planning to work in the far east permanently, which would make me able to apply to be "Not ordinarily resident" according to the "IR"

If I gain income in the UK from rent on property but ensure it is not brought in to the UK, ie sent to an offshoe account; do I have to pay Tax

IAny one in this situation who knows the rules and can provide advice would be most welcome.

Kind Regards

John Lockwood

[Mack111]

Guys i agree with your statement, i wasn't meaning real cheap cheap, i get a mine done for 1200 GBP a year but its really just sorting out my rental income and a few other bits and pieces, i live as an expat in Malaysia on a permanent basis so my tax issues are pretty straight forward as i only return to UK once a year to visit family plus i also pay tax in Malaysia as a resident.

Sorry if made it sound a bit simple, I withouit doubt would only advise anyone to seek proper competent tax advice as the tax department can go back years and years

cheers

[Wanderlust]

I am planning to work in the far east permanently, which would make me able to apply to be "Not ordinarily resident" according to the "IR"

If I gain income in the UK from rent on property but ensure it is not brought in to the UK, ie sent to an offshoe account; do I have to pay Tax

IAny one in this situation who knows the rules and can provide advice would be most welcome.

Kind Regards

John Lockwood

Hi John,
I can only tell you what my situation was, which is a bit different but might help. I had a flat in the UK which I rented out while I was in Thailand, but I wasn't working. The income I got from the flat was not a large amount and fell below the personal allowance. When I first started renting it out I filled the relevant IR form out, and the IR replied to me and told me that I didn't have to pay tax on the rent. I can't remember if there was anything on the form about income from work abroad (it was 9 years ago). I would suggest contacting the IR first as they have always been pretty helpful; I would guess your poition will be dictated by how your salary is treated for tax purposes, because unless you have a very expensive property (or more than one, as this will have a bigger impact) it is unlikely that the rental income will register on the tax radar, or if it does the amount will be minimal like lomus.

[PJG]

Hi,

Once you have gained non resident status your income overseas will not be liable for UK tax. All income gained in UK will be liable to UK tax whether it is remitted offshore or not. Your UK income will be subject to all the usual allowances and offsets so the Tax liability could be quite small. The big advantage of remitting the funds offshore is that any subsequent interest will be outside the UK Tax net.

[STEVE G]

If the income went to an off shoe account outside the Uk is this a way of
not paying tax.

The IR will tell you that it is not a way of avoiding tax, but I would suggest to you that many people with offshore accounts don't see eye to eye with this viewpoint.

[Mack111]

Its not a means to an end for avoiding tax but its helps but apart from that interest rates are normally higher offshore