Payment of UK taxes when living abroad
Mar 18th 2015, 12:59 pm
#1
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Payment of UK taxes when living abroad
I hope to live in a country outside the European Union later this year. The HMRC advised me that if I do this, I will pay tax on all my UK sourced income, for example, on the interest on my UK bank accounts. I lose my UK personal allowance. On the other hand, the other country does have a double taxation agreement with the UK.
Two queries. I have an ISA in the UK. This is tax free. But would it be taxed if I lived in this other country, even though it is not a matter of my UK personal allowance?
Secondly, I was told by a friend that people twho return to the UK for more than 90 days during the tax year are classed for UK income tax purposes as liable to UK tax rules. So for example, in this situation, I would retain my UK personal allowance. What's the truth?
Two queries. I have an ISA in the UK. This is tax free. But would it be taxed if I lived in this other country, even though it is not a matter of my UK personal allowance?
Secondly, I was told by a friend that people twho return to the UK for more than 90 days during the tax year are classed for UK income tax purposes as liable to UK tax rules. So for example, in this situation, I would retain my UK personal allowance. What's the truth?
Mar 18th 2015, 2:07 pm
#2
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Re: Payment of UK taxes when living abroad
As the Welcome Inn is for new members to introduce themselves...I have moved your thread over to our MBTTUK forum.
No doubt someone will be along soon to help you.
No doubt someone will be along soon to help you.
Mar 18th 2015, 2:15 pm
#3
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Re: Payment of UK taxes when living abroad
I hope to live in a country outside the European Union later this year. The HMRC advised me that if I do this, I will pay tax on all my UK sourced income, for example, on the interest on my UK bank accounts. I lose my UK personal allowance. On the other hand, the other country does have a double taxation agreement with the UK.
Two queries. I have an ISA in the UK. This is tax free. But would it be taxed if I lived in this other country, even though it is not a matter of my UK personal allowance?
Secondly, I was told by a friend that people twho return to the UK for more than 90 days during the tax year are classed for UK income tax purposes as liable to UK tax rules. So for example, in this situation, I would retain my UK personal allowance. What's the truth?
Two queries. I have an ISA in the UK. This is tax free. But would it be taxed if I lived in this other country, even though it is not a matter of my UK personal allowance?
Secondly, I was told by a friend that people twho return to the UK for more than 90 days during the tax year are classed for UK income tax purposes as liable to UK tax rules. So for example, in this situation, I would retain my UK personal allowance. What's the truth?
Mar 18th 2015, 4:59 pm
#4
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Joined: Jan 2011
Location: Tunbridge Wells KENT
Posts: 2,914
Re: Payment of UK taxes when living abroad
I hope to live in a country outside the European Union later this year. The HMRC advised me that if I do this, I will pay tax on all my UK sourced income, for example, on the interest on my UK bank accounts. I lose my UK personal allowance. On the other hand, the other country does have a double taxation agreement with the UK.
Two queries. I have an ISA in the UK. This is tax free. But would it be taxed if I lived in this other country, even though it is not a matter of my UK personal allowance?
Secondly, I was told by a friend that people twho return to the UK for more than 90 days during the tax year are classed for UK income tax purposes as liable to UK tax rules. So for example, in this situation, I would retain my UK personal allowance. What's the truth?
Two queries. I have an ISA in the UK. This is tax free. But would it be taxed if I lived in this other country, even though it is not a matter of my UK personal allowance?
Secondly, I was told by a friend that people twho return to the UK for more than 90 days during the tax year are classed for UK income tax purposes as liable to UK tax rules. So for example, in this situation, I would retain my UK personal allowance. What's the truth?
You get the UK personal allowance if you are resident in the UK or you are a citizen of an EEA country so you would not suffer UK tax even if you move outside the EEA if the income is less than your personal allowance. HOWEVER, there is currently discussion ongoing regarding the removal of the personal allowance for non-residents - nothing in today's budget ref this???
You could indeed become tax resident again in the UK IF you spent 90 days there (here) but it is unlikely that you would become so unless you have other ties such as close family and a guaranteed place to stay. The rules are now very complex but the simple(r) element of the detailed rules below is:
Automatic Tax Residence
You spend 183 days in the UK you are tax resident
or
You have a home in the UK and you spent 30 days there and you have no overseas home or a home you spent less than 30 days there
or
You work full-time in the UK for any period of 365 days
If you do not meet any of the automatic UK (NB you would not be automatically not UK tax resident if you spent over 90 days in the UK) tests, you should use the sufficient ties test to determine your UK residence status for a tax year.
If you were not UK resident for any of the three tax years before the tax
year under consideration, you will need to consider if you have any of these
UK ties:
(The number of days you spend in the UK in a tax year dictates the
number of UK ties that are needed for you to be UK resident)
a family tie - spouse/partner or child under 18 in the UK
an accommodation tie - a place in the UK available to you for a continuous period of 91 days and you spend one night in it (16 nights if it is a close relative's)
a work tie - You have a work tie for a tax year if you do more than three hours of work a day in the UK on at least 40 days in that year, and
a 90-day tie - You have a 90-day tie for a tax year if you have spent more than 90 days in the UK in either or both of the previous two tax years.
Table A: UK Ties needed if you were UK resident for one or more of the
three tax years before the tax year under consideration
Days spent in the UK in the tax year under consideration:
16 - 45 UK ties needed - At least four, 46 - 90 UK ties needed - At least three, 91 - 120 UK ties needed - At least two, Over 120 UK ties needed - At least one
Table B: UK Ties needed if you were UK resident in none of the three tax
years before the tax year under consideration
Days spent in the UK in the tax year under consideration:
46 - 90 UK ties needed - All four, 91 - 120 UK ties needed - At least three, Over 120 UK ties needed - At least two
https://www.gov.uk/government/public...dence-test-srt
I did say it was complex
which is why most BE enthusiasts wisely stay well clear of anything other than very basic tax questions on here.
Last edited by Pistolpete2; Mar 18th 2015 at 5:04 pm. Reason: sorry Pollyana!
Mar 18th 2015, 7:50 pm
#5
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Re: Payment of UK taxes when living abroad
Thank you and I will look tomorrow. I should add that the country I am thinking of living in is the REPUBLIC OF MOLDOVA, next to Romania. It is not in the European Union. Does this make a difference? I know the rules in the EU are different. There is a double taxation agreement with Moldova. However, the HMRC tell me that in Moldova, my UK personal allowance is scrapped. So I pay UK taxes on every pound I receive from the UK. On the other hand, he didn't mention the rules on how long I need to spend in Moldova to be classed for a tax purpose as a non-dom, and "permenant" resident of Moldova, and thus unable to claim the personal allowance and disabled from getting tax free ISAs.
Mar 18th 2015, 8:00 pm
#6
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Joined: Jan 2011
Location: Tunbridge Wells KENT
Posts: 2,914
Re: Payment of UK taxes when living abroad
Thank you and I will look tomorrow. I should add that the country I am thinking of living in is the REPUBLIC OF MOLDOVA, next to Romania. It is not in the European Union. Does this make a difference? I know the rules in the EU are different. There is a double taxation agreement with Moldova. However, the HMRC tell me that in Moldova, my UK personal allowance is scrapped. So I pay UK taxes on every pound I receive from the UK. On the other hand, he didn't mention the rules on how long I need to spend in Moldova to be classed for a tax purpose as a non-dom, and "permenant" resident of Moldova, and thus unable to claim the personal allowance and disabled from getting tax free ISAs.
Mar 18th 2015, 8:03 pm
#7
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Re: Payment of UK taxes when living abroad
Citizen of the UK.
Mar 18th 2015, 8:04 pm
#8
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Re: Payment of UK taxes when living abroad
Born and bred in England
Mar 18th 2015, 9:44 pm
#10
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Re: Payment of UK taxes when living abroad
Thanks. I know there is a treaty with Moldova. The question is how long I need to reside in the UK to quality for UK tax reliefs.
Mar 19th 2015, 1:06 am
#11
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Re: Payment of UK taxes when living abroad
As Pollyana has stated, it depends where you are as to whether ISA income or gains are taxable where you actually live. You can keep your ISA but not pay into it while non resident. If you return to the UK you can resuscitate paying into it.
You get the UK personal allowance if you are resident in the UK or you are a citizen of an EEA country so you would not suffer UK tax even if you move outside the EEA if the income is less than your personal allowance. HOWEVER, there is currently discussion ongoing regarding the removal of the personal allowance for non-residents - nothing in today's budget ref this???
You could indeed become tax resident again in the UK IF you spent 90 days there (here) but it is unlikely that you would become so unless you have other ties such as close family and a guaranteed place to stay. The rules are now very complex but the simple(r) element of the detailed rules below is:
Automatic Tax Residence
You spend 183 days in the UK you are tax resident
or
You have a home in the UK and you spent 30 days there and you have no overseas home or a home you spent less than 30 days there
or
You work full-time in the UK for any period of 365 days
If you do not meet any of the automatic UK (NB you would not be automatically not UK tax resident if you spent over 90 days in the UK) tests, you should use the sufficient ties test to determine your UK residence status for a tax year.
If you were not UK resident for any of the three tax years before the tax
year under consideration, you will need to consider if you have any of these
UK ties:
(The number of days you spend in the UK in a tax year dictates the
number of UK ties that are needed for you to be UK resident)
a family tie - spouse/partner or child under 18 in the UK
an accommodation tie - a place in the UK available to you for a continuous period of 91 days and you spend one night in it (16 nights if it is a close relative's)
a work tie - You have a work tie for a tax year if you do more than three hours of work a day in the UK on at least 40 days in that year, and
a 90-day tie - You have a 90-day tie for a tax year if you have spent more than 90 days in the UK in either or both of the previous two tax years.
Table A: UK Ties needed if you were UK resident for one or more of the
three tax years before the tax year under consideration
Days spent in the UK in the tax year under consideration:
16 - 45 UK ties needed - At least four, 46 - 90 UK ties needed - At least three, 91 - 120 UK ties needed - At least two, Over 120 UK ties needed - At least one
Table B: UK Ties needed if you were UK resident in none of the three tax
years before the tax year under consideration
Days spent in the UK in the tax year under consideration:
46 - 90 UK ties needed - All four, 91 - 120 UK ties needed - At least three, Over 120 UK ties needed - At least two
https://www.gov.uk/government/public...dence-test-srt
I did say it was complex which is why most BE enthusiasts wisely stay well clear of anything other than very basic tax questions on here.
You get the UK personal allowance if you are resident in the UK or you are a citizen of an EEA country so you would not suffer UK tax even if you move outside the EEA if the income is less than your personal allowance. HOWEVER, there is currently discussion ongoing regarding the removal of the personal allowance for non-residents - nothing in today's budget ref this???
You could indeed become tax resident again in the UK IF you spent 90 days there (here) but it is unlikely that you would become so unless you have other ties such as close family and a guaranteed place to stay. The rules are now very complex but the simple(r) element of the detailed rules below is:
Automatic Tax Residence
You spend 183 days in the UK you are tax resident
or
You have a home in the UK and you spent 30 days there and you have no overseas home or a home you spent less than 30 days there
or
You work full-time in the UK for any period of 365 days
If you do not meet any of the automatic UK (NB you would not be automatically not UK tax resident if you spent over 90 days in the UK) tests, you should use the sufficient ties test to determine your UK residence status for a tax year.
If you were not UK resident for any of the three tax years before the tax
year under consideration, you will need to consider if you have any of these
UK ties:
(The number of days you spend in the UK in a tax year dictates the
number of UK ties that are needed for you to be UK resident)
a family tie - spouse/partner or child under 18 in the UK
an accommodation tie - a place in the UK available to you for a continuous period of 91 days and you spend one night in it (16 nights if it is a close relative's)
a work tie - You have a work tie for a tax year if you do more than three hours of work a day in the UK on at least 40 days in that year, and
a 90-day tie - You have a 90-day tie for a tax year if you have spent more than 90 days in the UK in either or both of the previous two tax years.
Table A: UK Ties needed if you were UK resident for one or more of the
three tax years before the tax year under consideration
Days spent in the UK in the tax year under consideration:
16 - 45 UK ties needed - At least four, 46 - 90 UK ties needed - At least three, 91 - 120 UK ties needed - At least two, Over 120 UK ties needed - At least one
Table B: UK Ties needed if you were UK resident in none of the three tax
years before the tax year under consideration
Days spent in the UK in the tax year under consideration:
46 - 90 UK ties needed - All four, 91 - 120 UK ties needed - At least three, Over 120 UK ties needed - At least two
https://www.gov.uk/government/public...dence-test-srt
I did say it was complex
which is why most BE enthusiasts wisely stay well clear of anything other than very basic tax questions on here.Life used to be so much simpler!!
Yes you can tell I am confused
Last edited by mikemike; Mar 19th 2015 at 1:08 am.
Mar 19th 2015, 6:04 am
#12
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Joined: Jan 2011
Location: Tunbridge Wells KENT
Posts: 2,914
Re: Payment of UK taxes when living abroad
I do know that if you are filing your UK taxes on the remittance basis (as a non-dom) you would forego your personal allowance but I'm obviously not sure whether this in any way entered into the conversation (with HMRC) in your case.
If you become resident for tax purposes then you get the personal allowance. If you are non resident then the last thing I saw is that you have to apply for it - I have done this when filing the form sa109 by ticking the appropriate box.
Mar 20th 2015, 2:16 pm
#13
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Joined: Aug 2004
Posts: 4,754
Re: Payment of UK taxes when living abroad
I hope to live in a country outside the European Union later this year. The HMRC advised me that if I do this, I will pay tax on all my UK sourced income, for example, on the interest on my UK bank accounts. I lose my UK personal allowance. On the other hand, the other country does have a double taxation agreement with the UK.
https://www.gov.uk/government/upload...68547/r105.pdf
Mar 20th 2015, 2:30 pm
#14
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Joined: Sep 2014
Posts: 116
Re: Payment of UK taxes when living abroad
Thanks. I have filled in a form with my bank to receive my interest gross, while I am living here in the UK. Because my income is below the personal allawnace at present, I should not be paying tax anyhow on the interest. However, because I am classed as self-employed by the HMRC, the overpayment of tax on previous income I have to apply for at the start of the new tax year.
However, the HMRC say I will pay tax on my bank interest as though no UK personal allowance existed if I live in Moldova. So all my bank interest in the UK is taxed in this situation, and there is no UK personal tax allowance allowed.
However, the HMRC say I will pay tax on my bank interest as though no UK personal allowance existed if I live in Moldova. So all my bank interest in the UK is taxed in this situation, and there is no UK personal tax allowance allowed.
Mar 20th 2015, 2:35 pm
#15
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Joined: Sep 2014
Posts: 116
Re: Payment of UK taxes when living abroad
For the other poster, I am no tax expert. But the guy from the HMRC I spoke in January to about this said that if I was classed as a resident of Moldova, I would lose my personal allowance in the UK. Perhaps the rules are different for Moldova, which is not part of the European Union? But he was clear on this point. If there is a dispute over this, I can phone the HMRC up about it, but I would have to know what I was talking about. With respect to how I pay, I do not understand ("filing your UK taxes on the remittance basis (as a non-dom)"). I am still a UK resident - but I am researching all this.
