JasonSouthYorks

Having scoured the web and this forum I still can't make up my mind what to do for the best with the lump sum from the house sale.

We intend to rent for the first year or so and use the interest from our equity to pay the rent.

Do you think that we would be better off leaving the money in the UK and have the interest paid monthly to NZ? This way we could avoid paying tax in NZ I believe (4 yr rule) and also be classed as a non-taxpayer in the UK. By doing this we would be unable to claim Family Assistance in NZ though.

We would also be at the mercy of the exchange rate.

Or, would it be better to simply transfer all the cash to NZ when the exchange rate picks up, pay NZ tax on the interest and receive Family Assistance? Interest rate are also higher in NZ.

Your thoughts please. And if you have been in the same predicament, what did you do?

Thanks

Margaret Parkinson

My daughter & son in law had the money transferred to NZ but kept it in sterling. Their Bank Manager arranged it, they will convert when the exchange rate improves. Not sure about the rest.

June

squeekybobo

Hiya - I'm just about to head off camping (not that I'm excited!!!) but re savings in the UK:

- If you leave the savings in the UK, you'll be taxed on the interest earnt even as non-residents. The bank will usually deduct basic rate tax, although you can make an annual application to the bank to have your interest paid gross in full tax years on non residence - see point 2 below

- If you are a UK/EEA/Commonwealth national you'll still be entitled to a UK personal allowace (£6,035 in 2008/09) and so if your interest is less than this then you can claim a refund through a return.

- Right so this election to have your interest paid gross of UK tax. There is a passage buried in the tomes of tax that states for non-residents, the UK tax on bank interest is limited to that withheld at source. So if you don't have any withheld at source, then no UK tax is due. Though as I said previously, you do have to make this election on an annual basis (hassle factor) and you do lose your UK personal allowance so if you had any other forms of UK income you'd want to look at the figures.

You could look at a off-shore bak account (Channel Islands etc) as they are outside the UK tax system but in the UK banking system. Watch out for minimum required sums in the account although if you'd sold an account I think you'll be fine.

So I'm off to spend two days with half a house on my back but PM if you like and I'll get back to you (probably inc my answer on here for others to see).

Hope that helps

Squeekybobo

chocolate cake

I'd recommend an off shore bank account with a UK bank, most have options based in Channel Islands, Isle Of Man. They will be taxed free, won't have to declare them in UK if no longer resident and you get 4 years grace in NZ.

I wouldn't bother transferring to a NZ bank, interest rate may be higher but there's tax to go with it. Also bear in mind that unlike UK, there is minimum guarantee in the case of failure.

JasonSouthYorks

Thank you to you all for your replies.

Having read the NZ Revenue site I understand that there is no nil rate tax band and that everybody pays tax on their savings interest regardless of their level of income.

Am I right in thinking that if a person is not working (ie. my wife) and the account is in her name then she can register as a 19.5% taxpayer? If my name was on the account then it would be taxed at 33% as I am working?

I think I'm slowly getting my head around it.

Gill and Ian

Good thread: it seems quite a complicated subject, but something important to know.
No Yorkshireman likes paying too much tax, if they can help it!
Our only problem is going to be selling our house in the first place..........

minky

We have taken the 4 year tax exemption you have to work out what is best from memory if you earn over $80k you are not entitled to the family credit system here as for Channell island accounts if residing in the uk the bank will inform the inland revenue of your details now.Whether you decide to transfer your monies if you can keep the in pounds for the mo reason being the dollar is on the slide being 2.4 in Feb and now 2.6 last year about July it went to 2.97.Theres the election this year mortgagee sales are appearing with reductions in house prices not seen here for some time and the economic news is not getting much better.We came Sept 06 petrol $1.46 now $2.12 food shop $20-30 per week more expensive.

Hope this helps

Karen

cypherpunk

Just to complicate things, if you put your money in one of the new PIE cash accounts in NZ you only have to pay 19.5% tax on the interest for your first year as a new immigrant, because you haven't had any NZ income in previous years. This may carry over to a second year depending on your income. The normal PIE tax rate is 30%.

alscott76

Am so lost.. so I have got 30K in a UK bank and I am moving to NZ and will only be renting for the 1st year where is my money best staying?
I have work lined up so I dont think I will need to use the money at the mo...:curse:

squeekybobo

From a UK pov, the best bet is it get into a simple channel island account. You won't be taxed in the UK on this although some accounts require a minimum balance (which is often below £30k anyway).

From the sounds of it, any interest earnt in that account won't be taxed in NZ for the first 4 years of your stay there = tax free! Drinks on you then...

Why doesn't everyone in the UK put money offshore as it is?
- Because 99% of long-term residents in the UK are taxed on there worldwide income wherever earnt of paid and so there is no point storing cash offshore as it's going to be taxed in the UK anyway.

As an aside, I'm thinking of writing a FAQ on UK taxation for expats (it happens to be my area you see) which I hope you folks will find useful... Just wanted to gauge the interest before putting pen to paper (or finger to keyboard) - Let me know!

minky

You might need to check re tax being deducted as of 2005 the Woolwich in the channel islands deducted tax at source for uk resisdents.

Also when here you have to advise your bank what tax rate to deduct on your savings based on what you will earn here.

JasonSouthYorks

That is a great idea. It's such a complex area and if anybody with any knowledge can help I am sure that everyone will find it useful. I know that I would for one.

minky

you could transfer your 30k to sterling account over here where you get a lower rate of interest.

Changing at todays rate would give you $78743.77 you can get 8.63 pa for 9 months int paid at end or call account 8.25.

The rates review for the bank here is 24/7 and speculation is for going down the savings rates were 8.9 so have been going down little by little this last month but their inflation comes out soon so who knows!

chocolate cake

From a tax minimisation point of view defintely best to trf it to an offshore account with UK bank in Isle of Man/Channel Islands, avoiding UK tax and no need to declare in NZ for 4 years.

I've with Barclays, you can maintain both a current account (to pay any UK bills) and deposit savings a/c and access both over the net.

teebrown

I would love some F&Q on this, I haven't a clue and need some advice in idot terms:

We will be getting a lump sum £50k and want to put it somewhere where it will gain money, we wont need it in NZ so any suggestions? we will also get a Pension paid every month in a UK account approx £600, should we keep it in UK or transfer some of it to NZ?

Any help appreciated.