Avoiding (NOT evading) UK tax as a liveaboard

[fliti]

I worked and lived abroad for many years before turning to life aboard. I hope to preserve my non resident status for tax purposes for a few more years by limiting my UK stays to the standard 90 days per year.I was wondering whether others have experience of any problems with the UK tax authorities when claiming non-residence as a liveaboard? Any special recommendations?

 

[Richard10002]

I worked and lived abroad for many years before turning to life aboard. I hope to preserve my non resident status for tax purposes for a few more years by limiting my UK stays to the standard 90 days per year.I was wondering whether others have experience of any problems with the UK tax authorities when claiming non-residence as a liveaboard? Any special recommendations?

When I was looking at becoming non resident a few years ago I took some tax advice and it was recommended that I actually took up reidence somewhere. Apparently, there was a case some years ago where living aboard for a couple of years was merely defined as a long cruise. In addition, all ties to the UK need to be severed, so merely limiting visits to 90 days isn't necessarily enough - IIRC an airline pilot fell foul of this.

 

[Conachair]

I worked and lived abroad for many years before turning to life aboard. I hope to preserve my non resident status for tax purposes for a few more years by limiting my UK stays to the standard 90 days per year.I was wondering whether others have experience of any problems with the UK tax authorities when claiming non-residence as a liveaboard? Any special recommendations?

I was non resident anywhere for 5 years living aboard, told them before I went but they weren't that interested as long as I paid for any earnings arising in the UK. But would be well worth looking into it more , the criteria for non resident was recently made more stringent, might not apply to you if you have non res status already but worth a look.

 

[TQA]

OOPS I was under the impression it was a total of 183 days in any year actually in the UK.

Has this been reduced to 90 days?

 

[penfold]

It may be a common time threshold for other HMRC rules, but 183 days in the UK/184 days outside in any 365(rolling) is the limit for the seafarers' earnings deduction(SED), beyond which a mariner pays no income tax. I'm looking forwards to my rebate, hopefully in time for it to be a nice christmas prezzy(which will be hypothetically opened under the tree in the mess room, as I'll be working Christmas and the new year).

 

[mocruising]

I have maintained NT "Not ordinarily resident" for tax purposes since 1980. I was a seafarer from 1980 to 1988 but resident in Bahrain. Then in Abu Dhabi and Qatar between 1988 and May this year. Its always been easy because I have always maintained the less than 90 days in the UK. For the past eight years I have been spending four months a year on the boat between France and Greece. I do however complete a tax return in the UK every year which covers rental income from my UK property. I would maintain that this status has not in the past been dependent upon ties with the UK I have always had multiple properties in the UK and my kids attended fee paying schools in the UK for a period in excess of ten years. Up until May this year I have always been resident in either Bahrain UAE or Qatar with the resident visa stamped in my passport.

This however may all all change next April when the laws are changed. I now work as a Consultant and spend six months a year in Saudi but I have no residence permit, I work on six months multi entry business visas, these allow me to enter for 30 days as many times as I like. I still spend four months of the year on the boat which is at present in Greece, and approximately two months in the UK.

I am trying to maintain my NT status and I am watching the space for any changes. The other thing that has changed is that my wife and only dependent now lives in the UK for the first time in 31 years.

I would add that if the immigration service ever tied up with the revenue many people I work with and have met over the years who work offshore on a 28/28 basis but not as seafarers would be stuffed as the electronic tagging of passports is prety sophisticated these days.

 

[temptress]

Get some professional advice

I worked and lived abroad for many years before turning to life aboard. I hope to preserve my non resident status for tax purposes for a few more years by limiting my UK stays to the standard 90 days per year.I was wondering whether others have experience of any problems with the UK tax authorities when claiming non-residence as a liveaboard? Any special recommendations?

In my opinion it is possible to do what you want BUT the rules are complex (and changed frequently) what works for one person may not work for the next person.

You can actually spend more than 90 days in a tax year in the UK but you also need to keep an eye on your rolling average over a number of years.

There is a difference between Not Resident and Not Ordinary Resident. This can effect and your families (Wife/kids) entitlement to Pensions, Health care, welfare, right to live in the UK. The rules are different if you are in the EU than say the Carrib/Turkey/Asia. Also don't forget if you spend significant time in one country you may become defacto resident there and subject to their laws.

Get some professional advice on your personal circunstances.

 

[rivonia]

The simple answer is that NT can not be given if you are living on board, this is true as we were in the same position as you.

You will have toget a residence established in another country.

Once resident you will then have to severe ALL UK resident ties.

Do seek proffesional help asap.

Fair winds

Peter

 

[Conachair]

OOPS I was under the impression it was a total of 183 days in any year actually in the UK.

Has this been reduced to 90 days?

Think it's 90 days average.

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

 

[rallyveteran]

The simple answer is that NT can not be given if you are living on board, this is true as we were in the same position as you.

You will have toget a residence established in another country....
Peter

This didn't apply to us in the late 1990s. We weren't resident anywhere for five years. I recollect that when a similar thread came up here a few months ago I found a poster on another board who wasn't resident anywhere at the current time by virtue of moving around on a yacht.

I would reiterate what another poster has said and urge the OP to seek advice because what happens to one person isn't necessarily going to apply to another.

 

[temptress]

The simple answer is that NT can not be given if you are living on board, this is true as we were in the same position as you.

You will have toget a residence established in another country.

Once resident you will then have to severe ALL UK resident ties.

Do seek proffesional help asap.

Fair winds

Peter

Rivonia - I am sorry but there is no SIMPLE answer and while this may be the case for you but it is not the case for everyone.

You do not have to be resident anywhere! Though this may not necessarily be a desirable situation. You may also not need to sever all ties with the UK.

This is not the forum to discuss the finer details - what works and will not work is very dependent on the specific circumstances of a given individual and the knowledge of your adviser. The regulations are not black and white on the issue there is room for interpretation.

To the OP get some properly qualified professional advice - and that is not necessarily an accountant or tax adviser. Look for specialist ex-pat/wealth planning type advice, most likely your bank will already have a division that can help you that advice will usually cost you.

 

[KellysEye]

When we left the UK we took advice from an accountant who specialised in not resident, not ordinarily resident and not domiciled. He said that to get not res you need to have an address in another country and pay tax there. If they have a tax agreement with the UK you won't pay UK tax. However, he also said that if you are away for four years and don't have a fixed address you can apply for not res and not ordinarily resident after four tax years. We had stopped working so when we got our not res we got a signicant tax rebate backdated four tax years. We had income from house rental on which we paid tax on but had moved our money offshore and paid no tax on interest. If you move money offshore now do not put it in a European bank. There is a Witholding tax on interest which is now 35%.

The having no assets, even club membership, in the UK is for not domiciled.

 

[TQA]

Arrrggggghhhhhhh

Yup the rules have changed as of June this year.

Spend more than 183 days in the UK in any one rolling year and you are resident. [Same as Before]

Spend less than 10 days in the UK in any one rolling year and you are non resident,

HOWEVER THERE IS A GREY AREA BETWEEN 10 AND 183 !!!!

"The residency status will be determined by a combination of whether they are an arriver or a leaver, day count and most crucially "connecting factors", five defined stipulations based around family, employment, accommodation, time spent in the UK in the previous year and, only for leavers, time spent in the UK compared with other countries.

The consultation proposes that arrivers will always be counted as non-resident if they spent less than 45 days in the UK. Those who spend between 45-89 days in the UK will only be counted as resident if four factors apply to them. This will go down to three factors for people spending 90-119 days in the UK; and two factors for 120-182 days."


Read more: http://www.accountancyage.com/aa/analysis/2079946/taking-residency-test-courtroom#ixzz1eRpyrfpH

Lawyers are going to get richer on this one.

 

[KellysEye]

One intereasting thing is that when you arrive back in the UK to live you lose your not res the day you arrive, so tax plan acccordingly. For example we sold our rented house and flat before coming back to avoid capital gains tax.

 

[Slow_boat]

I don't know if it is relevant but I was at A+E in the local hospital recently and they had posters seemingly everywhere warning people that if you are not ordinarily a resident of the UK you may not be entitled to free treatment.

Likewise, if you haven't made enough national insurance contributions, you may get a reduced pension, if any. My brother is in this situation but there again, he has genuinely been resident outside the UK most of his life, not just for tax purposes.

 

[maby]

We were getting professional advice on this just a few days ago. As others have said, you need to sever all ties, so sell up everything and take the money elsewhere. Our advisor was suggesting that the Isle of Man is best - apparently the Channel Islands are too closely linked to Britain for it to work. You really do need to own some property in your new country of choice - being nomadic on a boat will not cut it.

You can then get away with up to 90 days here - though if you are on a yacht I'm not sure how they can police it - there's no border controls at the mouth of the Medway so, provided you don't use any credit cards or have to go to hospital, what records of your presence are there?

I guess that if you are willing to never come back to England and are going to become a sailing nomad, you probably can ignore all of this - if you take everything you own outside the country and don't leave a forwarding address, the b*****s really don't have anything to tax you on, do they?

 

[Conachair]

What's to be gained though?

If you aren't earning lots of cash and forgetting to declare it abroad why go non resident?

 

[TQA]

What's to be gained though?

If you aren't earning lots of cash and forgetting to declare it abroad why go non resident?

When Anglo Irish were paying 7% interest it was worth being expat for tax purposes for many!

 

[maby]

What's to be gained though?

If you aren't earning lots of cash and forgetting to declare it abroad why go non resident?

Well, I think there is always an assumption that the amount of money you sre receiving is sufficiently high to justify the disruption - otherwise you would not be going to all the trouble...

 

[jimbaerselman]

I don't know if it is relevant but I was at A+E in the local hospital recently and they had posters seemingly everywhere warning people that if you are not ordinarily a resident of the UK you may not be entitled to free treatment.

To be pedantic, you have to be "administratively resident" to qualify for NHS treatment. You lose administrative residence if you spend more than 90 days continuously outside the country. Hence GPs won't give you more than 90 days prescriptions.

Equally, if you spend more than 90 days continuously in another country, either you're breaking your visa limits, or you are administratively resident there.

Within the EU, there is no means of policing such movements, so it's a matter of personal convenience whether or not you choose to change administrative residence - usually by registering with local police.

This is a completely different matter from tax residence, or ordinary residence!