full time cruisers and UK tax

[spindly_killer_fish]

I imagine this is going to have a very small audience, but if you left the UK to go cruising for a few years and you still receive an income (pension etc.) I assume you would not need to pay tax on that regardless of how much as you would be non tax resident. Would that be a correct assumption?

 

[Stingo]

If your boat is SSR registered, it is assumed that you are in the UK for more than 180 days per year. Thank you Gordon Brown for that! I understand he was trying to close all the loopholes of the mega yachts registering under SSR and then remaining in the French Rivera etc

 

[spindly_killer_fish]

so 2 questions pop to mind then.

1) your immigration status would show you are non resident so i imagine you could use that for proof?
2) do you need to have your boat registered in the UK ? I assume there are downsides like proof of ownership and insurance?

 

[bedouin]

I imagine this is going to have a very small audience, but if you left the UK to go cruising for a few years and you still receive an income (pension etc.) I assume you would not need to pay tax on that regardless of how much as you would be non tax resident. Would that be a correct assumption?

I'm afraid not - you are liable for UK tax on any UK income where ever you live. Very hard to get out of that.

If you have assets (rather than just income from a pension) you can probably move those offshore and not be liable to UK tax if you aren't resident in the UK

 

[Tranona]

so 2 questions pop to mind then.

1) your immigration status would show you are non resident so i imagine you could use that for proof?
2) do you need to have your boat registered in the UK ? I assume there are downsides like proof of ownership and insurance?

You have to become formally non resident which is not easy in the circumstances you describe. Relatively easy if you move to another country and take a job there, also common if you say retire and become resident elsewhere in which case many states require you to be tax resident there.

You will need to take specialist tax advice as to whether you qualify, but the vast majority either choose or are forced to retain UK residence because at some point they will want to return to the UK.

Registration of the boat is totally irrelevant to tax status (either you or the boat). If you are physically resident in the UK you can use the simple SSR and many use this while they are preparing their trip and may continue to use it for the 5 year validity. However renewal becomes problematic if you are no longer physically resident. It is sensible therefore to use the main Part 1 register which is a bit more onerous to get but does not have a residence requirement

 

[spindly_killer_fish]

Thanks for all the help chaps.

im guessing its not the end of the world if i own the boat and just draw enough to keep me going, I wont be returning to the UK though, ill end up retiring in Thailand as my wife and daughter are both dual citizens.

 

[bedouin]

Thanks for all the help chaps.

im guessing its not the end of the world if i own the boat and just draw enough to keep me going, I wont be returning to the UK though, ill end up retiring in Thailand as my wife and daughter are both dual citizens.

Then it is well worth your while getting professional advice - it could save you thousands

 

[PlanB]

Your circumstances are different from mine, but pre Brexit, I kept a UK address (and a foothold in the property market) for banking, GP and other services, and paid all my UK taxes.

 

[Tranona]

Then it is well worth your while getting professional advice - it could save you thousands

Plus 1 If you are making such a fundamental move in your residence then you need to take professional advice. If you retain assets in the UK you cannot avoid UK tax but there are reciprocal arrangements with many other countries, so you can look at minimising your overall tax payments by either switching into tax free savings or moving assets into different tax regimes.

 

[RunAgroundHard]

HMRC has a test to determine if you are resident for tax purposes. It is east to pass the test, but it can be challenged. Severing all connections with the UK is one way of failing the test, maintaining a home or having a bank account passes the test.

I have maintained a home and bank account, but was not considered a resident for UK tax purposes. My normal home was outside the UK, all my earnings were outside the uk, I was paid in local currency, I was not in the UK more than 183 days. Transfers of income to the UK to pay insurance or council tax on my home, or bills, was allowed and did not impact my non uk tax status. My employer noted me as an expatriate and this was logged with HMRC.

If you receive income from shares, in the UK you will be taxed on it in the UK. Being on holiday, outside the UK does not count towards the 183 days, but folks do try that on.

 

[spindly_killer_fish]

Oh i have no intention of keeping anything in the UK, when i go i go. ill probably need a mailbox address to keep my bank accounts but that will be all. if at any time I need to be returned to land full time, then it will be in Thailand, not here.

 

[Tranona]

Oh i have no intention of keeping anything in the UK, when i go i go. ill probably need a mailbox address to keep my bank accounts but that will be all. if at any time I need to be returned to land full time, then it will be in Thailand, not here.

All the more reason for seeking professional advice. You cannot simply "go" and at the same time retain bank accounts in the UK. HMRC has a set of tests for becoming non resident as suggested in post#10. You cannot normally have a bank account in the UK if you are non resident.

Your situation is not unusual but the solution will depend entirely on your specific circumstances so unless you are fully conversant with the relevant law (and presumably not as you are asking basic questions on a public forum) best to seek advice from someone who is.

 

[PlanB]

Some banks won't accept a mailbox address - money laundering rules.

 

[spindly_killer_fish]

Some banks won't accept a mailbox address - money laundering rules.

bugger.

 

[spindly_killer_fish]

tax advice will be the way forward and probably an offshore account methinks

 

[Neeves]

Oh i have no intention of keeping anything in the UK, when i go i go. ill probably need a mailbox address to keep my bank accounts but that will be all. if at any time I need to be returned to land full time, then it will be in Thailand, not here.

I assume from this statement you are not eligible for a UK State pension nor a pension from any of your historic employers. UK pension funds seem to be required to declare any pensions which are then collated and will be used to generate a Tax Code. As mentioned you may be able to transfer the taxation regime to another country, Thailand in your case, where it would also be subject to tax. Normally the UK State pension and any other pensions would be taxed at source, the UK - but you would need to make formal arrangements to change this.

Interest generated in your UK accounts would also be liable to UK taxation and UK banks will ask for your taxation arrangements - and or deduct any taxable income (on your behalf).

Keep active any UK bank accounts - it is very difficult to renew them should you feel the need as I think you need a UK address.

Go for the professional advice.

Jonathan

 

[wonkywinch]

Normally the UK State pension and any other pensions would be taxed at source, the UK - but you would need to make formal arrangements to change this.

Normally the state pension is not taxed at source although others are. This is done on the basis that, for many, it is their only source of income and used to fall below the personal allowance.

As Neeves and others say, seek professional advice. The information you receive here will be worth about as much as you've paid for it.

I have a friend who was fined almost half a million quid for tax avoidance as he honestly believed his situation made him non res and his employer was persuaded to pay him gross for a few years.

 

[Baggywrinkle]

It's complicated ....

Get professional advice and read carefully any dual taxation agreement the U.K. has with the country you intend to be tax resident in. This will affect any income generated in the U.K. ... pensions, rental income, investments etc. Obviously, if you can't prove you are tax resident in another country, then the U.K. will "claim you" and tax you accordingly .... one of the requirements to claim tax relief at source in the U.K. is proof of tax residency elsewhere.

If the dual taxation agreement is favourable, then tax relief at source for U.K. sourced income is possible and you will receive this income free of U.K. taxation, but the devil is in the fine print of the dual taxation agreement.

Info here: Tax on your UK income if you live abroad

 

[GHA]

tax advice will be the way forward and probably an offshore account methinks

And you can speak to the revenue, been non resident anywhere onboard for years now, tax office were helpful & pleasant to talk to before leaving.

 

[Neeves]

Normally the state pension is not taxed at source although others are. This is done on the basis that, for many, it is their only source of income and used to fall below the personal allowance.

As Neeves and others say, seek professional advice. The information you receive here will be worth about as much as you've paid for it.

I have a friend who was fined almost half a million quid for tax avoidance as he honestly believed his situation made him non res and his employer was persuaded to pay him gross for a few years.

My taxation responsibilities are advantageous to me - they may not work for others.

I pay UK tax on UK pensions in the UK. During the time I worked in HK I continued to pay the full requirement to remain eligible for a full UK state pension. The contributions I paid to maintain the State pension were not significant - it was a good investment. The full UK State pension is not large and outstrips the personal allowance. You might want to compare your potential for a Thai pension vs a UK pension.

Don't think Thailand as Shang Ri La - HK was nirvana and then it was not. In 1946 the Empire was building New Delhi - it is (even now) stunning - within months the Brits walked away and left it. Strategic planning....?

The information you receive here may be worth as much as you are paying to receive it - but it will raise questions, opportunities and doubts that you can then resolve when you take professional advise.

Specifically ask about maintaining a UK bank account - it can be advantageous. I'd point you toward 'international' banks Standard Chartered or HSBC - who will have branches in Thailand

Maintain your citizenship, even when updating the passport becomes a pain - health care and child education then university might not be issues to you now but might become important to your partner.

I understand we all get old. There are reciprocal arrangements between Oz, the UK and some other countries - and they are worth much more - if you, or your immediate family, need serious health care - than trying to minimise your tax shadow. You never completely cut ties - its so easy to go back (unlike some of my relatives who arrived on square riggers).

So though you think you are going to leave the UK behind you - hedge your bets.

As GHA says - Revenue are very approachable, very understanding and immensely patient.

When the chips are down - the UK might look attractive.

Jonathan