How to avoid paying tax

[Nostrodamus]

I know it is not good practise to post this on two forums but have asked the samequestion in Scuttlebook buthoped someone here may be able to help as no doubt there are others in the same position.

So I have worked all my life and paid my dues to any government agency which wants to take their slice from my wages.
We have now sold all our assets in the UK, moved aboard our boat and will soon be leaving the UK for good to cruise. At the moment we have no intentions of going back apart from the occasional visit.
Even though I am not using any resources they still tax my meagre pension.
I have heard of merchant seamen and even long haul flight staff paying a reduced rate of tax but is there any way I can reduce or even get rid of them taking my money. I can certainly spend it more wisely than they can.

 

[Deleted User YDKXO]

I think you need to take some good advice on this. As I understand it, if you are physically out of the UK for more than 183 days in a tax year, then you can claim non residency status which may allow you not to pay tax in the UK on non UK earnings. I've heard though that HMRC are clamping down on non resident status though; if you retain a house in the UK, they may well claim you are still resident for tax purposes. Again, as far as I understand it, tax is still payable on all earnings arising in the UK although you may be able to claim a refund under any double taxation treaty with another country. I think the real point is that you have to be resident somewhere for tax purposes, if it isn't the UK. But, as I say, this may all be rubbish and you need to talk to an expert

 

[jordanbasset]

I had similar thoughts but decided to just accept it in the end. As you know you get taxed at 20% after your personal allowances (unless you are receiving a much higher pension than me) and as you are on a pension you no longer get stopped national insurance. All in all I was taxed much heavier during my working life. It sucks but as the saying goes taxes and death are the two things you cannot avoid, or at least not easily in the case of the former.
As I mentioned in the other thread you could take up residency in another country but I did not find that practical being on a boat.

 

[Tranona]

Mike is basically correct. It is difficult not to be resident somewhere for tax purposes. It is quite possible to become non-resident in the UK in your situation, but you need to effectively cut all ties with the UK. There is a process you have to go through with HMRC, and based on the experiences of a couple of people I know who have done it recently they are very helpful in determining whether you qualify or not.

Speak to your local tax office.

 

[Vern]

This is not a criticism, saving on tax is an art form and some treat it as a hobby
But, all those who live aboard and cruise around...what happens if (and when) you become ill?

I have had a few clients who lived permanently in Spain or Italy etc. But I met them in the UK, simply because they scurried back here pronto when one or other of them became unwell with something serious.
This usually meant selling up lock stock over there to come 'home'.

My experiences of this were mostly in the late 1990's, so may not be applicable now?

 

[Tranona]

This is not a criticism, saving on tax is an art form and some treat it as a hobby
But, all those who live aboard and cruise around...what happens if (and when) you become ill?

I have had a few clients who lived permanently in Spain or Italy etc. But I met them in the UK, simply because they scurried back here pronto when one or other of them became unwell with something serious.
This usually meant selling up lock stock over there to come 'home'.

My experiences of this were mostly in the late 1990's, so may not be applicable now?

You are right. Becoming non-resident cuts you off from the NHS and means you can't get an EHIC so you are on your own healthwise. In fact you can lose rights to NHS with an absence of only 3 months from the UK, although in practice this does not happen often - it is designed to stop "health tourists".

You also need to consider all the otheer long term benefits of being a UK taxpayer, such as rights to benefits and particularly state pension. Many people keep UK residency and maintain some form of UK address just to be sure that they can access these services in the future. If you have children that might want to go to University, they will become overseas students and therefore have to pay full fees without access to grants, loans etc.

Becoming non-resident is a major step and you need to be sure that you can support yourself long term with the resources you have.

Good professional advice clearly needed.

 

[macd]

If you have children that might want to go to University, they will become overseas students and therefore have to pay full fees without access to grants, loans etc.

Not if you send them to a Scottish uni. Classic tit-for-tat: the Scots charge tuition fees to English-resident students (because English unis levy such a charge on Scots), but not to a friend's (British) daughter, whose home is Warsaw.

Fully agree with your earlier post. First point of reference should be one's UK tax office. I found them helpful (and obviously free) when I moved from UK 10 years ago.

 

[Slow_boat]

If you're rich enough tax is optional.

Try registering in Monaco.

 

[Conachair]

I think the real point is that you have to be resident somewhere for tax purposes, if it isn't the UK.

Not quite true though grey area. I was non resident anywhere for 5 years. But you can be fairly sure that any income arising from activities in the UK will be taxed. If you are non resident then if you do carry out the work abroad you should pay tax in the country where the work was carried out, even if it was for a UK company. That's what I was told, but maybe I just got away with it.
There are other issues with non residence - ssr and eu health card.
Complex area, don't take my word for it

 

[Deleted User YDKXO]

If you're rich enough tax is optional.

Try registering in Monaco.

You need a few million quid in your pocket to be accepted as a Monaco resident as you do for Jersey and I think, Guernsey but the Isle of Man might be worth thinking about as a tax residency

 

[KellysEye]

We got not resident and not ordinarily resident for tax purposes. The problem is you can't get it quickly unless you have a fixed adress and are paying tax in another country. Clearly this is not on for cruisers. However, there is a four year rule. If you can prove you've been out of the country for four years with no fixed abode then you can apply for not-res, which we did. If you leave the UK in (say) March 2102 then you can make the not-res claim at the end of April 2016 and get a rebate for tax paid in the last four years. If you leave in (say) May you don't get back the tax paid in that tax year, although you will still get not-res. If possible use an accountant who has not-res experience. If you need a recommendation please PM me.

The key thing is not-res does not cover UK income, any income in the UK will still be taxed so move money/assets offshore. Don't use any tax haven in Europe, the European witholding tax on interest earned is now 35%. Move everything offshore before leaving the UK. Also there are moves afoot to not give non-res if you belong to a UK club and other trivial things so cut all ties.

 

[bryantee]

a taxing question

be careful sometimes its out of the frying pan into the fire.on retiring after being employed by uk company working in greece and mid east ,been non res for years all the concessions tax free salary but pay ni contributions if working in eu. good for state pension. stayed in greece. looked at moving permanently to greece. took professional advice both in uk and greece.result opened uk company as director and,pay tax on uk pensions. with allowances much cheaper than greece. wife is independant and is non res.no uk tax on pension . she has greek residency but below the level as a single income.
now employed and resident in india. pay indian tax of 10% on local income.required to extend residence /employment visa every year.
TAKE Profesional Advice

 

[Conachair]

The problem is you can't get it quickly unless you have a fixed adress and are paying tax in another country.

Not my experience, I spoke to the tax office, left and stopped paying tax on work done abroad. Simple as that. There is a form to fill in , forget the name. Easy as untying 4 ropes. Though apparently they can get a bit picky if they think you're pulling a fast one or just having a big long holiday and trying to avoid capital gains tax.
Self assessment needs to be done using 3rd party software, the web site can't handle it on its' own. the foreign income page seemed to change every year, but you had to declare money earned abroad and tax paid abroad. Since i kept forgetting to pay tax on work done abroad I was honest about this with no comeback. Wasn't much though.

 

[KellysEye]

>Not my experience, I spoke to the tax office, left and stopped paying tax on work done abroad. Simple as that.

Did you have a fixed address, also what year did you leave? As you said they keep changing things.

 

[Conachair]

>Not my experience, I spoke to the tax office, left and stopped paying tax on work done abroad. Simple as that.

Did you have a fixed address, also what year did you leave? As you said they keep changing things.

No address for 5 years, non resident anywhere. Left 2005. though I should have been resident in Spain as was there for considerably more than 183 days but kept on the move , head down and ear to the ground. Spoke to a couple of tax offices in uk before leaving, 1 phone & 1 visit. Basically they said if i was non resident they didn't care. Declare any UK income arising in the UK. Even though i was being paid by UK company for the small amounts of work as i was out of the country and the work was out of the country then no UK tax was paid. So they said. So I did

But don't anyone take my word for it! May it was my friendly smile and lucky life wot did it

 

[Nostrodamus]

Lets face it this is complicated stuff and a lot has to be taken into account.
Now I hate to say it but I am going to. I should imagine there are those with far more assets than I have and may have their own accountants. They either do not frequent these pages or the accountants are so creative then it is something they do not want to pass on.
I do think the RYA or Crusing Association could orshould have looked into it to advise members or it would make a good story in one of the boating publications. I am supprised that there are many out there like myself in this position but I have not heard from one who has taken proffesional advice.
they are probably like me and don't want to pay out lots of money to be told you cannot do anything.
I know the merchant navy and long haul workers get a reduction in tax for being out of the country for so many days but why can't we get a reduction for not being there at all?

 

[Nostrodamus]

There area lot of different views and good advice about this matter but the post is duplicated on the Scuttlebutt forum.
Can all replys be sent there so we have all the information in one place.
There have been some very intresting replies and i thank you for them and for posting on the other forum.

 

[KellysEye]

>I have not heard from one who has taken proffesional advice.

We took professional advice from an accountant who does our tax returns and is a specialist in not res, which is why we appointed him.

 

[duncan99210]

It can also depend on the source of your pension. Any public pension (local gov, civil service, armed forces etc) is subject to UK tax unless you are resident in a limited number of overseas countries (eg Cyprus, Canada) who have special reciprocal arrangements with the UK.

 

[KellysEye]

>No address for 5 years, non resident anywhere. Left 2005.

We left in 2004 and were told by HMRC (I think it was the IR then) that we could only get not res with the conditions I mentioned.

>Spoke to a couple of tax offices in uk before leaving, 1 phone & 1 visit. Basically they said if i was non resident they didn't care. Declare any UK income arising in the UK.

I can see that they wouldn't care if you were abroad as long as you kept paying tax but did you ask what you needed to do for not res?

Smart move in Spain )