Non-resident status for tax planning?

[Tim Good]

We plan to move aboard in April and go. It is likely that for the foreseeable we will not be in the UK for more than 2 months of each year.

We have a house here that we will rent, a business that will pay both a small salary and dividends and various other investments, some deferred in Ireland.

Could someone tell me the if they have registered themselves as "non-resident" and what you have learned / gained?

 

[Tranona]

Difficult to get non resident status with that sort of UK activity. Good information on how to apply from HMRC but unless you have job/income elsewhere doubt you will get any tax advantage. Govt very reluctant to allow potential taxpayer to escape!

 

[westernman]

You won't be able to be non-resident in the UK without being resident somewhere else.

 

[macd]

You won't be able to be non-resident in the UK without being resident somewhere else.

I think that's probably the case in practice. But if it applies, it can be straightforward. When I moved to the IoM it was a completely painless experience, although I've had the odd battle with the UK tax man since, invariably as a consequence of their not reading their own bloody treaties.

And the usual hobby horse: anyone who tells you that you will always pay tax on income in the country where it's generated is talking nonsense; anyone who claims you will always pay tax in your country of residence is equally cock-eyed. The UK has taxation treaties with around 140 countries...they're all very detailed and, more to the point, all different.

 

[jordanbasset]

If you did get non-resident status also remember there may be downsides. Is your boat registered on the SSR, if so you will need to remove it. You will not be entitled to use EHIC, so if you are planning on sailing in E.U. Countries you will need to consider private health insurance, of course if you are going further afield you would need to consider this anyway.

As to whether you will be entitled to become non tax resident some good advice here
https://www.gov.uk/tax-foreign-income/residence
'Work out your residence status
Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).
You’re automatically resident if either:
you spent 183 or more days in the UK in the tax year
your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:
you spent fewer than 16 days in the UK (or 46 days if you haven’t been classed as UK resident for the 3 previous tax years)
you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working'

If you do qualify you need to inform HMRC when you go. You also need to complete a couple of extra forms each year for your tax return, they are complicated but not too difficult to complete

 

[macd]

If you did get non-resident status...You will not be entitled to use EHIC

I'm sure you're aware of this, JB, but that rather depends on where you become resident instead. All EEA countries plus Switzerland are in the EHIC 'zone'.

 

[jordanbasset]

I'm sure you're aware of this, JB, but that rather depends on where you become resident instead. All EEA countries plus Switzerland are in the EHIC 'zone'.

Yes agree.
Thinking back to the O.P.'s situation and in particular the property being rented out they will still need to pay tax on any net income they receive even if they are non-resident
https://www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad

Personally wonder whether it is worth the hassle even if it was possible to become non-resident, which isn't at all clear

 

[macd]

Thinking back to the O.P.'s situation and in particular the property being rented out they will still need to pay tax on any net income they receive even if they are non-resident

That's not necessarily the case. Depending on the country/treaty, UK rental income might be relievable. Sometimes it is, sometimes it isn't.
Secondly, if resident elsewhere, under many treaties you can still qualify for a UK personal tax-free allowance. In which case if the rental income is taxable in the UK but below the allowance threshold, no tax would be paid in the UK (but it would become taxable income in the country of residence).
Pensions are often relievable, although different rules sometimes exist between government (such as civil service, police, teachers) and 'other' pensions. State retirement pension comes under 'other'.

This is a digest of all the UK's tax treaties: https://www.gov.uk/government/uploa...356800/Digest_of_Double_Taxation_Treaties.pdf

 

[affinite]

Is your boat called "Google" by any chance ?

 

[macd]

Is your boat called "Google" by any chance ?

In the narrow sense of keeping me up to speed on my tax circumstances, it's called 'Staying Afloat'. All the above is based on personal experience.

 

[KellysEye]

You have to be out of the country for four years and not domiciled elsewhere to get not resident status, we had not resident and not ordinarily resident status. Our status paperwork said not but everyone says non for some reason. Any income in the UK, such as rent, is still taxed but we moved other assets, such as cash, offshore to avoid tax. If moving assets offshore do not use a bank in the UK such as Jersey or Isle of Man there is now a European witholding tax of assets offshore of 30%.

 

[lindsay]

You will get a lot of seemingly conflicting information on this one. This is because much information is presented and/or interpreted only partially. Often two opposing views are both correct because of differing circumstances

We can cut through the clutter by googling the new(april 2013) uk statutory tax residency regulations, in particular an HMRC publication dated dec 2013.

You have property, a business and investments so you have the experience to become knowledgeable quickly, despite it being a 100 page, tedious, but not difficult, read.

At least after understanding where the government is coming from you will be able to have an intelligent conversation with a qualified financial advisor WHO IS FAMILIAR WITH THE ISSUE.

A DIY job is NOT recommended.

As has been pointed out, with all your UK ties you will have your work cut out, and it might take a few years of shedding some of these ties to get to non resident

Good Luck!

 

[GHA]

Could someone tell me the if they have registered themselves as "non-resident" and what you have learned / gained?

I was non resident anywhere for 5 years, as others have said you need some professional advice really. That said... In a nutshell from meetings in the local tax office - meet the criteria (much more difficult than was a few years ago) they don't care about any money arising from activities outside the country, any money from inside the UK they will want declared as income.
I was earning quite a bit outside the UK so it was worth it , in your case with all the activity in the UK maybe not.

 

[bedouin]

And the usual hobby horse: anyone who tells you that you will always pay tax on income in the country where it's generated is talking nonsense; anyone who claims you will always pay tax in your country of residence is equally cock-eyed. The UK has taxation treaties with around 140 countries...they're all very detailed and, more to the point, all different.

No - but this being the tax man the default position for individuals is that you have to pay tax on everything in both the country it is generated, and the country of residence and, if you are unlucky enough to be US, in US as well

 

[macd]

No - but this being the tax man the default position for individuals is that you have to pay tax on everything in both the country it is generated, and the country of residence and, if you are unlucky enough to be US, in US as well

If by the tax man's "default" you mean "off the top of my head, I just work here" then you are correct. However, the UK has double taxation treaties with something like two-thirds of all the countries on the planet, the principal purpose of which is to prevent people paying tax twice on the same income. If you happen to be resident in any of those countries, their tax men will often be eager to help you wade through it, since it usually means more money for their exchequer. But, as said by others, good professional advice is often worthwhile.

Clearly double taxation treaties have no bearing on the OP's apparent desire to be non-resident anywhere.

US citizens, of course, are a special case, god help them.

 

[bedouin]

If by the tax man's "default" you mean "off the top of my head, I just work here" then you are correct. However, the UK has double taxation treaties with something like two-thirds of all the countries on the planet, the principal purpose of which is to prevent people paying tax twice on the same income. If you happen to be resident in any of those countries, their tax men will often be eager to help you wade through it, since it usually means more money for their exchequer. But, as said by others, good professional advice is often worthwhile.

What I mean is in that you are liable for the tax unless there is a treat to reduce the tax liability. As you say UK has treaties with many countries so it is rare to have to pay double tax (unless you are a US citizen).

But since the OP, as you say, the OP is not going to be resident anywhere then the UK taxman is going to want his slice of UK income

 

[GHA]

You won't be able to be non-resident in the UK without being resident somewhere else.

Has that changed recently? Taxman didn't care what I was up to as long as I met the non resident days out of the country requirements etc.

 

[macd]

Has that changed recently? Taxman didn't care what I was up to as long as I met the non resident days out of the country requirements etc.

Things changed in 2013. See lindsay's post, #12.
This is the link to the guidance notes mentioned, all 105 pages of it:
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=FhT41sOFA5E&formId=7361

 

[jordanbasset]

That's not necessarily the case. Depending on the country/treaty, UK rental income might be relievable. Sometimes it is, sometimes it isn't.
https://www.gov.uk/government/uploa...356800/Digest_of_Double_Taxation_Treaties.pdf

I cannot see on your link anything to suggest rental income generated in the UK would be not liable to tax, could you point it out for me?
It does mention Property Income Dividends and Property Authorised Investment Funds, that is not the same as income from a rental property you personally are renting out.

HMRC is clear on the subject on tax on rental income when a non resident
https://www.gov.uk/tax-uk-income-live-abroad/rent

 

[GHA]

Things changed in 2013. See lindsay's post, #12.
This is the link to the guidance notes mentioned, all 105 pages of it:
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=FhT41sOFA5E&formId=7361

I did have a quick flick through that, didn't see any mention of being resident in a foreign country as a requirement for non resident status in the UK - is it in there?

If so could be very difficult for cruisers.