Questions on legal stuff (taxes) as EU citizens wanting to liveabord in the UK

[tomk32]

Hello there,

My lovely girlfriend and I (she's the skipper, I'm new to sailing) want to move from Austria (where we lived last) to Cornwall (falmouth-ish) and join the liveaboard community . Getting a house or flat here is too expensive and for the really cold weeks we can go to my family home in Bavaria where we have a whole flat for ourselves.


Set aside the issue of buying a boat, mooring it somewhere, fitting it for winter, etc; I have an important question:

From a thread on taxation (looking at the problem the other way around) I gathered that I'm most likely to fall under UK taxation, which I wouldn't mind at all, looking that the much higher limit (compared to austria or even my native germany) before I have to handle this VAT nonsense. Did I read that thread correctly? Will the HMRC accept a harbour office or similar when I register as a sole trader (or Ltd)? My girlfriend and I both have our job "on the internet", in my case an american company just to make matters more complicated.

Anything I should know when registering the boat (we'll go for 24ft or less and we'd like to sail to the continent sooner or later) a boot as a not-yet-UK-resident?

 

[Tranona]

Not quite sure what you think the problem is. If you become resident in the UK (basically spending at least 186 days a year in UK) then you will be liable to UK tax on your earnings. Can't see why VAT is a concern as you only need to register for that if you are a business with a significant turnover or you trade in goods where you want to reclaim VAT. If you are an employee then your tax will be automatically deducted from your wages by your employer. If you are self employed you will need to complete a tax return each year and after the first year you will be expected to pay by instalments based on your anticipated earnings in the year. You may well find difficulty in using a marina as your address - many do not officially permit liveaboards. You can find lots of information on tax and VAT on the HMRC website, but you may find it useful to take professional advice from a tax accountant as to how best to arrange your affairs.

Perhaps you should spend more time considering the practicalities and costs of living aboard. A 24 ft boat is impractical for 2 people. Partition off an area in your house 3m *2.4m with a height of 1.6m and you will get an idea of the space you will have to cook, eat, relax, sleep and attend to your bodily requirements. It is not easy to find anywhere to live aboard in the area you are looking at, particularly if you intend following any type of land based work and social life. Don't imagine there is a huge "liveaboard" community to join. Although many people do live on boats it is a fringe activity and precarious as it mostly happens below the radar.

If you do become resident then you will,be able to register your boat on the Small Ships Register, but you may well have to prove that you are resident. There is no compulsion to register - it is only necessary if you want to take your boat abroad.

 

[jimbaerselman]

You become tax resident in UK if you spend more than 182 days out of 365 in the country.

But if the profit from a business is received in another country, it will be taxed there.

Luckily, within the EU, tax levied on a business profit in one country will be offset against tax paid in the other country.

VAT is a separate issue, related more to where you sell your services and goods, and where you buy your inputs. If the business turnover is significant (over the VAT threshold of £81,000 pa in UK) it may be worth taking advice - but that costs .
It's an administrative bore, but being able to claim a tax rebate for VAT paid on your inputs is quite a bonus. It's nothing to do with profit . . . and thus ultimately income tax.

 

[Sybarite]

You become tax resident in UK if you spend more than 182 days out of 365 in the country.

.

There used to be a second criterion: if you spent on average 3 months per year over a number of years, you were considered tax resident. However, I cannot say that I am up to date on UK tax.

 

[jimbaerselman]

There used to be a second criterion: if you spent on average 3 months per year over a number of years, you were considered tax resident. However, I cannot say that I am up to date on UK tax.

I'm a bit out of date with that one, and too lazy to look it up! But I think it relates to a specific tax - IHT? - if you have taken up residence elsewhere.

 

[tomk32]

Thanks to everyone for the replies, I see becoming resident will be easier than expected, also reading that some people have a problem trying to escape the HMRC. Strange no one called me crazy for doing it the other way round... Re VAT, the limits when you have to do that are quite low in my native Germany (€17k) and in Austria (€30k) and I'm really not into this kind of paperwork you know. Those limits always kept me from working and earning more but I don't want to keep this minimalistic style all my life.

Re the 24ft liveaboard, Tranona you're right about it being tiny, but that's what the budget allows for now. We've spent lots of time together in similar confined spaces when touring Europe in car and tent for a month or back when sharing a double room in a flatshare. And if we really need to stretch our legs, there's the bavarian mountain retreat.

 

[vyv_cox]

Following up Tranona's post re living on board a 24 ft boat, I have now located this link that might be of interest.
http://www.sailnow.com/sail/simulator.html

 

[Sybarite]

I'm a bit out of date with that one, and too lazy to look it up! But I think it relates to a specific tax - IHT? - if you have taken up residence elsewhere.

No it wasn't specific to a particular tax. It was to establish residency for tax purposes. However I am going back to my exam times which was before UK entry to Europe.

 

[bjl]

If your vessel is less than 7.5m long (about 24'6") it will not be dealt with as a 'means of transport' by HM Revenue & Customs when you import it. I don't know if that helps.

 

[Tranona]

If your vessel is less than 7.5m long (about 24'6") it will not be dealt with as a 'means of transport' by HM Revenue & Customs when you import it. I don't know if that helps.

What relevance is that to the OP? Firstly he makes no mention of importing. Secondly he is in the EU so there is no restriction on moving boats around provided VAT has been paid or the boat is exempt.

In the case of imports from outside the EU where HMRC might have an interest how would a boat be treated differently if it was above 7.5m?

 

[septiclecky]

Not quite sure what you think the problem is. If you become resident in the UK (basically spending at least 186 days a year in UK) then you will be liable to UK tax on your earnings. Can't see why VAT is a concern as you only need to register for that if you are a business with a significant turnover or you trade in goods where you want to reclaim VAT. If you are an employee then your tax will be automatically deducted from your wages by your employer. If you are self employed you will need to complete a tax return each year and after the first year you will be expected to pay by instalments based on your anticipated earnings in the year. You may well find difficulty in using a marina as your address - many do not officially permit liveaboards. You can find lots of information on tax and VAT on the HMRC website, but you may find it useful to take professional advice from a tax accountant as to how best to arrange your affairs.

Perhaps you should spend more time considering the practicalities and costs of living aboard. A 24 ft boat is impractical for 2 people. Partition off an area in your house 3m *2.4m with a height of 1.6m and you will get an idea of the space you will have to cook, eat, relax, sleep and attend to your bodily requirements. It is not easy to find anywhere to live aboard in the area you are looking at, particularly if you intend following any type of land based work and social life. Don't imagine there is a huge "liveaboard" community to join. Although many people do live on boats it is a fringe activity and precarious as it mostly happens below the radar.

If you do become resident then you will,be able to register your boat on the Small Ships Register, but you may well have to prove that you are resident. There is no compulsion to register - it is only necessary if you want to take your boat abroad.

You become tax resident in UK if you spend more than 182 days out of 365 in the country.

But if the profit from a business is received in another country, it will be taxed there.

Luckily, within the EU, tax levied on a business profit in one country will be offset against tax paid in the other country.

VAT is a separate issue, related more to where you sell your services and goods, and where you buy your inputs. If the business turnover is significant (over the VAT threshold of £81,000 pa in UK) it may be worth taking advice - but that costs .
It's an administrative bore, but being able to claim a tax rebate for VAT paid on your inputs is quite a bonus. It's nothing to do with profit . . . and thus ultimately income tax.

Can you tell me why then that top athletes and sports people who enter competions in this country end up paying income tax on their prize money, as this was the reason why Usain Bolt would not come to this country and run in athletic competions for sometime?

Think you will find that they still have to pay income tax on any earnings then claim it back from HMRC

 

[laika]

I think the permanent address thing might *officially* be an issue, but how much of one it is practically is another question.

For tax purposes an individual might need "permanent address": This may not actually be true (anyone know?) but HMRC have always seemed to be rather adamant about being given one. For a legitimate "permanent address" (i.e. to get a vote and receive official mail) the marina where you stay would have to have officially recognised residential moorings (with associated council tax liability). "official" liveaboard berths are rather harder to come by than "unofficial" ones.

Don't know what "gentlemen of the road" do: I doubt they tend to pay much tax. Personally I've been distorting the statistics for people living with their parents since I left home 30 years ago.

For a limited company I think you're supposed to put a name plate outside the door (few home-based companies do and no-one seems to check) which the harbour office might not let you do, but there are companies which provide. Don't know about sole traders.

 

[Tranona]

Can you tell me why then that top athletes and sports people who enter competions in this country end up paying income tax on their prize money, as this was the reason why Usain Bolt would not come to this country and run in athletic competions for sometime?

Think you will find that they still have to pay income tax on any earnings then claim it back from HMRC

Not sure any of that is relevant to the OP. If he is resident in Austria (or Germany) he pays tax there but could still spend time in UK. If the amount of time he spends in the UK is enough to make him resident he pays tax in UK. A non resident earning money in UK has to pay tax on it, but can offset that tax against he tax in his country of residence under double taxation agreements. Don't know the details of Bolt's problem, but I guess he was losing something compared with earning money elsewhere.

 

[septiclecky]

Not sure any of that is relevant to the OP. If he is resident in Austria (or Germany) he pays tax there but could still spend time in UK. If the amount of time he spends in the UK is enough to make him resident he pays tax in UK. A non resident earning money in UK has to pay tax on it, but can offset that tax against he tax in his country of residence under double taxation agreements. Don't know the details of Bolt's problem, but I guess he was losing something compared with earning money elsewhere.

The point I was trying to get across was that people where advising the OP that they would not be paying tax if they where not in the country less than a certain number of days but sportsmen who are in the country only a few days still have to pay tax on any winnings or appearance money.

 

[vyv_cox]

The point I was trying to get across was that people where advising the OP that they would not be paying tax if they where not in the country less than a certain number of days but sportsmen who are in the country only a few days still have to pay tax on any winnings or appearance money.

I think you will find that only top earning athletes are affected. BBC says 'UK rules impose a levy on visiting sportspeople to include global sponsorship and endorsement earnings as well as any appearance fee.' http://www.bbc.co.uk/sport/0/athletics/26197494 Probably doesn't apply to the OP for the reasons Tranona has stated.

 

[jimbaerselman]

I think you will find that only top earning athletes are affected. BBC says 'UK rules impose a levy on visiting sportspeople to include global sponsorship and endorsement earnings as well as any appearance fee.' http://www.bbc.co.uk/sport/0/athletics/26197494 Probably doesn't apply to the OP for the reasons Tranona has stated.

Yes.

The general point is that, wherever you are tax resident, if you earn income from activities in another country, it is taxable within that other country.

For entertainers etc, this was difficult to enforce when fees from several sources were being paid into tax havens, often into "foundations" whose ultimate beneficiaries were not traceable.

So draconian levies were imposed on "assumed" total income. Those who actually received less then the fees levied were then tempted to declare their income, especially if tax had already been paid and there was a double taxation agreement between the countries.

 

[chanelyacht]

Hello there,

My lovely girlfriend and I (she's the skipper, I'm new to sailing) want to move from Austria (where we lived last) to Cornwall (falmouth-ish) and join the liveaboard community . Getting a house or flat here is too expensive and for the really cold weeks we can go to my family home in Bavaria where we have a whole flat for ourselves.


Set aside the issue of buying a boat, mooring it somewhere, fitting it for winter, etc; I have an important question:

From a thread on taxation (looking at the problem the other way around) I gathered that I'm most likely to fall under UK taxation, which I wouldn't mind at all, looking that the much higher limit (compared to austria or even my native germany) before I have to handle this VAT nonsense. Did I read that thread correctly? Will the HMRC accept a harbour office or similar when I register as a sole trader (or Ltd)? My girlfriend and I both have our job "on the internet", in my case an american company just to make matters more complicated.

Anything I should know when registering the boat (we'll go for 24ft or less and we'd like to sail to the continent sooner or later) a boot as a not-yet-UK-resident?

With reference to the company bit, I doubt any marina office would want a limited company registered with them.

I'd use a registered office service, not expensive and they will forward all official paperwork onto you (that you could use the marina address for).

I use @UKplc who have always been very good.

 

[prv]

For a limited company I think you're supposed to put a name plate outside the door (few home-based companies do and no-one seems to check)

Indeed - my dad jokingly screwed his to the cupboard he keeps his company paperwork in

Pete

 

[phantomlady]

There is a thriving liveaboard community in West Cornwall.

 

[AntarcticPilot]

With reference to the company bit, I doubt any marina office would want a limited company registered with them.

I'd use a registered office service, not expensive and they will forward all official paperwork onto you (that you could use the marina address for).

I use @UKplc who have always been very good.

Yes; even a small place like Ely has at least one company that provides an address, post handling and telephone answering service for companies; there's a place in Cambridge that provides much more elaborate facilities up to and including access to conference rooms etc. For what they provide they aren't that expensive.

However, I'm sure a local newsagent might well be happy to oblige; that's the traditional way of getting an address to use!

BTW, the OP mentions their business being IT related and presumably requires a decent internet connection. That might actually be the hardest bit to get on a reliable basis. Most marina Wireless networks don't have the capacity that an IT business might require; unless you're lucky and have a good 3G mobile signal, getting decent connectivity could be a bit hit or miss.