Tax situation for liveaboards

[boatmike]

Have not thought this one out fully but intend to join the ranks of Med livaboards in the spring from April/May through to Oct/Nov returning home in the winter to sunny blighty (sic) If all goes well we intend selling up then and possibly buying a winter home abroad somewhere.
In theory if spending 6 months out of the country it should be possible to claim non-residency and save on income tax. A part of me says it can't be quite that simple though. All you good boys and girls out there must have already got this one "sussed out" so what's the score?

<hr width=100% size=1><P ID="edit"><FONT SIZE=-1>Edited by boatmike on 18/11/2004 09:16 (server time).</FONT></P>

 

[mikewilkes]

It is a very "grey" area.

You need a good accountant who works for "expats". You will get some good points off here but only use them as that.

Properly organised it is very worthwhile. Best of luck.



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[jhr]

'Fraid it's not that simple; the laws are more restrictive than that. Put simply, you can be in the UK for a maximum of 90 days in a 12 month period and retain tax exempt status. I think you may be able to get some reduction in your annual tax bill if you're out of the country each year for a lesser period, but I'm no expert.

Try the Inland Revenue website, and in particular <A target="_blank" HREF=http://www.inlandrevenue.gov.uk/pdfs/ir20.pdf>here</A> as a starter.

<hr width=100% size=1>Je suis Marxiste - tendance Groucho

 

[mikewilkes]

< maximum of 90 days in a 12 month period >

From what I recall the accountant saying it also involves " averages " over a four year period.
The good old days it used to be 182 days allowed back in the UK. Now I must be honest and say my time back is kept to an absolute bare minimum. Time to see grand kids , dentist , optician and old friends. Usually manage that in 3 weeks flat.




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[boatmike]

Thanks for the link to IR website. Told you I had not thought it out! It does seem that the only way to escape Shylock is not to be in the country for more than 90 days in any year. Seems the best plan is to buy that winter residence in Cyprus ASAP...... Then of course I will probably have to pay Cyprus tax but from what I have seen this is much less than UK and the weather is a lot better! Interestingly as my main income comes from a UK based pension I will get nobbled on this anyway unless I move to another country like Cyprus and pay tax on it there regardless of how long I am away so it's no good just bogging off to the Caribbean and being away all year either if I am reading it right.... Ho hum...... Lucky to have a pension at all in these uncertain times I suppose. Feel very sorry for all the poor people who have paid in for years and their fund collapsed before they could claim it.....
Thanks again anyway....

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[boatmike]

Yes Mike,
Having worked abroad in the past I was sure the 90 day thing was new, but anyway it seems that they will nobble my UK based pension anyway regardless of how long I am away (unless you know different of course)
Seems the best plan is to find a country that has a reciprocal agreement with the UK and low taxation, become "domiciled" (sounds like a pet cat!) and "resident" there.... Seems like a way around capital gains tax if not income tax..... Definitely need a good accountant......

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[paulrossall]

Have you researched the effect of moving your domicile abroad on your state pension, eligability to NHS treatment etc. My instinct would be to remain domicile in the UK and have a little flat somewhere with a relative/close friend dealing with your mail. Unless you have a mega pension and vast income the saving on tax might not be significant. I remember this subject has come up before on the forum. Do a search. Paul.

<hr width=100% size=1>" there is nothing-absolutely nothing-half so much worth doing as simply messing about in boats".

 

[Davy_S]

There is quite a bit of info on the download section of the HSBC bank.
http://www.offshore.hsbc.com/public/offshore/main/secondary_content/en/res_download_centre_pop.jhtml. It gives you a rough idea of your tax and domicile status

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[cliffb]

Davy S ...
Sorry old chum, that link didn't work for me. Got denied access. What I did get to ...eventually is this <A target="_blank" HREF=http://www.offshore.hsbc.com/public/offshore/pdf_files/tax/en/taxfacts.pdf>http://www.offshore.hsbc.com/public/offshore/pdf_files/tax/en/taxfacts.pdf</A>
It's a fair old download...but looks like it could do the job.

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[boatmike]

I don't believe eligibility for state pension is affected by a decision to live abroad especially if you are still within the EU. Similarly reciprocal agreements on health extend throughout the EU.

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[boatmike]

No info here that is not on the Inland Revenue site mentioned earlier. It is also aimed at people working abroad on contract not retiring overseas. In this respect the IR site is more forthcoming and clear.

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[Davy_S]

Thanks for the link Cliff. It seems odd that! i can get through with both links but the site seems very slow. When i looked a couple of weeks ago you could zip straight through it no problem. Still, if you wade your way through it there is some info there.

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[Davy_S]

This has some info http://www.phaexpat.com/retiring-abroad.html

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[Sea Devil]

I am not an accountant but have been ex-pat - non resident for 10-12 years.

the 90 day rule is an average over 3 or 4 years but is not really the problem - You still have to pay tax on monies earned in the UK... pensions, rental income etc - there are of course advantages - you can have interest on bank/savings accounts paid ex tax - in full. You can invest the (huge) savings off shore and not pay tax on them but that's about it. You do not pay UK tax on money earned tax free in other countries.

the health thing is not really an issue as to become 'resident' again you just arrive in a UK (air)port and say I am resident - and you are - that easy - but of course you cannot change frequently....

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[boatmike]

Thanks Michael,
That's the way I am seeing it too although it depends where you go to. The tax regime in France where you live is not advantageous to deciding to take up full residency for tax purposes anyway I guess. With a pension or UK earnings you could always opt to pay tax in France rather than the UK but that would not help much. Cyprus and some other places are low tax areas though as I understand it so to pay tax on pensions etc in Cyprus rather than UK might be better especially when they are in the EU (application being processed now) Frankly I am not that impressed with the NHS that I would run home to the UK to be treated in an overcrowded hospital by a doubtfully qualified foreign doctor anyway. I was once treated in a hospital in Athens and it was far superior, so thats not a worry, so it's personal choice I suppose. Probably go ex-pat as you have done until I was totally sure of staying anyway.... By the way its freezing cold and peeing down here at the moment....... Never mind the taxes, let me outa here!!

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[bbilly]

If you have a boat are financially independent and can go anywhere you want why ever would you want to spend >90 days in the UK!

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[cliffb]

Mike
You're the expert.... and do correct me if I'm wrong... but as I understand it, although the gains made on money invested 'offshore' are free of UK tax, when you bring those gains, or that money back to a UK bank, tax is applied.
So....
To benefit one has to draw the money 'offshore' as well. Which means, does it not, that one has to have an offshore current account from which a debit or credit card account can be fed? If this is so, the question is, is it possible to have a current account in an offshore tax haven (IOM, Jersey, Gib, Caymans etc) without being a resident... or 'domiciled' there?
Obviously one could instead have the money brought to a current account in a EU country, but wouldn't you then have that country's tax applied to it?
Answers on a postage stamp please /forums/images/icons/smile.gif

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[mikewilkes]

Look at HSBC's overseas accounts.



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[cliffb]

Hmmm.... must remember to engage brain before opening mouth!!
Thanks

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[temptress]

I have been in the situation you are considering for many years. I am now resident in the UK for Tax purposes.

As said elsewhere it is not that simple a situation. It is if you spend a large period of time abroad it is relatively simple to NOT actually pay any tax BUT the issue is are you 'evading' (illegal) or 'avoiding' (legal). If the former they will find you eventually and this can lead to heavy fines and prison. Take care.

Also it is very hard to change your DOMECILE (and takes years because it is established by actions and not intent) but relative easy to change your residency.

Get some serious professional help because as well as the rolloing 90 day in any 12 months over 4 years rule their is also a 60 (or is it 30) day contigous rule. Also you have to be out of the country for 5 years minimum or you will have to pay tax on the preceding years. It is very complicated.

If you keep 'a small flat' in the UK and have your post sent there you will be deemed to be maintaining resdency for tax purposes - after all you have a residence here.

Professional TAX advice will cost you but is worth the money if you are serious about this.

Good luck


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