Investment Offshore Guide
oThis guide could be of interest to anyone, whether or not resident in the UK, although it will most likely be of more use to those who are resident or domiciled abroad.
SUMMARY/ PRECIS OF KEY POINTS.
- Broadly speaking you will be treated as none-resident if you spend less than 183 days of the tax year in the UK and your visits to the UK average less than 91 days per tax year; e.g. if you retire to Spain and spend 10 months of the year there, you will be none-resident in the UK for tax purposes. If you spend 6 months in Spain and 6 months in the UK, you could be resident in both countries. Fortunately, many countries have double taxation agreements with the UK and it is unlikely you would have to pay tax in both countries.
- Depending on your circumstances it may be advantageous for yiour UK pension income to be paid gross, without deduction of UK tqax. You may be liable to overseas tax so it will be important to understand both country’s tax systems and make sure the correct HM Revenue and Customs forms are completed.
- Whether taxed here or abroad, currency fluctuations can affect your income from the UK, so managing this risk is vital. One way of doing this is to open a multi currency bank account. This will let you decide when to convert Sterling to local currency and will also help reduce bank charges.
- If you have UK investments such as PEPs and ISAs, unit trusts and investment bonds, it may make sense to move these investments offshore and invest in Euros instead.
- Tax efficient PEPs and ISAs are not recognised outside the UK. This, coupled to currency risks, means it may be worth surrendering these investments before you leave.
- If you are planning to put your money in an offshore bank account to escape tax then think again! The European Savings Directive requires all banks either to disclose customer details to the tax authorities or to levy a 15% withholding tax (rising to 35% over the next few years). It is not possible to receive interest tax free.
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