Query on UK income tax

[fjcruiser]

"And HMRC (no longer called IR!) does work retrospectively"

Correct.That is why you have to keep your tax returns for minimum of 6 years. If you have earned interest on an offshore tax account keep it there. as soon as you bring it back to the UK it becomes taxable again!

[fjcruiser]

the IR works restropectively, hence the need to keep your tax returns for a minimum period of 6 years.
Also, to avoid being taxed on the interest you have earned offshore, you do not remit it to the UK as simple as that.You dont need to be non resident to have an offshore account.

[JunFan]

Thanks for pointing out those things...mmm...my accountant has checked this out twice now...I'll have to check my latest tax return a bit more thoroughly LOL!

[greatexpectations]

Originally Posted by fjcruiser

the IR works restropectively, hence the need to keep your tax returns for a minimum period of 6 years.
Also, to avoid being taxed on the interest you have earned offshore, you do not remit it to the UK as simple as that.You dont need to be non resident to have an offshore account.

naive question - i apologise - but of your cash is in a Dubai bank, and you draw it in the UK to spend, are you clear of the tax's man clutches?

as in this case the money never hits a uk bank....

[Elphaba]

Originally Posted by greatexpectations

naive question - i apologise - but of your cash is in a Dubai bank, and you draw it in the UK to spend, are you clear of the tax's man clutches?

as in this case the money never hits a uk bank....

That is not likely to ever be an issue. Not unless it is a deliberate plan to avoid tax, but spending money whilst on holiday/at home is not a worry at all.




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[wikkid]

If you are UK resident and have money in an offshore account, HMRC have fought and won a case that the interest gained on that account IS taxable and must be declared annually. Many former ex-pats kept an offshore account open thinking that the interest did not have to be declared. This is part of a large scale investigation by HMRC which is ongoing and was expected to raise billions by applying any tax due for up to 6 years previous and applying penalties of up to 100% of the unpaid tax.

This is not an issue for anyone who is still non-resident, but shows the need for some tax-planning upon return.

As for withdrawing some money from an ofshore account while here on holiday/ short visit etc, there is no need for any worry, only if and when you become UK resident.

Wayne

[greatexpectations]

thanks guys - this helps....

so assuming you resume UK residency after some lengthy period and have fulfilled the requirement of being permanent non-uk.....

when you move back, you keep the principle sum earned in an offshore account, but need to declare/pay tax on the interest

when you draw down on the principle investment, is this obvious to Hmrc, and do you get taxed at this point?

[Maz25]

Originally Posted by greatexpectations

thanks guys - this helps....

so assuming you resume UK residency after some lengthy period and have fulfilled the requirement of being permanent non-uk.....

when you move back, you keep the principle sum earned in an offshore account, but need to declare/pay tax on the interest

when you draw down on the principle investment, is this obvious to Hmrc, and do you get taxed at this point?

Once you move back in the UK, you will start paying taxes on everything in your account, as interest paid is calculated based on the balance in your account. Taxes will not be backdated but if you fail to declare that you are now resident and the HMRC were to find out, you will be prosecuted. As has already been said, the HMRC is cracking down hard on people trying to evade taxes and those caught are being prosecuted and made to pay back taxes owed which in this case would be backdated!

Once you move back to the UK and start paying taxes again on your salary, then it would be obvious to all that you are back in the UK and have a liability for UK taxes. From that point, it will only be a matter of time before they find your little stash of cash and start taxing you. The minute you change your address at the bank, they will inform HMRC in any case!!!

[crazymazy1980]

Quite a useful thread this.

I have a quick couple of questions in relation to this.

What happens if you want to regularly transfer money back to the UK? I still have a mortgage here in the UK which I am planning on transferring a part of my salary back across to top-up on any rental income I get.

How is this managed for tax purposes? Or can I just change my mortgage direct debit to come out of an off-shore account (say in Jersey). Can you pay a mortgage in the UK from an international account?

[Maz25]

Originally Posted by crazymazy1980

Quite a useful thread this.

I have a quick couple of questions in relation to this.

What happens if you want to regularly transfer money back to the UK? I still have a mortgage here in the UK which I am planning on transferring a part of my salary back across to top-up on any rental income I get.

How is this managed for tax purposes? Or can I just change my mortgage direct debit to come out of an off-shore account (say in Jersey). Can you pay a mortgage in the UK from an international account?

The HMRC website will provide you with all the info you need: HM Revenue & Customs: Non Residents

You can still transfer money into your account back home, without acquiring any tax liability if you fill in the relevant form. Even then, taxes will ony be paid on the interest rather than the balance and you can still claim back any taxes that you have paid at the end of the tax year (see above link for the form). Offshore accounts are great for savings, so unless you are planning to save a large amount of money, then there is no need to set up a new offshore account. Once you have set up an account in the UAE, then your bank can do the transfer for you on a monthly basis. I would advise that you check with your bank to see how much they will charge you to receive the transfer. When I used to bank with HSBC, I know that they charged £13.