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What’s the most tax efficient way for an expat to save for retirement?

Financial discussion for any financial queries for Expats
samuzza
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What’s the most tax efficient way for an expat to save for retirement?

#128630

Postby samuzza » March 28th, 2018, 3:40 pm

What’s the most tax efficient way for an expat to save for retirement?

I want to invest in low-cost passive funds (e.g. Vanguard ETFs).

I’m British, but working in Thailand. I don’t know whether I’ll be retiring in the UK or Thailand.

Currently I have an overseas account (execution only) with SVS Securities in London. I invest in Vanguard ETFs.

Is this a good way to save for retirement?

My concerns are 1) If I retire in Thailand, would I have to pay taxes in the UK and Thailand if I sell securities in the UK and then transfer the money to Thailand?

2) If retire in the UK, will I have to pay taxes when I start using my portfolio for my retirement?

Ideally I’d like to have an ISA, but as an expat I can’t. Is there anything similar to an ISA for an expat?

Are there better ways to go about saving for my retirement than what I’m doing at the moment?

I plan to get some advice from a tax advisor soon, but doing some groundwork first to get my head around things.

Also, how much should I be paying for tax advice? I’m a newbie to this stuff. Hope my post is clear.

Cheers for any advice in advance.

Alaric
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128636

Postby Alaric » March 28th, 2018, 3:55 pm

samuzza wrote:What’s the most tax efficient way for an expat to save for retirement?



I think we can tell you what to avoid, namely "international" life assurance. This will be based offshore in the Channel Islands or the Isle of Man. It may save tax, but won't save charges. If you can invest without incurring tax on the income and gains from your investments, that's the first battle won. The second is how you withdraw the money. If you are tax resident in the UK, it's going to be subject to UK taxation. That would give you breaks on an initial tax free earnings level, on savings income and dividend income, not to mention capital gains. Double taxation agreements with much of the world usually mean that the domicile of the assets doesn't create much if any additional taxation.

You may need to check where the Vanguard ETFs are based as this may have a bearing on their tax status.

kanga
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128843

Postby kanga » March 29th, 2018, 3:06 pm

If you were working and paying tax in Thailand it used to be very positive to invest in in LTFs and or RMFs (Long Term Mutual funds and Retirement Mutual Funds) but they had to be held for a minimum amount of time. I am not sure of the latest regs as I think they reduced the tax benefit but worth investigating if you are looking at a minimum 5-7 year time horizon. Mentioned in a few threads on Thai Visa in the banking section.

If you are currently considered non resident for tax by HMRC then I think I am correct in saying that there is no Capital Gains tax to pay from gains in investments held in the UK that you realise whilst non-resident (other than property) but you would potentially pay tax on any dividend/ income - depending if it is above the current threshold and if you are claiming the personal allowance.

At the moment if you do not bring in any income in the year it is earned (calendar year) then the Thai taxman is basically ignoring it. Thailand has also not yet formally signed up to CRS but is expected to in 2022/3 or thereabouts.......

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Re: What’s the most tax efficient way for an expat to save for retirement?

#128846

Postby kanga » March 29th, 2018, 3:12 pm

samuzza wrote:
My concerns are 1) If I retire in Thailand, would I have to pay taxes in the UK and Thailand if I sell securities in the UK and then transfer the money to Thailand?

See my penultimate comment about transferring in money. This could of course change in the future.

Dod101
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128859

Postby Dod101 » March 29th, 2018, 3:51 pm

Au contraire I think even a non resident for tax purposes will need to pay CGT on any gains made in the UK, just as for any income arising in the UK, although things may have changed since I was non resident for tax purposes. I would keep any assets outside of the UK if you can (say the Channel Islands) and so keep well clear of the UK taxman whilst non resident. I know nothing about Thai taxes but that is another subject.

If in due course you retire in the UK you will need to pay taxes on income and any capital gains, unless you can get the assets sheltered in an ISA or SIPP which I do not think you can do unless you are resident in the UK for tax purposes.

Dod

genou
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128874

Postby genou » March 29th, 2018, 4:48 pm

Dod101 wrote:Au contraire I think even a non resident for tax purposes will need to pay CGT on any gains made in the UK, just as for any income arising in the UK,
Dod



This is wrong in general and specifically wrong for a Thailand resident. See
https://www.gov.uk/government/uploads/s ... _force.pdf

Share sales and dividends will not be taxed in the UK.

BBLSP1
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128880

Postby BBLSP1 » March 29th, 2018, 5:47 pm

Regarding non-resident cgt more generally, refer to RDR1:

https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1

The section beginning at 6.57 and more specifically 6.60 for non-residents. In general, and excluding property, a non-resident is not subject to cgt provided they are not temporarily non-resident.

Regarding the reference to RDR3 and temporary non-residence, in general being non-resident in excess of 5 years means that you are not temporarily non-resident, but the rule has various caveats, so you will have to apply your own personal circumstances to resolve whether you are temporarily not resident or not. Refer to Section 6.2 of RDR3:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/547118/160803_RDR3_August2016_v2_0final_078500.pdf

Dod101
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128921

Postby Dod101 » March 29th, 2018, 9:59 pm

genou wrote:
Dod101 wrote:Au contraire I think even a non resident for tax purposes will need to pay CGT on any gains made in the UK, just as for any income arising in the UK,
Dod



This is wrong in general and specifically wrong for a Thailand resident. See
https://www.gov.uk/government/uploads/s ... _force.pdf

Share sales and dividends will not be taxed in the UK.


I withdraw my comments and that explains why Thailand in particular is popular with some of my acquaintances. Thanks. I will go back to sleep.

Dod

dspp
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Re: What’s the most tax efficient way for an expat to save for retirement?

#128965

Postby dspp » March 30th, 2018, 9:44 am

As a generalisation it is best to rinse any capital gains before becoming tax resident in a state that levies a capital gains tax. But you need to know the tax treatment in your local state where you are resident before making a decision on this.

Another generalisation for expats is that they do not get access to the various tax-exempt accounts (ISAs, SIPPS, IRA, etc etc) however there are many variables at play including how long you are in any particular country for, how your home (nationality) country treats you for tax (e.g. USA approach), etc.

I'm afraid my experiences are that there are less upsides than people think, unless your employer is grossing up your local income, or your destination country is a very low tax location. If these are the case then just save like crazy. Otherwise save even more.

regards, dspp

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Re: What’s the most tax efficient way for an expat to save for retirement?

#129114

Postby torata » March 31st, 2018, 12:55 am

samuzza wrote:What’s the most tax efficient way for an expat to save for retirement?
<Snip>
I plan to get some advice from a tax advisor soon, but doing some groundwork first to get my head around things.
Also, how much should I be paying for tax advice? I’m a newbie to this stuff. Hope my post is clear.
Cheers for any advice in advance.


Apologies if this is teaching you to suck eggs, but going on the info above, I'd proceed with caution with regards to the quality of advice that you may get from an advisor, although you say "tax advisor" not "financial advisor".

On the old TMF site, the expat board was filled with people who'd been ripped off by inflexible, high cost products that were labelled as 'retirement vehicles/pensions'.

There were some excellent posts by a guy called 'offshorerebates' explaining how you would be sucked dry. Unfortunately, I don't have any wayback archive links or copies

torata

PinkDalek
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Re: What’s the most tax efficient way for an expat to save for retirement?

#129115

Postby PinkDalek » March 31st, 2018, 1:01 am

torata wrote:... On the old TMF site, the expat board was filled with people who'd been ripped off by inflexible, high cost products that were labelled as 'retirement vehicles/pensions'.

There were some excellent posts by a guy called 'offshorerebates' explaining how you would be sucked dry. Unfortunately, I don't have any wayback archive links or copies

torata


In slight pantomime voice but oh yes you do:

viewtopic.php?f=77&t=1962&p=18185

At least that is some of them you managed to archive at the WayBackMachine.

torata
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Re: What’s the most tax efficient way for an expat to save for retirement?

#129116

Postby torata » March 31st, 2018, 1:21 am

PinkDalek wrote:
torata wrote:... On the old TMF site, the expat board was filled with people who'd been ripped off by inflexible, high cost products that were labelled as 'retirement vehicles/pensions'.

There were some excellent posts by a guy called 'offshorerebates' explaining how you would be sucked dry. Unfortunately, I don't have any wayback archive links or copies

torata


In slight pantomime voice but oh yes you do:

viewtopic.php?f=77&t=1962&p=18185

At least that is some of them you managed to archive at the WayBackMachine.


;) age....

samuzza
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Re: What’s the most tax efficient way for an expat to save for retirement?

#129153

Postby samuzza » March 31st, 2018, 11:51 am

Cheers for the advice and links guys and gals. I really appreciate it.

TahiPanasDua
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Re: What’s the most tax efficient way for an expat to save for retirement?

#129612

Postby TahiPanasDua » April 3rd, 2018, 7:10 am

samuzza wrote:Cheers for the advice and links guys and gals. I really appreciate it.


Maybe it's helpful to know what I did/thought while a long term expat. Sorry if it repeats some of the good advice above.

1. As stated above, expats with non-resident status are not subject to CGT except for residential property. I sold and immediately rebought all my shares that were in profit in the tax year before returning.

2. Expats are liable for All UK sourced income so you have to declare dividends. I maxed all tax allowances by owning everything jointly with my wife.

3. As expats we couldn't take out ISAs and we are buying into them this week for the first time.

4. Most ETFs that you are likely to buy are Irish domiciled so dividends that you receive are not UK source income, even if the ETF invests in UK shares. I held my ETFs with a Luxembourg broker. You don't have to declare them. That is my understanding and I never did.

5. I still hold Hong Kong shares and in the past didn't declare them in the UK. Regrettably, I will have to declare the dividends from now on.

Finally, do not touch overseas financial advisors with a barge pole even if wearing an asbestos suit with breathing apparatus!

TP2

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Re: What’s the most tax efficient way for an expat to save for retirement?

#130302

Postby bobjones » April 6th, 2018, 7:20 am

I just want to add, stay the hell away from any financial advisors espcially those who try and sell you insurance linked investments.

Stick to buying Irish domiciled, UK listed ETFs.

tieresias
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Re: What’s the most tax efficient way for an expat to save for retirement?

#131291

Postby tieresias » April 10th, 2018, 8:53 pm

Seconding what TP2 wrote about UK tax and offshore advisers which mirrors my own experience.

You are with SVS, which was one of very few brokers that let me open an account when I was overseas, and I like them and have not only kept the dealing account but have also, since I returned to the UK, opened an ISA with them. If you need other brokers, just to spread the risk around, DeGiro and InteractiveBrokers also let me open accounts whilst abroad. The Vanguard ETFs available in the UK all appear to be domiciled in Ireland, so no UK income tax to pay whilst you are ex-pat. In my amateur opinion, there should be no CGT to pay either, as long as you've been ex-pat long enough to be what they used to call "ordinarily non-resident" (which is not a term used nowadays and was never properly defined but was generally understood to be 3+ years). And, depending which Vanguard ETFs you use, they seem a sensible enough investment strategy.

So, all in all, you look pretty well set.

I know nothing of Thai tax/etc though. I know it used to be, when I was there in 2003, that non-Thais were not allowed to own real property nor more than 49% of a business, so personally I would think more than twice before retiring there. But maybe things have changed.

There is nothing similar to an ISA for an ex-pat. If someone tries to tell you that there is, I suggest you come straight back to this forum and seek advice!

All the best.

pensionman
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Re: What’s the most tax efficient way for an expat to save for retirement?

#137238

Postby pensionman » May 6th, 2018, 11:24 am

I too would advise you to stay away from overseas "financial advisers", especially somewhere like Thailand. Most are unqualified, insurance bond salesmen, providing very little actual advice.

Even though you're no longer in the UK, a UK registered pension scheme is still a good vehicle to use to save for retirement, for the following reasons:

Tax-free growth (no income tax or capitals gains tax on earnings or gains)
Full access to your whole pension from age 55
Up to 25% can be taken tax-free
The remaining 75% is taxed as UK income but you can utilise double taxation agreements, and most British expats will still get the personal allowance which is almost £12,000 pa.

My company is currently in the process of setting up a SIPP (Self Invested Personal Pension) designed for the non-UK resident, expat market. It won't allow full trading but you will be able to choose investments from a limited range of low-cost funds managed by Vanguard and BlackRock.

We're just waiting on our FCA approval and then the SIPP will be open to investors.

In the meantime, you can follow us for updates on social media [Deleted] and the website should go live in a couple of weeks where you will find more information.

Feel free to make any suggestions for features you'd like us to include.
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Re: What’s the most tax efficient way for an expat to save for retirement?

#149579

Postby DiamondEcho » July 2nd, 2018, 8:06 pm

TahiPanasDua wrote:1. As stated above, expats with non-resident status are not subject to CGT except for residential property. I sold and immediately rebought all my shares that were in profit in the tax year before returning.


Hi TP2, I'm reading this thread with interest as we're due to return to the UK in a month.
I was interested to see your comment about washing out a capital gain via 'sale and immediate repurchase'. I understand that there is a 30-day bed and breakfast delay in the UK these days. Ie you have to be out of the position that long to wash any CGT. Does this B+B period/rule not apply if done while non-resident? Ie as a Brit after 10 years away could I wash a position within say a day and be clear of UK CGT?

dspp
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Re: What’s the most tax efficient way for an expat to save for retirement?

#149656

Postby dspp » July 3rd, 2018, 10:29 am

DiamondEcho wrote:
TahiPanasDua wrote:1. As stated above, expats with non-resident status are not subject to CGT except for residential property. I sold and immediately rebought all my shares that were in profit in the tax year before returning.


Hi TP2, I'm reading this thread with interest as we're due to return to the UK in a month.
I was interested to see your comment about washing out a capital gain via 'sale and immediate repurchase'. I understand that there is a 30-day bed and breakfast delay in the UK these days. Ie you have to be out of the position that long to wash any CGT. Does this B+B period/rule not apply if done while non-resident? Ie as a Brit after 10 years away could I wash a position within say a day and be clear of UK CGT?


DE,

I suggest you try these people for advice. They are good and cheap and can help you with your area of need. You are somewhat short of time in my opinion so do not delay. Indeed you may find you need to take a holiday to give yourself more time.

https://casterbridgehardy.co.uk/

No connection, just a satisfied customer.

regards, dspp

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Re: What’s the most tax efficient way for an expat to save for retirement?

#149745

Postby DiamondEcho » July 3rd, 2018, 4:15 pm

Thanks DSPP, but alas companies like this need such thorough ID checks these days (like embassy certified copies of passports etc) before they'll interact with you, that there will not be enough time for hurdles like that. So right now I'm thinking I'll just unwind the position and then/likely buy it back 30/+ days later. It might be better to face a present gross trade cost of a couple of £k, than a future CGT cost of many multiples of that.

... shame the UK tax code is so impenetrable...


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