The Lemon Fool

(Apologies if this is wrong place for this post but could not find a better home or previous similar discussions)

Folks

Suppose there's a general election and Corbyn gets in with a good majority ... I see carnage ahead.
He and McDonnell have said they would re-nationalise utilities, given 10% of large companies to employees, and threatened raising income/dividend/corporate taxation. They've also hinted at ending pension tax reliefs (partially, totally, higher rate earners - who knows!).

So imagine, you've worked hard, about to retire, have pension pot in SIPP (holding shares), ISAs (holding shares also) but more in naked shares and cash. What to do?

Well that's my position and frankly, I am seriously tempted to run for foreign hills. Practical questions arise like:

a) I guess one would have to establish non-dom status - sellling residence, stay away for a year plus, but what else?
b) Can one shift assets like these abroad quickly and avoid the UK taxes ahead of this? (Once elected, I imagine they might put capital controls limiting this in place and the £ would drop in value ..)
c) Without moving abroad, what else can one do to stop an admirer of Chavez and Maduro wreaking havoc on assets, investments, lifestyle and retirement?

Global diversification is the way ahead. Venezuelan policies will further debauch the currency, so sterling exposure should be minimised. The landlord class can expect no mercy from the revolution, so where possible exposure to UK property should be minimised. It goes without saying that vulnerable UK shares should be disposed of long before Election Day in favour of less risky global funds.

A stock of physical gold sufficient to buy passage elsewhere is a prudent reserve: jewellery and gold sovereigns will do. A bug-out bag containing passport, cash, deeds and other irreplaceable essentials is another prudent measure, there is no telling how deep the instability could get, and it is way better to have ones affairs in order ready to jump before anything occurs.



Mind you, as you are nearing the end of the financial race, restrictions on pension inputs are less important than the risk of punitive wealth and consumption taxes.
One consolation: once safely retired, they can’t tax free time.

I wonder how many of the big companies would delist from the LSE and effectively leave the UK ( laying off employees)?

I also wonder if the working masses will take a good look at their pension forecasts and realise that their retirement date has moved further into the distant horizon? ( I doubt many would even realise, though).

Bhoddhisatva wrote:Practical questions arise like:

a) I guess one would have to establish non-dom status - sellling residence, stay away for a year plus, but what else?

b) Can one shift assets like these abroad quickly and avoid the UK taxes ahead of this? (Once elected, I imagine they might put capital controls limiting this in place and the £ would drop in value ..)

c) Without moving abroad, what else can one do to stop an admirer of Chavez and Maduro wreaking havoc on assets, investments, lifestyle and retirement?

Here is how I see it:

a) The steps you describe might establish non-residence status but not necessarily non-dom status. The former is important for avoiding things like income tax and CGT. The latter is more an IHT issue, at least if you are a UK national

b) Whether you can move assets overseas at all, and whether you can do that quickly, depends on what they are. Obviously some things caannot be moved at all e.g. a house, an ISA and a pension. The first two can be sold and the cash expatriated. Share holdings could be moved without selling if you can find an offshore broker to move them to. Cash is the easiest and quickest thing to move overseas - more or less instant as long as you have a place to send it to.

3) As long as you are in the UK then pressure can be put on you by the authorities to pay tax on or even repatriate assets held overseas. Likewise if you are overseas but you assets are in the UK. To be really safe both you and your assets need to be elsewhere.

BH, You would need to have carefully thought out where you would go first and considered things like medical/health services & costs, particularly in old age, and taxation issues there.

As opposed to taking all your assets overseas, you may also wish to consider leaving some behind and not burning your bridges behind you, in case you later decide to return..

Also, if you have any income arising in the UK it is likely that that income will be subject to UK taxes even if you are resident overseas (e.g pension income, though not ISA income).

It is hard to believe that even a Corbyn government would be so stupid as to implement their ******policies all at once. If they did the pound would collapse, house prices would fall sharply and inflation rise. Much higher income tax rates would remove purchasing power from the better off so they could not afford current house prices. Once the trend is house prices is firmly down, it will carry on in that direction. That will give severe problems to banks.

They have already said they are planning to stop money flowing abroad, so exchange controls would be brought in very quickly.

If you think a Corbyn government is likely, get out soon! It will take a catastrophic replay of the '70's for the younger generation to learn the lessons that my generation learnt then about the effect of left wing policies.

scrumpyjack wrote:They have already said they are planning to stop money flowing abroad, so exchange controls would be brought in very quickly.

I wonder how effective they would be in this day and age however. Would they also try and ban overseas card transactions, loading pre-paid debit cards and using them overseas, hawala, bureau de change places and so on?

Back in the 1960s and 1970s there were no online or electronic bank services and the use of bank cards was far less. People in general did not own homes overseas. I think a UK government would struggle to keep the funds here, just like the Italian and Greek authorities have struggled with that.

richfool wrote:Also, if you have any income arising in the UK it is likely that that income will be subject to UK taxes even if you are resident overseas (e.g pension income, though not ISA income).

And for more devilish detail, that ISA wrapper shelters contents from UK IT and CGT but the wrapper is ignored elsewhere. The chosen country of tax residence may look at world-wide income and/or gains and tax accordingly - including anything in an ISA (I can feel an intervention from Lootman on 'practical' aspects of this even as I type). A DTA won' t help much with this as no UK tax will have been paid on ISA-contents to offset against 'local' taxes. When that tax-tail starts wagging things can become pretty tricky.

Bhoddisatva wrote:I guess one would have to establish non-dom status - sellling residence, stay away for a year plus...

Becoming (and remaining) non-resident in the UK for IT & CGT purposes involves a bit more nowadays than you might assume - but at least it's now rather more formalised than guessing how IR20 might or might not be interpreted. Info regarding the Statutory Residence Test is downloadable from here:
https://www.gov.uk/government/publicati ... e-test-srt

Domicile is trickier if the UK is your domicile of origin (the only circumstance I've investigated) - but you might not discover with absolute certainty during your life-time whether your estate will be viewed as if you'd become domiciled elsewhere.

Cheers!

Im skeptical that Corbyn will actually follow through on half the policies he has claimed to want.

Leaders of the opposition play a kind of shell game, Corbyn's comments will act as a damper on the UK stock market, which has a negative effect on the current govt, which increases the chance of another election.

He just has to avoid overdoing it so that it's not too obvious if he gets into power and has that sudden attack of amnesia which seems to affect every new PM.

Fundamentally the number one problem will be sterling. If McDonald (******) was to even get close to introducing capital controls then the markets will go crazy and we will see a substantial realignment of £ vs other currencies in anticipation. Then will come 'price controls' and so it will run...

Young people will have to learn the hard way if 'experts' are put in charge of anything that Labour nationalises. Expert means total loyalty to the 'leader' not competency to run complex businesses. It would be funny if the consequences were not so serious of revisiting 'socialism' as seen in Zimbabwe, Venezuela, Cuba etc....

JonE wrote:

richfool wrote:Also, if you have any income arising in the UK it is likely that that income will be subject to UK taxes even if you are resident overseas (e.g pension income, though not ISA income).

And for more devilish detail, that ISA wrapper shelters contents from UK IT and CGT but the wrapper is ignored elsewhere. The chosen country of tax residence may look at world-wide income and/or gains and tax accordingly - including anything in an ISA (I can feel an intervention from Lootman on 'practical' aspects of this even as I type)

Ha, yes, I do think it would be near impossible for a British national living overseas to correctly account for an ISA according to a foreign tax regime, due to the fact that there is no tax reporting done by the ISA issuer and because the tax years will be different. I suspect most expats simply ignore this.

But in any event my advice to the OP was more along the lines of selling the ISA before leaving, so there is no tax due on it anywhere. And then remitting the cash overseas. Partly because the ISA benefits might be reduced in this scenario, and partly because any assets left in the UK would be a tempting target for a punitive government.

JonE wrote:Domicile is trickier if the UK is your domicile of origin (the only circumstance I've investigated) - but you might not discover with absolute certainty during your life-time whether your estate will be viewed as if you'd become domiciled elsewhere.

You probably felt this coming too. If a UK national has moved both himself and all his assets from the UK, and has no intention of returning, then the matter of how HMRC views his domicile is probably going to be moot.

The death would be registered overseas, probate would happen overseas according to a foreign-made will, and the beneficiaries would have received and spent their inheritance long before the UK authorities even become aware of the death, if they ever do.

If someone leaves the UK to escape UK taxation then that is probably what they are going to do!

One should always plan for the worst case.

I already opened an overseas bank account 2 years ago and urgently opened an overseas broking account after the last general election.
With Transferwise, the money can move from my UK bank account and be visible in Singapore in less than 30 minutes. That's less time than Mr Corbyn would take to get from the Palace to number 10.

Naturally, I wouldn't even consider investing in water utilities or anything at risk of expropriation. Lots of money in Investment Trusts, with the money invested overseas.

The bigger risk is changes in the taxation regime for capital gains, ISAs and SIPPs. Effectively taxing my modest retirement pot to pay for the gold plated public sector pensions, of which, the ones MPs get are the most generous of all.

If that comes to pass, then I would probably move the bulk of my modest portfolio to Singapore and then go and live somewhere like The Isle of Man, or more promisingly, Thailand, where I believe overseas income is not taxed.

jaizan wrote:One should always plan for the worst case.

If that comes to pass, then I would probably move the bulk of my modest portfolio to Singapore and then go and live somewhere like The Isle of Man, or more promisingly, Thailand, where I believe overseas income is not taxed.

You might like to consider Malaysia. I lived and worked there and enjoyed it a lot. Whilst tax levels are quite high, they have a territorial tax regime meaning you only pay tax on any money actually remitted to Malaysia. Expat friends there use overseas credit cards, etc to reduce Malaysian tax to minimal levels. The country has a Malaysia My Second Home scheme which grants a 10 year renewable visa which you could consider.

Thailand has a less generous tax regime and, most importantly for me, is much less safe than their Land of Smiles sobriquet suggests. They have a very high murder rate comparable to the Philippines. 2 personal Brit friends were separately murdered in Thailand. Malaysia by comparison is a safe bet.

TP2.

Speaking of transferring portfolios to Singapore, does anyone have a safe broker there or elsewhere who doesn't charge the earth? I looked into this and the big solid Singaporean banks welcome our accounts but they are too expensive.

The usual alternatives like Saxo Bank for overseas brokerage seem a bit dodgy to me, being primarily interested in currency derivatives, etc. I have an account with HSBC Hong Kong who are safe and have moderate charges but don't accept LSE shares, only Hong Kong and USA.

I also have an account with Internaxx in Luxembourg which I thought was OK when it was run by TDI (Toronto Dominium Bank), subsequently sold to Interactive Investors and now sold on again to Swissquote (Who......?) Impermanent or what?

I have to move.

TP2.

InteractiveBrokers?

They are in HK. Would be surprised if they don't support Singapore.

Pendrainllwyn

This thread reminds me of the guy in the late 1930s who foresaw world conflict, and decided to find a remote place where he would not be affected. He chose Guadalcanal.

TahiPanasDua wrote:Speaking of transferring portfolios to Singapore, does anyone have a safe broker there or elsewhere who doesn't charge the earth? I looked into this and the big solid Singaporean banks welcome our accounts but they are too expensive.

I am with OCBC in Singapore. I think it is SGD25 per trade, which works out at £14. That's only slightly more than Halifax AND in Singapore I own the shares directly, so no risk if my broker goes bust.
For a long term investor like myself, it doesn't really matter if the cost of a trade is £5, £10 or £20, because my average holding period is probably over 5 years. Avoiding recurring charges matters more.

jaizan wrote:If that comes to pass, then I would probably move the bulk of my modest portfolio to Singapore and then go and live somewhere like The Isle of Man, or more promisingly, Thailand, where I believe overseas income is not taxed.

Overseas income isn't taxed in Singapore either. That's another reason why it's such a magnet for offshore SE-Asian wealth. That said Singapore doesn't wish to become some dodgy tax-haven, so opening an account there usually requires close ties like physical/legal reidency.

A friend looked at Guernsey some 18 months ago.

No IHT and properties then were similar in price to the south of England. Now the property prices are escalating.