Income tax when not living in England.

[King Herald]

I was a seaman for many years and due to being out of the UK for most of every year I haven't paid income tax since 1989. That is normal under the seamans act of some year or other

For most of that time I've actually lived in the Philippines, and spent only 8 year living in England.

Last year I retired, and I now have a small pension that is paid from in US$ to a US bank. Now I am retired should I have to pay UK income tax on that pension, even though I only spend maybe a week a year at most in the UK???

We have a house in England that we rent out, if that makes a difference.

Wife and I both do a UK tax return every year, and neither of us pay a penny. Not sure if that will change now though.

I've emailed my tax lady in the UK, but no reply yet.

[GT03ROB]

Take a look at this, but I'd say no.

https://www.gov.uk/government/uploads/system/uploa...

[Eric Mc]

Nice and simple isn't it. It takes 105 pages to tell you how to determine if you are a UK tax resident or not.

[GT03ROB]

For most of us we don't need to read too far into the 105 pages!

[Countdown]

This might help

http://www.carsontrotter.co.uk/cms/filelibrary/Res...

Based on what you've said I'd say "no" as well.

[The Mad Monk]

Ussain Bolt doesn't pay British tax when he works in the UK.

So, why should you?

[GT03ROB]

Countdown said:

This might help

http://www.carsontrotter.co.uk/cms/filelibrary/Res...

Based on what you've said I'd say "no" as well.

That document is out of date & does not reflect the current situation which is as defined in the document I linked to. There have been some important changes & firming up of definitions.

[Countdown]

GT03ROB said:

Countdown said:

This might help

http://www.carsontrotter.co.uk/cms/filelibrary/Res...

Based on what you've said I'd say "no" as well.

That document is out of date & does not reflect the current situation which is as defined in the document I linked to. There have been some important changes & firming up of definitions.

Thanks - which bits have changed which would impact on OP? (to save me trawling through the whole doc )

[malks222]

The Mad Monk said:

Ussain Bolt doesn't pay British tax when he works in the UK.

So, why should you?

actually, yes he does!

http://www.telegraph.co.uk/sport/othersports/athle...

[Eric Mc]

There are special tax rules of overseas sportsmen and women participating in UK events.

[Eric Mc]

LC23 is our resident overseas tax expert. Hopefully, he'll post.

[The Mad Monk]

malks222 said:

The Mad Monk said:

Ussain Bolt doesn't pay British tax when he works in the UK.

So, why should you?

actually, yes he does!

http://www.telegraph.co.uk/sport/othersports/athle...

"So why did Bolt compete at the London Olympics?
"The London Games were exempted from the tax rules. Some big events such as the Olympics, the Uefa Champions League and the Commonwealth Games demand exemption "as a condition of their being held in Britain.

He didn't pay tax when he was here for the Olympics.

http://tinyurl.com/jfbrplt

[King Herald]

I'll wait for LC23 to show then.😎

[schmunk]

If you are tax resident in the Philippines, and have a permanent home available to you there but not in the UK (your UK property does not count as a permanent home if it is rented out and thus unavailable for your use), you will be considered Philippines resident under the UK/Philippines double taxation treaty, regardless of your UK tax residence. There are further tests if this is not definitive.

Article 17 of the UK/Phillipines treaty says:

Subject to [it not being a government pension], pensions and other similar remuneration paid in consideration of past employment to a resident of [the Philippines] shall be taxable only in [the Philippines].

Thus, your pension will not be taxable in the UK, even if it's a UK pension.

The US/Philippines tax treaty has similar wording to say that it will only be taxable in the Philippines.

N.B. the treaty allows the UK to tax your rental income, albeit if you are a UK citizen you will be entitled to the personal allowance (currently £11,000) to offset against your income.



I haven't come across LC23 in the forums, but looking at his profile we seem to have a very similar line of work - I might even know him, given the small world of expat tax.

Edited by schmunk on Friday 22 July 16:28

[Eric Mc]

As I alluded to earlier - it is a far from straightforward area of tax and one that only a few people seem to properly understand.

Having a quick read of HMRC guidance and deciding "Yup, I'm OK" is probably not going to result in a happy outcome.

[malks222]

The Mad Monk said:

"So why did Bolt compete at the London Olympics?
"The London Games were exempted from the tax rules. Some big events such as the Olympics, the Uefa Champions League and the Commonwealth Games demand exemption "as a condition of their being held in Britain.

He didn't pay tax when he was here for the Olympics.

http://tinyurl.com/jfbrplt

I know he didn't pay any whilst here for the games, no big name athletes did, it was exempt. but you'll notice he doesn't really come and compete in events like the diamond league etc...... because he'd be liable for a tax bill for a share of his annual endorsement deals (eg he earns a portion of that while here so owes tax on it) but would earn less for a win than it would cost him in tax.

other sports stars have complained about this in the past, golfers, tennis players etc.....

[LC23]

Evening all. Just checking in. Drop me a PM OP and I'll have a look at this for you.

[LC23]

Some initial comments for you OP. If you have been out of the UK for many years (and by that I am assuming a non UK tax resident), then under the SRT if you are spending only a week a year in the UK then you will be automatically non resident under the second automatic overseas test (spending fewer than 46 midnights in the UK in the tax year).

As a non UK tax resident you are only liable to UK tax on UK source income. It sounds like it is a US pension you are receiving (payout from a US employer's 401k?). This is not UK source income if so and therefore not liable to UK tax. As Schmunk says, Article 17 of the UK/Philippines DTA gives sole taxing rights to the country of residence anyway - the Philippines in this case.

I haven't covered the US/Philippines angle as you didn't ask on this point so I assume have it covered. Care needs to be taken with US DTAs. They have "savings clauses" which basically allows the countries to "ignore" the DTA for certain income sources and tax based on their domestic law anyway. The US/Philippines DTA is no different. If you need advice on this area then let me know.

Edited by LC23 on Friday 22 July 21:37

[King Herald]

LC23 said:

Some initial comments for you OP........

Just browsing though some copies of old tax returns my tax lady ticked the box as a non resident, even though I don't 'officially' live in another country. I recall reading "resident, but not ordinarily resident" some time ago, but that was when we move back to the UK in 2002.

My status in the Philippines is as a tourist, as that is by far the easiest way to stay here. I could get a residence visa if I had to though.

I need to check exactly where my pension is paid from as well, as that sounds like it will make a difference. It is not from a 401K, as I cashed that out and took the money, though the IRS took 30% first........ I'm making inquiries right now, back later.

[jeff m2]

The 30% withholding on the 401K should be a tax credit on your Phil tax if they and the US have a treaty similar to the US & UK.
That's assuming you actually file in the Philippines due to your status. (Tourist)