Anyone here tempted to move offshore?

[anonymous-user]

Just curious whether anyone here has either taken the plunge, or is considering taking the plunge, to move offshore?

Some people move overseas as they have have managed to obtain employment in another country which is fair enough. And some move at retirement age for somewhere which is more comfortable. I am more thinking of the situation when someone moves offshore well before retirement and perhaps still runs or has an interest in their UK based company?

It is a sensitive topic, and I was hoping to avoid the moral aspects in this thread (which I accept can't just be dismissed).

I happened to speak with an adviser the other day who specialises in this area, who outlined various options which some people do. There are complex rules depending upon the location which of course they would deal with but, putting aside the technicalities, I don't actually know anyone personally who has decided to do it, so it becomes hard to get any kind of yardstick as to how realistic it is in practise.

By the way, I should add, I'm not thinking about this any time in the immediate future. I'm more just wondering if I should be mulling it over as a future consideration. Very interested if others are any further forward in similar deliberations.

[ellroy]

I know a couple of guys who have, Jersey and Gibraltar.

I frankly don’t see the appeal, I like the country I’m in and the tax would have to be truly pernicious or society take a significant turn for the worse before it would make sense to me.

You can mitigate the tax to a pretty reasonable degree before needing to take that kind of a step in any case with the right planning anyway.

[dingg]

I know a couple who have went off radar in tenerife , been at it for over 15 yrs with no problems (yet)

[anonymous-user]

ellroy said:

I know a couple of guys who have, Jersey and Gibraltar.

I frankly don’t see the appeal, I like the country I’m in and the tax would have to be truly pernicious or society take a significant turn for the worse before it would make sense to me.

You can mitigate the tax to a pretty reasonable degree before needing to take that kind of a step in any case with the right planning anyway.

I think the main justification (for me) would be more related to lifestyle than tax. The rules as they stand allow circa 6 months allowable in the UK, so it doesn't meaning leaving completely, or indeed forever.

On the tax points, the main option for individuals to reduce their tax liabilities is via pension contributions. But outside of that and the lower rate tax thresholds, individuals will pay some portion over 50% in tax. Until they die of course, when the state will ask for 40% of what is left. I'm not saying that is egregious by the way, as it is similar in many countries.

Did the people you know how moved find it worked out as they expected?

[HootersGsy]

I moved to Guernsey many years ago, though that was really just through circumstance than any thought process of "I must move offshore" as I definitely wasn't earning enough to consider that side of things at the time!

Now though, while I do think about moving back to the UK the tax consequences do put me off quite a lot. The lifestyle here is something you need to be ready for, being on a small island has limitations and you do need to get away every now and again. Still, the 15 minute walk to work is quite acceptable

If your business is one you can manage remotely I don't see any reason why you couldn't move offshore, but be careful with your day count - unexpected travel delays such as fog can cause some worry!

[JulianPH]

When you say "offshore" do you mean moving to a tax haven, or to a different country (that may have a more favourable tax system)?

I lived in Portugal and plan to return there in the future. You will need to completely remove all UK ties though for HMRC to accept that you are no longer domiciled here.

[anonymous-user]

JulianPH said:

When you say "offshore" do you mean moving to a tax haven, or to a different country (that may have a more favourable tax system)?

I lived in Portugal and plan to return there in the future. You will need to completely remove all UK ties though for HMRC to accept that you are no longer domiciled here.

Good question - I'm more thinking of the latter, but somewhere like Andorra might not be so bad for a few months a year, particularly if it were just a bit closer to a main airport.

I agree on the second point. The expert I was speaking to was suggesting it was often best to work these arrangement into a long term plan. For example, he was suggesting you could gift part of a UK company to an offshore trust whilst still remaining in the UK. Subject to certain rules, this bypassed the rule about offshore businesses being controlled by UK domiciles. All UK income would of course still be taxed at UK rates.

He was also saying you could use an offshore trust to protect assets (which I realise wouldn't then actually by owned by me) and provided you moved out of the UK withing 10 years, you didn't pay the additional tax HMRC levy on assets in trust. Of course, if you then didn't leave the UK, this would somewhat defeat the objective.

I've probably not got all of the technical details right on this yet - as I say, I'm at a very early stage, and my main priority now is family related rather than tax. But I'm also wondering what might be best on a long term basis. And as I say, I don't know anyone who has done it which makes it more difficult.

With your prospective future move back to Portugal, do you think that would give you a tax, benefit in addition to the lifestyle benefit, or would the tax be broadly similiar?

[JulianPH]

EddieSteadyGo said:

Good question - I'm more thinking of the latter, but somewhere like Andorra might not be so bad for a few months a year, particularly if it were just a bit closer to a main airport.

I agree on the second point. The expert I was speaking to was suggesting it was often best to work these arrangement into a long term plan. For example, he was suggesting you could gift part of a UK company to an offshore trust whilst still remaining in the UK. Subject to certain rules, this bypassed the rule about offshore businesses being controlled by UK domiciles. All UK income would of course still be taxed at UK rates.

He was also saying you could use an offshore trust to protect assets (which I realise wouldn't then actually by owned by me) and provided you moved out of the UK withing 10 years, you didn't pay the additional tax HMRC levy on assets in trust. Of course, if you then didn't leave the UK, this would somewhat defeat the objective.

I've probably not got all of the technical details right on this yet - as I say, I'm at a very early stage, and my main priority now is family related rather than tax. But I'm also wondering what might be best on a long term basis. And as I say, I don't know anyone who has done it which makes it more difficult.

With your prospective future move back to Portugal, do you think that would give you a tax, benefit in addition to the lifestyle benefit, or would the tax be broadly similiar?

Glad to hear you are getting professional advice, it is a highly complex area and the slightest thing wrong buggers it all up, at massive expense.

Portugal has a a deliberate loophole. Dividend income that "can" be taxed in the country it is paid will not be taxed in Portugal for 10 years. There is no requirement for it to be taxed in the country it is earned in, just that it can be. It is a side effect of the double (or anti-double) taxation treaty the UK has with Portugal.

So becoming domiciled in Portugal and leaving all UK connections behind would save me 45% a year for ten years. Tempting...!

However, I have business interests and property here (not to mention family) so proving I have severed all links is going to be difficult.

Cheers

[anonymous-user]

JulianPH said:

Portugal has a a deliberate loophole. Dividend income that "can" be taxed in the country it is paid will not be taxed in Portugal for 10 years. There is no requirement for it to be taxed in the country it is earned in, just that it can be. It is a side effect of the double (or anti-double) taxation treaty the UK has with Portugal.

So becoming domiciled in Portugal and leaving all UK connections behind would save me 45% a year for ten years. Tempting...!

However, I have business interests and property here (not to mention family) so proving I have severed all links is going to be difficult.

Cheers

Interesting - it seems a few countries make themselves deliberately attractive in terms of tax for income not earned in the host country.

If you timed that right, I would imagine it could be very beneficial.

Personally, I've decided I'm not going to work quite as hard as I did when I was in my 20's and 30's. There is more to life etc etc. I know everyone says it, but I know myself I have needed to re balance.

My wife and I love the alpine environment, so if there was a way I could make that a more permanent feature in our life, as well as being tax efficient, all the better.

[Condi]

Im confused as to why you want to move offshore?

Is it for a better lifestyle, to do less work, or to pay less tax? Naturally depending on your priorities will make a difference as to where suits and why.

[Testaburger]

JulianPH said:

You will need to completely remove all UK ties though for HMRC to accept that you are no longer domiciled here.

I know you know you’re onions with financial planning, Julian, but this isn’t strictly true. The number of ties (as defined by HMRC) determines how much time you can spend in the U.K. before becoming resident for tax purposes.

I’ve got a house in the U.K. - that’s my only tie. HMRC let me in for 90 days. If I had a family there, it would be 30.

[GT03ROB]

Testaburger said:

JulianPH said:

You will need to completely remove all UK ties though for HMRC to accept that you are no longer domiciled here.

I know you know you’re onions with financial planning, Julian, but this isn’t strictly true. The number of ties (as defined by HMRC) determines how much time you can spend in the U.K. before becoming resident for tax purposes.

I’ve got a house in the U.K. - that’s my only tie. HMRC let me in for 90 days. If I had a family there, it would be 30.

Remember though residency & domicile are 2 different things with different rules. It's not totally clear which the OP is looking at.

[JulianPH]

Testaburger said:

JulianPH said:

You will need to completely remove all UK ties though for HMRC to accept that you are no longer domiciled here.

I know you know you’re onions with financial planning, Julian, but this isn’t strictly true. The number of ties (as defined by HMRC) determines how much time you can spend in the U.K. before becoming resident for tax purposes.

I’ve got a house in the U.K. - that’s my only tie. HMRC let me in for 90 days. If I had a family there, it would be 30.

That is interesting thanks, it goes against what I have been initially told.

Have you any more information on this as it is something I am seriously considering at some point?

Cheers!

[Croutons]

I don't think he is onions actually.

That aside, why, if your motivation is lifestyle, are you asking in Finance? There are stloads, in fact, fking stloads of threads on this in both Employment and the Holidays/ travel folders.

Here, you'll get told about tax. In case you didn't get that from the replies thus far. Which if not of specific interest, means you'd be better seeking out those other threads.

[anonymous-user]

Croutons said:

That aside, why, if your motivation is lifestyle, are you asking in Finance? There are stloads, in fact, fking stloads of threads on this in both Employment and the Holidays/ travel folders.

Because I'm not interested in being employed, nor am I looking for views on where to go on holiday.

This sub-forum tends to appeal to many people who own their own company and whose circumstances are possibly similar to my own. It's for that reason I think it is the likely to be best place to ask my question.

[anonymous-user]

Condi said:

Im confused as to why you want to move offshore?

Is it for a better lifestyle, to do less work, or to pay less tax? Naturally depending on your priorities will make a difference as to where suits and why.

Primarily better lifestyle. Less tax as a secondary but useful benefit.

If you look at Julian's example of moving to Portugal, their government allows overseas earnings (from a Portuguese perspective) to be taxed at an advantageous rate for a period of time. I've seen a few countries have a similar approach.

As I mentioned earlier, I'm very motivated to live somewhere in the Alps. As a 'toe in the water', I've rented a chalet in France for 6 months starting this December. This is to try and see whether it works as well in practise as I hope it might.

So I am particularly interested in views where people have made the step to see how it worked out for them.

[Testaburger]

JulianPH said:

That is interesting thanks, it goes against what I have been initially told.

Have you any more information on this as it is something I am seriously considering at some point?

Cheers!

Of course. There are a few different mechanisms for determining (non)residence for tax purposes. These are held within the Statutory Residence test, or if that doesn’t clarify your position, the Sufficient Ties test.

Within those, you’ll find a cap that fits.

The following is taken from the HMRC guidance for statutory residence. The Statutory Residence test begins with seeing if you meet their criteria to be an overseas resident. It’s called the Automatic Overseas Test. There are a couple of ways to ‘pass’ (and therefore be deemed non-resident in the U.K. for tax purposes) which are outlined.

If you ‘fail’ that test, then you move on to the Automatic UK test; a set of criteria to determine whether you’re a U.K. resident (as opposed to non-resident).




If that doesn’t work out for you, then finally there is a Sufficient Ties Test. This seems to basically disregard all the finer details, and tells you how much time you can spend in the U.K. based on what you leave behind - a house, family, etc.

As someone who is based overseas, paid overseas, with a wife & home overseas and one house in the U.K., I fall under Test 3 of the Automatic Overseas Test above.

Here’s the link: the ‘tests’ begin around page 19.

https://assets.publishing.service.gov.uk/governmen...

Hope this helps. Please note that this is for tax residence, and applies to non-UK earned income.

If you have business interests in the U.K., then I suspect tax is due on that, unless you do some manoeuvring. If you are considering remaining in the U.K. and ‘offshoring’ your income, then that’s Non-Dom stuff and seems far more complicated!

Cheers

[GT03ROB]

Testaburger said:

As someone who is based overseas, paid overseas, with a wife & home overseas and one house in the U.K., I fall under Test 3 of the Automatic Overseas Test above.

Testaburger said:

I’ve got a house in the U.K. - that’s my only tie. HMRC let me in for 90 days. If I had a family there, it would be 30.

So how come I'm allowed 90??

I think you are mixing ties with automatic overseas, there.

Edited by GT03ROB on Friday 24th August 10:53

[JulianPH]

Testaburger said:

Lots of very useful things!

Cheers

Thanks very much for this. I'll go through the link and see what could apply to me.

My difference is I would not be working whilst living in Portugal (apart from any work I do for my UK based companies).

I also have family ties and property in the UK.

Cheers again!

[Testaburger]

GT03ROB said:

So how come I'm allowed 90??

I think you are mixing ties with automatic overseas, there.

Edited by GT03ROB on Friday 24th August 10:53

No idea. Purely the advice I was given.

Incidentally, now that I’ve been away several years, I qualify for 120 in the ties test. I notice when it comes to ties, once you’ve been away 3 years, then you essentially get an extra ‘tie freebie’, which would explain why you get 90 and I get 120 (I think).