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Tax - UK savings and mortgages

Discussion in 'Teaching abroad' started by hippy-chic, Apr 15, 2011.

  1. Hello
    I am taking a post abroad and I anticipate that I will be able to save money, however, some people have been telling me that I will be hit by the tax man on this income? (I don't have any money to start up an off-shore account)

    Also, how easy/hard is it to get a mortgage when you are an expat? I have a mortgage already and was hoping to use the equity from the sale of the house plus savings to buy somewhere new for when I get back in 2 years time? Anyone done this? I have heard HSBC is possible? But how do you prove your income?

    thanks

    ANy advice, good or bad will be accepted!!!
     
  2. Hello
    I am taking a post abroad and I anticipate that I will be able to save money, however, some people have been telling me that I will be hit by the tax man on this income? (I don't have any money to start up an off-shore account)

    Also, how easy/hard is it to get a mortgage when you are an expat? I have a mortgage already and was hoping to use the equity from the sale of the house plus savings to buy somewhere new for when I get back in 2 years time? Anyone done this? I have heard HSBC is possible? But how do you prove your income?

    thanks

    ANy advice, good or bad will be accepted!!!
     
  3. Hello!

    Who are you working for? I am SCE so it might be a bit different if you are working for an international school. I have been saving whilst working abroad and have had no problems but again it probably depends on the circumstances of your employment. I am currently looking at buying a property and letting it out. The difference being that I am a first time buyer so it's more expensive for me. It's not impossible but it's certainly not cheap as you are living abroad. As for proving income that again depends on your employer. As I am employed by the MOD it's not a problem for me.

    Sorry it's a bit vague!
     
  4. 576

    576 Established commenter

    In January I started sending money home by wire transfer. Not huge amounts but 1000GBP a month. This goes straight into my UK current account & the tax man doesn't take any of it!
    Though rather than saving it - it comes out the next day and is paid off my mortgage!
    I don't know if I'll be able to do this indefinitely as I do also like my holidays but if I can continue for the next 2 years I'll pay off my mortgage in 2013 instead of 2026! and for however long I keep it up I am reducing the interest owed [​IMG]
    I let my property out through an agency & the rental income covers the regular mortgage payment, so the money I send home is all overpayment!
    I do wonder what my place (& my beautiful leather furniture) will be like when I return - but hey! Being here has given me so many opportunities which I wouldn't have had if I'd stayed at home & I can always buy new furniture.
    I know this didn't really answer your questions - but moving money home in small increments shouldn't create tax problems in the UK - though I do have to pay the bank here for it (though I also have to pay them everytime I take my own money out of the atm - but that's another story)
     
  5. PuRe

    PuRe Occasional commenter

    It depends where you are going? Double taxation problems; the need to apply for non-res etc... I opened my offshore account with no money, it was the same bank company I had whilst overseas.
     
  6. the hippo

    the hippo Lead commenter Community helper

    With regard to overseas earning and the Great British Taxman, my advice would be to find an accountant who really knows what he is talking about. Different people in different countries around the world will of course give the OP different advice, so it is essential to find out the facts.
    As I understand it, the UK tax authorities can, in certain situations, claim part of any income earned while teaching overseas.
    The previous poster has mentioned the process of applying to be non-resident for tax purposes. It seems unlikely to me that one can claim to be "non-resident" and at the same time be paying a mortgage (and claiming tax relief?) on a property in the UK. However, as I said earlier, I am not a tax expert and the OP really does need to find an accountant who is able to give up-to-date and informed advice.
     
  7. nemo.

    nemo. Occasional commenter

    Hi it's not so complicated if you don't have millions.

    Fill in a P85 when leaving. You will usually get a tax rebate paid into you account - the PAYE system assumes you are here all year and apportions your personal allowance. If you leave in august you can get back c900 quid (it depend of course on earnings) but worth it!

    If you are out of the country for 6 months you are not resident. You are not liable in uk for earning overseas. However you are liable for any rental income/ interest etc in uk. But you get your PA. If renting your house you get deductions. This you may want a cheap accountant for. You ar also liable for capital gains tax on uk capital gains etc

    If you are expected to be away for more than 2 years you are not ordinarily resident. I did that for tax reasons last time but for mist people not a big issue.

    There are double tax agreements for teachers for some countries that mean if you work for two years and come home you can get te tax back paid in the foreign country!! No taxes at home.

    When non resident you cannot contribute to an ISA.

    You can contribute to a private pension for 5 full tax years after leaving uk. Gross 300 quid per month so 240 net. I use a SIPP so will be doing that as get 720x5 tax back from uk government even though not in uk!

    The must do is the P85!!!

    You can also add NI contributions while abroad. Worth it for some.
     
  8. Hmmm, interesting. I am currently trying to sort out a few things including a mortgage and will be leaving the country in August. This has caused me many long converstions with brokers, my comments are based on what I believe to be true from my research so far about buy-to-let mortgages.
    As I currently don't have a mortgage there are very few options. There are some banks who will do off-shore mortgages but you need to be asking for over £100000 (I'm not). Some banks require that I already be an expat (which I am not - but this may answer the question about whether you can get one when you are abroad already - one of these was Birmingham Midshires). Many want you to be working for a government or multi-national (I'm not). HSBC said I would have to be a premier customer with them before they would consider me, when I asked how I could become one, they said I needed to have £50,000 in a savings account with them (if that was the case I wouldn't need a mortgage).
    If you already have a mortgage then I am told it is often possible to arrange an agreement with your current provider to let out your property. Usually these are temporary for a year or two.
    Remember you may need insurance as a landlord etc.
    Nemo, I've started to consider my pension options for when I leave. If you have a SIPP in the UK that you pay into from abroad do you have to set this up before you leave the UK or can you do it when you are already away?

     
  9. nemo.

    nemo. Occasional commenter

    Hi although it can be set up here you will be asked if resident by providers usually first. Simpler to do first. Hargreaves Lansdown is the best SIPP for a simple portfolio which is the one I used (I use hsbc trackers as dead cheap)


    I forgot to add technically when not resident you should inform your banks and credit cards and they will probably close your accounts! Stupid I know but most have it written into their terms of contract. First direct and egg certiNly did as the realised I was abroad and account shut. Nationwide didn't care and I bank with them now


    You wont need an offshore mortgage unless non resident when you apply.


    You will have to consider the effect of capital gains tax rules if non resident. It would cease to be your main residennce and therefore any capital gain would be taxable after indexation and allowance rules.
     
  10. nemo.

    nemo. Occasional commenter

    I would add with regard to CGT that is when you need an accountant as the rules changed and it is complex as usually you used to have 3 years after becoming non main residence but this may not count for becoming non resident for tax.
     
  11. happygreenfrog

    happygreenfrog Occasional commenter

    Regarding Mortgages, may i concur with what is written above. I've been abroad for 7 years now, maintain my fully owned apartment in the UK and have managed to build a small share portfolio during my time away YET found it almost impossible to get a mortgage last summer when looking to buy a second home, despite the purchase price being low and me holding the equity in my main property to cover it. I was told it was all to do with the new financial regulations now in place and, as such, would suggest you try and arrange a mortgage before you leave, based on your UK salary.
     

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