Living overseas - UK tax on savings?

tomS_4

I've been living and working overseas for 5+ years now. It was initially just a temporary thing, so I didn't really worry too much about sorting out my finances in the UK before I left.

But it's now permanent (at least for a few years) and so I've realised that I may be losing lots of money on account of UK tax.

I have over 50k in UK savings accounts. The interest rate isn't always that high, as I can't now switch them to new accounts easily. So any savings I can make (without causing problems) would be great.

I noticed many banks have R85 forms on their websites, so it seemed as if I should just fill those in. Easy.

But a little googling seems to imply that I need an R105 form from HMRC instead - and that many banks don't accept them or don't want overseas customers and sending them a form might trigger them to try and shift you out (or to their international division).

Given how hard it is to open UK bank accounts/credit cards from overseas, I don't really want to get kicked out of the ones I do have.

In simple terms, what is the best course of action? Can I use an R85? Is it safe to try an R105? Is there another way such as claiming tax back directly from HMRC each year? (and is that a pain?)

PS/ After 5 years I end up as a permanent resident here (Japan) and that means I now have to pay tax on overseas income. Which is one thing that has triggered me to look into this, I don't want to pay twice!

PPS/ I'm assuming that as a non resident I don't have to fill out any annual tax forms etc.. in the UK? I hope...

jennifernil

Japan and UK have signed a Double Taxation agreement, so you will not end up paying twice.

However the usual convention is that you should pay the tax in the country in which you are resident for tax purposes, and reclaim any tax you have paid in the other country.

RetiredInThailand

tomS wrote: »

Can I use an R85? Is it safe to try an R105? Is there another way such as claiming tax back directly from HMRC each year? (and is that a pain?)

You cannot use an R85. To do so would leave you open to prosecution.

You can use an R105 (that's what it's for). Whether your bank accepts them or not is another matter but there are quite a few UK banks that do and who have no problems opening accounts for non-residents. Building societies tend to be less helpful, and more fool them.

Failing that you can just reclaim any tax paid (up to the value of your personal allowance) using form R40. You only have 4 years to do this.

In all cases you may have to declare the interest in your country of residence and pay tax on it there, but that depends on your particular circumstances in the country in which you live. As mentioned, there are generally agreements in place to ensure that you don't pay the same tax twice.

tomS_4

Is there any particular beneft/drawback to the R105 method compared to the R40 method?

Are there any other tips or recommendations regarding tax for people living overseas?

Thanks!

buglawton

Do the UK banks where you save know you are not a UK resident? Many savings accounts require real UK residency not just a UK address.

RetiredInThailand

tomS wrote: »

Is there any particular beneft/drawback to the R105 method compared to the R40 method?

R105: interest paid gross, no upper limit, no need to claim anything.

R40: interest paid net and tax claimed back via a form, limited to your personal allowance.

For me it's a simple choice but if the tax on your interest is below your personal allowance there isnt much in it.

RetiredInThailand

buglawton wrote: »

Do the UK banks where you save know you are not a UK resident?

The ones that take R105 forms certainly do. The address on the R105 has to match the residential address known to the bank exactly. They all also have a UK correspondence address for me as letters posted to where I live can take a long time to arrive (though they do always seem to arrive in the end).

zygurat789

RetiredInThailand wrote: »

Failing that you can just reclaim any tax paid (on income up to the value of your personal allowance) using form R40. You only have 4 years to do this.

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