Live off interest?

wkt54

Is there not something like - you must spend at least 183 days in the UK?

I'm not sure.

InMyDreams

wkt54 wrote: »

He!

Thanks Nigel. Free, hope you don't mind me asking this in your thread, but I think we are after the same information.

I am getting my gross interest paid monthly into my Flex account, and will not be over £5225, next April.

The bond will expire next September, so what you are saying , is that I should not fill out an R85 then, whatever I decide to do with the money?

If I have 20% interest taken off the following year, will I be able to claim a refund in 08/09?

If you will not be over the limit this tax year (07/08), then fill in the R85 asap. This will stay in force until you tell the bank otherwise (so you won't get the interest taken off next year either) which it is your duty to do once you go over the limit in any year. You shouldn't have to then claim any refund. The crucial point being that your interest is being paid monthly spread between two tax years. If you were being paid annually, then the whole amount would be counted as being received in one tax year and some tax would be payable.

But it does matter what you do with the money afterwards. If you're going to put it somewhere else (eg in another bond) then the interest earned will continue to add to your income for that tax year. If you spend it (eg as a house deposit) then it's no longer earning you an income.

free4440273

noh wrote: »

You are correct, if your income for this tax year will exceed £5225 you should not fill in a R85 form.
The other poster invested £115000 in Nationwide at 6.7% as we are already more than 5 months into this financial year that will earn her approx. 7/12 x 0.067 x £115000 = £4494 this tax year. So assuming she has had or will have other income this year of less than £230 she was correct in filling in the R85. Next year she should not fill in the form as she will have more than her allowance as income.
Edit:- I think It should be "next year tell Nationwide that you are no longer eligible"
Here is a link to the form http://www.hmrc.gov.uk/forms/r85.pdf

Nigel

Noh, thanks, that makes sense. I actually have £200K to invest from october and so using your calculations i would not be able to claim gross, fair enough. Could i complete form R40 still, as i am not working and would still presumably have a tax free allowance of £5225?? Thanks for your help

noh

free4440273 wrote: »

Noh, thanks, that makes sense. I actually have £200K to invest from october and so using your calculations i would not be able to claim gross, fair enough. Could i complete form R40 still, as i am not working and would still presumably have a tax free allowance of £5225?? Thanks for your help

Yes you would complete the R40 after the end of the tax year ie after April 5th next year..

Nigel

free4440273

noh wrote: »

Yes you would complete the R40 after the end of the tax year ie after April 5th next year..

Nigel

Thanks nigel, really kind of you

wkt54

Free - at a quick calculation - if you could wait until 6 November, and invested £190,000 in the 1 year bond, and received gross interest monthly - which is 6.5%, not 6.7%, you would just be inside the £5,225.

But as Inmydreams said, you couldn't reinvest the monthly interest at a high interest.

Maybe in the Flexaccount, which is low interest.

What is an R40?

free4440273

wkt54 wrote: »

Free - at a quick calculation - if you could wait until 6 November, and invested £190,000 in the 1 year bond, and received gross interest monthly - which is 6.5%, not 6.7%, you would just be inside the £5,225.

But as Inmydreams said, you couldn't reinvest the monthly interest at a high interest.

Maybe in the Flexaccount, which is low interest.

What is an R40?

http://www.hmrc.gov.uk/taxback/forms.htm

Cook_County

wkt54 wrote: »

Is there not something like - you must spend at least 183 days in the UK?

I'm not sure.

You remain UK resident following HMRC Brief 01/07 http://www.hmrc.gov.uk/briefs/income-tax/brief0107.htm because you have not "left" the UK for settled purposes and therefore taxable in the UK on worldwide income. Even spending a day here would mean HMRC would consider you UK resident unless you show a settled pattern of life elsewhere. This is consistent with previous court rulings on residence.

If your anticipated income is greater than the personal allowance you cannot sign the R85, but of course might get a UK refund after the end of the tax year.

Cook_County

GracieP wrote: »

Thanks for the reply. It's nice to know it's possible and the tax isn't as bad as I was afraid it would be. And as luck would have it I have a Flexaccount. As long as I sell my house for what I think I'll get this should be doable.

Gracie - because you are both Irish and therefore not UK domiciled if you invest offshore there will be zero UK tax payable on the interest. You might want to consider this for part of the money.

wayne42

djbd1973 wrote: »

Do you think that say in five years time, you wanted to move back, would you have enough money to be able to get a footing in the housing market?

Reason I ask is that a friend of mine moved out to Thailand for a few years but his money did not keep up with inflation as much as he wanted to and he has struggled a bit since his return. He is doing okay, don't get me wrong but he was in a better financial position when he left than when he returned.

He still had better weather though!!

Personally I believe that we sold up nearing the housing peak..
Although we have no plans on returning (except visits) If we did return in lets say 5 years then I would be looking to buy something larger and at a cheaper price..If I owned property now for purely investment purposes in the UK I would be rather worried at this point..
That's just my personal view.