Moving abroad - Conflicting advice on ISAs from HMRC

Plugs9

We have a number of ISAs and savings accounts which we operate on-line and we have recently moved to Spain and told all our providers.
HMRC advise that "you can keep your ISA open and you’ll still get UK tax relief on money and investments held in it." and also "You can transfer an ISA to another provider even if you are not resident in the UK."
This sounds great until you try and do it.
We cannot open any type of new account with "other providers" unless we confirm that we are resident in the UK !!!
Why do HMRC make that statement if it is impossible?
Also, if HMRC say it is possible why are the providers not permitting it?????

Worse still, a fixed rate cash savings account in Tesco bank has matured and Tesco has automatically moved it to a NEW Easy access savings account with a NEW number at 0.35% but will not allow us to move it to a new Fixed rate account with them unless we are resident in the UK!!!

Can anyone offer any advice how to overcome this impasse?

[Deleted User]

Just because HMRC say you can doesn't mean the provider has to offer it! They can have their own criteria if they wish.

xylophone

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad

What is permitted and what providers offer are not necessarily the same - think of the flexible ISA.

https://www.thisismoney.co.uk/money/expat/article-6618459/Can-Isa-abroad-close-it.html

sal_III

As above, the advice isn't conflicting. HMRC are stating that you don't owe tax in these circumstances and you can change the ISA provider. It's up to the ISA providers to decide whether they want to offer yo u a new account as a non-UK resident or not.

Have you considered tax implications in Spain on your UK savings? Just because HMRC considers the special status ISA interests to be tax free, doesn't mean Spanish tax man feels the same way.

colsten

The only way round the residency requirements is to have an address in the UK. Be also prepared to have to appear in person in a UK Branch, if the provider does have Branches, to present your ID.

As has already been mentioned, keeping your money in an ISA might not protect you from paying tax on the interest. If you are resident for tax purposes in Spain, you will have to declare all your income in Spain. Spain has a double-taxation agreement with the UK, so you wouldn't pay any tax in the UK on anything, anyway, whilst you are a Spanish resident for tax purposes.

The other aspect to consider is that ISA interest rates are now lower than the rates in non-ISA accounts. Whilst you also may find it difficult/impossible to open non-ISA accounts if you don't have a UK address, it is something to keep in mind, too.

badger09

colsten wrote: »

The only way round the residency requirements is to have an address in the UK. Be also prepared to have to appear in person in a UK Branch, if the provider does have Branches, to present your ID.

As has already been mentioned, keeping your money in an ISA might not protect you from paying tax on the interest. If you are resident for tax purposes in Spain, you will have to declare all your income in Spain. Spain has a double-taxation agreement with the UK, so you wouldn't pay any tax in the UK on anything, anyway, whilst you are a Spanish resident for tax purposes.

The other aspect to consider is that ISA interest rates are now lower than the rates in non-ISA accounts. Whilst you also may find it difficult/impossible to open non-ISA accounts if you don't have a UK address, it is something to keep in mind, too.

I don't agree.

When banks specify 'UK resident' they invariably go on to specify 'UK resident for tax purposes'. So merely having a UK address is not, IMHO, a 'way round the residency requirements'

SonOf

The ISA rules allow you to continue holding an ISA if you move abroad. However, to offer financial services in the EU, the firm most hold passporting permissions. Something that is, at this stage, expected to be lost with Brexit. Some firms will set up an actual office within the EU. Some will decide not to transact within the EU.

Why do HMRC make that statement if it is impossible?

It is not impossible.

Also, if HMRC say it is possible why are the providers not permitting it?????

Because providers may not wish to incur the costs of opening an office within the EU for the very small number of people that it would apply to.

It is also worth remembering that whilst ISAs are tax free in the UK, they are not recognised as being tax free if you are resident in another country. i.e. the interest/returns you have are subject to taxation rules of the country you are in.

HardCoreProgrammer

About 2 weeks ago, I asked various S&S ISA providers, and cannot find a single one which will accept transfers if I have non UK address.

Moral of the story: Get your ISAs in order before you move.

badger09

HardCoreProgrammer wrote: »

About 2 weeks ago, I asked various S&S ISA providers, and cannot find a single one which will accept transfers if I have non UK address.

Moral of the story: Get your ISAs in order before you move.

Impossible to move a matured fixed rate ISA once you're non UK resident.

My son found the same problems after moving to HK 7 years ago. ISA either languishes in a very low rate account or you lose the tax free wrapper (which might not matter anyway) and move it elsewhere - NS&I being a possibility.