ISAs and Moving Abroad

Dstanley92

Hi,

I moved abroad from UK to Australia with my partner a couple of years ago and wanted to get an understanding of the best approach for the ISA's I hold back in the UK moving forward. I currently hold a UK stocks and shares ISA and a help to buy ISA.

Perhaps a bit naively, I did not realise I was unable to continue paying into my help to buy ISA as I am no longer a UK resident for tax purposes and therefore have continued to make monthly payments since living in Australia. My main query is in relation to the implications of this - will this prevent me from accessing the UK government contribution should I use the money for a house when I move back to the UK in the future or should I remove any money paid in since living in Australia?

In the case of both accounts - should I decide to close my ISA's - will there be any tax payable when I withdraw the money now that I'm living abroad?

Thanks in advance for any advice.
Daniel

masonic

Did you inform your bank of your new address and tax residency? It seems odd they didn't notice you'd been paying money into the ISA while ineligible for two years. Did they not ask you to make a mini ISA declaration at the start of each tax year?

Have you been declaring the interest earned in your HTB ISA, and any capital gains/dividends/interest earned within your S&S ISA to the Australian tax authorities? You could have a tax liability for anything earned/gained in your ISAs from the point you became resident in Australia for tax purposes.

Alexland

masonic said:

Did you inform your bank of your new address and tax residency? It seems odd they didn't notice you'd been paying money into the ISA while ineligible for two years. Did they not ask you to make a mini ISA declaration at the start of each tax year?

If it was a regular payment eg via standing order or direct debit then the ISA Manager might have taken a "continuous ISA application" at the start which would not need to be checked again unless there was a gap in contributions of at least 1 tax year.

https://www.gov.uk/guidance/information-you-need-from-investors-when-they-apply-for-an-isa#applications-to-subscribe-to-an-isa

If the OP had just stoped paying tax in the UK then HRMC might not (yet?) be aware they moved abroad.

masonic

Alexland said:

masonic said:

Did you inform your bank of your new address and tax residency? It seems odd they didn't notice you'd been paying money into the ISA while ineligible for two years. Did they not ask you to make a mini ISA declaration at the start of each tax year?

If it was a regular payment eg via standing order or direct debit then the ISA Manager might have taken a "continuous ISA application" at the start which would not need to be checked again unless there was a gap in contributions of at least 1 tax year.

https://www.gov.uk/guidance/information-you-need-from-investors-when-they-apply-for-an-isa#applications-to-subscribe-to-an-isa

If the OP had just stoped paying tax in the UK then HRMC might not (yet?) be aware they moved abroad.

Yes, although there is a requirement for HTB ISA managers to write to customers once a year to confirm they are still eligible. Perhaps that only covers specific eligibility criteria for the HTB ISA scheme (such as not having claimed a bonus previously, and not owning property) and not general ISA eligibility criteria (such as being UK resident).

The first question is the main one. Everyone who opens an ISA agrees: "I am resident in the United Kingdom for tax purposes or, if not so resident, either perform duties which, by virtue of Section 28 of Income Tax (Earnings & Pensions) Act 2003 (Crown employees serving overseas), are treated as being performed in the United Kingdom, or I am married to, or in a civil partnership with, a person who performs such duties. I will inform [ISA manager's name] if I cease to be so resident or to perform such duties or be married to, or in a civil partnership with,a person who performs such duties."

As a general rule, if you move abroad and cease to be tax resident in the UK, there is a requirement to notify your bank, and if such notification had been made the bank ought to have stopped accepting ISA subscriptions.

Alexland

Oh I agree that the OP should have informed the ISA manager and stopped the contributions however I was just covering how this situation might have occured.

MiserlyMartin

masonic said:

Yes, although there is a requirement for HTB ISA managers to write to customers once a year to confirm they are still eligible. Perhaps that only covers specific eligibility criteria for the HTB ISA scheme (such as not having claimed a bonus previously, and not owning property) and not general ISA eligibility criteria (such as being UK resident).

The first question is the main one. Everyone who opens an ISA agrees: "I am resident in the United Kingdom for tax purposes or, if not so resident, either perform duties which, by virtue of Section 28 of Income Tax (Earnings & Pensions) Act 2003 (Crown employees serving overseas), are treated as being performed in the United Kingdom, or I am married to, or in a civil partnership with, a person who performs such duties. I will inform [ISA manager's name] if I cease to be so resident or to perform such duties or be married to, or in a civil partnership with,a person who performs such duties."

As a general rule, if you move abroad and cease to be tax resident in the UK, there is a requirement to notify your bank, and if such notification had been made the bank ought to have stopped accepting ISA subscriptions.

I'll just add that you can be resident in another country but ordinarily resident in the UK and also domiciled in the UK still. Its very complex and you may need advice from one of those tax planning firms or accountants.

masonic

MiserlyMartin said:

masonic said:

Yes, although there is a requirement for HTB ISA managers to write to customers once a year to confirm they are still eligible. Perhaps that only covers specific eligibility criteria for the HTB ISA scheme (such as not having claimed a bonus previously, and not owning property) and not general ISA eligibility criteria (such as being UK resident).

The first question is the main one. Everyone who opens an ISA agrees: "I am resident in the United Kingdom for tax purposes or, if not so resident, either perform duties which, by virtue of Section 28 of Income Tax (Earnings & Pensions) Act 2003 (Crown employees serving overseas), are treated as being performed in the United Kingdom, or I am married to, or in a civil partnership with, a person who performs such duties. I will inform [ISA manager's name] if I cease to be so resident or to perform such duties or be married to, or in a civil partnership with,a person who performs such duties."

As a general rule, if you move abroad and cease to be tax resident in the UK, there is a requirement to notify your bank, and if such notification had been made the bank ought to have stopped accepting ISA subscriptions.

I'll just add that you can be resident in another country but ordinarily resident in the UK and also domiciled in the UK still. Its very complex and you may need advice from one of those tax planning firms or accountants.

There is guidance outlined at https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3

In essence, you are automatically considered UK resident if you spend more than 183 days in the UK in a given tax year, whereas you are automatically non-resident if you spend fewer than 16 days in the UK in a given tax year (where you were resident in one of the prior 3 tax years). If you work full time abroad over the whole tax year and don't work at all in the UK, then you could spend up to 91 days in the UK and still be considered non-UK resident. Beyond that, then yes you'd need to take various other things into consideration and it becomes more complex, but for those who meet the requirements of the automatic overseas tests it is relatively straightforward.

The OP may be a straightforward case, or a complex case and may or may not have received advice, but seems reasonably confident of his non-residence. You make a good point: it certainly wouldn't be advisable for the OP to contact the ISA manager to inform them he has ceased to be UK resident until having checked he meets the criteria.