SIPP that allows share or fund buying after leaving the UK?

Sunnylifeover50plan

SomeMadeUpName said:

Back to the OP, if anyone does have a SIPP provider who will take the 5 years, my mate retired today and is moving to Spain next month, so I'd love to let him know how to get the last few quid he can out of the HMRC.

If your friend is moving to Spain in June? the Spanish tax year runs from 1st Jan to 31st December - many ensure that they do not reside in Spain during their first year for more than 183 days meaning they become tax resident the following year - which means safer to move in mid to late July. Has he taken tax advice from any international advisors to ensure the Spanish don't demand a chunk of tax for this year?
Also the Spanish taxation and personal allowances are far less generous than in the UK the difficulty for him might be how to take out the drawdown he wants/ needs without paying high levels of taxation. It would be interesting to understanding what his drawdown/ tax profiling looks like going forward as a Spanish tax resident.

SomeMadeUpName

@Sunnylifeover50plan I am seeing him over this weekend. His original plan was to move in late July, but for some reason he pulled it forward a month and is now under the gosh to get organised.  I will try and run your questions by him and see if I can make him see sense, but I won't hold my breath.  He always has, and I suspect always will, operate in a very different way to me. 

[Deleted User]

dunstonh said:

So HL says you can still buy listed shares, investment trust, bonds and ETFs..

They are direct assets and not investment funds (which are retail financial instruments)

I am struggling to figure out how ITs and ETFs are not “retail financial instruments “ but more to the point... If buying ITs and ETFs is permitted then there is no problem.  

muze77

Regarding your friend and Spain and drawdown or lump sums, it looks bad. DTA with Spain says this: 

Article 17 PENSIONS 

 Subject  to  the  provisions  of  paragraph  2  of  Article  18,  pensions  and  other  similar  remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State.

Other treaties have exceptions for lump sum payments that coincide with drawdown, Spain does not seem to have this. In that case, getting 20% from HMRC is very unlikely to be worth it, unless Spain charges less than 20% in taxes and social premiums at the time of either drawdown or lump sum payments! Your friend should make sure he is aware of this, otherwise he will be worse off than doing nothing.

Sunnylifeover50plan

muze77 said:

Regarding your friend and Spain and drawdown or lump sums, it looks bad. DTA with Spain says this: 

Article 17 PENSIONS 

 Subject  to  the  provisions  of  paragraph  2  of  Article  18,  pensions  and  other  similar  remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State.

Other treaties have exceptions for lump sum payments that coincide with drawdown, Spain does not seem to have this. In that case, getting 20% from HMRC is very unlikely to be worth it, unless Spain charges less than 20% in taxes and social premiums at the time of either drawdown or lump sum payments! Your friend should make sure he is aware of this, otherwise he will be worse off than doing nothing.

Are you thinking of moving to a country which is a member of the EU, if so how does your target destination stack up against Spain for taxation of drawdown?

muze77

Are you thinking of moving to a country which is a member of the EU, if so how does your target destination stack up against Spain for taxation of drawdown?

If the EU country is like my destination, look for this paragraph in the treaty in the pension article:

   3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, if a lump-sum 
payment is paid before the date on which the pension commences, it may be taxed in the 
Contracting State from which it is derived. However, if the lump sum is paid on or around the 
commencement of a periodic pension, it shall be taxable only in that State. 

My understanding is that if you combine a lump sum with a small annuity, it will then only be taxable in the UK, so you could use the personal allowance to offset some tax, providing this is still granted to EU residents by the time you do this. But I have not yet had tax advice about this, so as always, do not rely on a forum to make financial/tax decisions but check this independently yourself.  

MacMickster

Sunnylifeover50plan said:

SomeMadeUpName said:

Back to the OP, if anyone does have a SIPP provider who will take the 5 years, my mate retired today and is moving to Spain next month, so I'd love to let him know how to get the last few quid he can out of the HMRC.

If your friend is moving to Spain in June? the Spanish tax year runs from 1st Jan to 31st December - many ensure that they do not reside in Spain during their first year for more than 183 days meaning they become tax resident the following year - which means safer to move in mid to late July. Has he taken tax advice from any international advisors to ensure the Spanish don't demand a chunk of tax for this year?
Also the Spanish taxation and personal allowances are far less generous than in the UK the difficulty for him might be how to take out the drawdown he wants/ needs without paying high levels of taxation. It would be interesting to understanding what his drawdown/ tax profiling looks like going forward as a Spanish tax resident.

Another reason that most move to Spain in the second half of the calendar year is to avoid Spanish Capital Gains Tax on the sale of their UK property.  They don't have Private Residence Relief nor any kind of indexation.  CGT would be due on the whole of any gain made on the property if it was sold in the current calendar year.

The OP's friend should be very careful about bringing forward the date on which he moves to Spain.

muze77

Bad news, called Vanguard. In their terms they say:
Please note that, if you move abroad, we reserve the right to place restrictions on your account. This may mean that you are prevented from making additional investments or switching existing holdings into other funds. If required to do so, we may also inform any relevant foreign authority about your investments.

In practice they will not allow the HMRC 5 year 2880 relevant UK individual contributions and they will freeze the account. Can only hold or sell whatever you had when you left. Shame. This is despite them saying in the SIPP declaration that you can be a relevant UK individual.

Malthusian

Deleted_User said:

I am struggling to figure out how ITs and ETFs are not “retail financial instruments “

ITs and ETFs are individual listed companies just like Astrazeneca or Barclays or Fevertree. Even though their business is to invest in another companies rather than push pills. So they fall under the same rules.

It's a pretty weird distinction because a collective mutual fund (to borrow US terminology) is a collective mutual fund, but nobody's disputing that the rules are weird. Arbitrary dummy spits by supranational governments often have arbitrary consequences.

If Fidelity HL decided they were going to be consistent between listed investment companies and retail financial instruments, they'd ban non-UK residents from trading all of them. So it is to the investors' advantage that they are being inconsistent. The option of being consistent the other way would risk prosecution so is not on the table.

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bostonerimus

would an International SIPP solve the problem of being able to buy investments while a UK non-resident?