Moving abroad - savings rates and tax

juw8e7

Ive had enough and Im planning on moving abroad this year.
So, wanting to know if my funds will be better off in the higher rate standard savings account (4%) than my ISA (2.5%) that I currently have?
Which will out-pay between the two?
If its the latter would I be better off sticking it all in the higher rate account and will I still have to pay tax on the interest from savings if I become a non UK tax resident? Is there any threshold/ relief etc? Not really interested in having to do SA tax returns on only savings interest if not required as I will have no other UK income. No rental income, no pension, dividends etc.
Any help from qualified people would be greatly appreciated? 

friolento

If you permanently live abroad, you are almost certainly subject to the tax laws of the country you live in. This country is likely to have a double taxation agreement (DTA) with the UK, to protect you from having to pay tax twice on the same income or asset. You can find the DTA by googling.

You should also familiarise yourself with the tax laws of your chosen country. Get a tax consultant if you have complex tax affairs.

As far as ISAs are concerned: whilst they are tax free in the UK, they aren’t in other countries. 

Will a 2.5% ISA pay you more than a normal 4% savings account? It depends on your tax rate, and on how much of your PSA you are using. This applies only whilst you are a tax resident in the UK, obviously. But the main question is why you only get 2.5% in your ISA when double that is still available. Also 4% on normal savings accounts seems low.

penners324

You're entitled to open a UK bank account when you become a non UK tax resident.

Many banks have been actively closing the accounts owned by people who have moved abroad.

You might be better opening savings accounts in your new country 

juw8e7

friolento said:

If you permanently live abroad, you are almost certainly subject to the tax laws of the country you live in. This country is likely to have a double taxation agreement (DTA) with the UK, to protect you from having to pay tax twice on the same income or asset. You can find the DTA by googling.

You should also familiarise yourself with the tax laws of your chosen country. Get a tax consultant if you have complex tax affairs.

As far as ISAs are concerned: whilst they are tax free in the UK, they aren’t in other countries. 

Will a 2.5% ISA pay you more than a normal 4% savings account? It depends on your tax rate, and on how much of your PSA you are using. This applies only whilst you are a tax resident in the UK, obviously. But the main question is why you only get 2.5% in your ISA when double that is still available. Also 4% on normal savings accounts seems low.

Will PSA still apply if abroad and non resident?

juw8e7

penners324 said:

You're entitled to open a UK bank account when you become a non UK tax resident.

Many banks have been actively closing the accounts owned by people who have moved abroad.

You might be better opening savings accounts in your new country 

penners324 said:

You're entitled to open a UK bank account when you become a non UK tax resident.

Many banks have been actively closing the accounts owned by people who have moved abroad.

You might be better opening savings accounts in your new country 

Im confused. Do you mean not entitled? 

PRAISETHESUN

You usually need to be a UK resident to open new UK-based accounts. For your existing accounts, you should be okay, but keep in mind that there are many reports of banks closing down accounts of customers who move overseas, particularly if the bank in question does not already operate there. 

ISAs in particular are something you need to look at closely. Even if you remained in the UK though, a 4% savings account will pretty much always pay more than a 2.5% ISA unless you are a higher rate tax payer. Additionally, keep in mind that ISAs are a UK-specific thing and most other countries won't recognise the tax-wrapper. You'll need to look at the tax rules in your new country to know for sure, but your UK ISA savings will most likely be treated as taxable in the foreign country, negating most of the advantages they offer in the UK. In that case it makes the most sense to just move your savings to the highest interest rate account you can - ISA or non-ISA. You also need to keep in mind that once you move away you will not be able to put new money into the ISA account as well.

Tax relief will depend on the terms of any double-taxation treaty between the UK and the country you are moving to. My understanding is that from the UK side you'll still get the personal savings allowance, but that doesn't really matter if the foreign country wants to tax the interest as well.

See here for more info: https://www.gov.uk/government/collections/tax-treaties

juw8e7

Thanks. So, will a British non-resident still receive the standard personal tax allowance of £12,570 or not?

Any recommendations for good tax advisors qualified in this field would be greatly appreciated!

juw8e7

I will open any new accounts required before I depart to get better rates. Providing they are ok with moving abroad, of course.

juw8e7

juw8e7 said:

Thanks. So, will a British non-resident still receive the standard personal tax allowance of £12,570 or not?

Any recommendations for good tax advisors qualified in this field would be greatly appreciated!

The gov.uk website seems useless in terms of getting a clear answer on this. Even after filling out pages and pages of questionnaires etc.
This outfit seem to say yes on the matter but its very unclear and I am getting mixed info. regarding this.
https://www.litrg.org.uk/tax-nic/income-tax/tax-allowances

PRAISETHESUN

juw8e7 said:

juw8e7 said:

Thanks. So, will a British non-resident still receive the standard personal tax allowance of £12,570 or not?

Any recommendations for good tax advisors qualified in this field would be greatly appreciated!

The gov.uk website seems useless in terms of getting a clear answer on this. Even after filling out pages and pages of questionnaires etc.
This outfit seem to say yes on the matter but its very unclear and I am getting mixed info. regarding this.
https://www.litrg.org.uk/tax-nic/income-tax/tax-allowances

That specific question might be better placed on the tax board.

Based on my experience with navigating tax treaties however, you usually only get a personal allowance if you're a resident of that country for tax purposes. I would assume that any personal allowance would be granted in the foreign country, but not in the UK if you're classed as non-resident. You should be able to claim tax relief on the UK tax you pay to HMRC in the foreign country however, so you won't end up getting taxed twice.

eskbanker

juw8e7 said:

Ive had enough and Im planning on moving abroad this year.

You still haven't said where you're planning to move to, but why do you seem so keen to keep savings in the UK if you're not going to be living here anymore?