Living outside the UK with a S and S ISA
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[Deleted User]
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Ok, I opened a stocks and shares ISA recently, thinking that it was ok as I had retained a UK address. Turns out this is not the case so I want to shut it down. It has lost money so would I be liable for tax on it? Is just shut it down the best thing to do here? Please, help with your advice and suggest any alternative ways in which a non resident can legitimately open an account for funds/share dealing.
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Did you open it when you were resident or in that tax year? You don't have to close an ISA if you live abroad but can't pay more into it.
You can open normal fund/share dealing accounts though.Remember the saying: if it looks too good to be true it almost certainly is.0 -
There is no UK tax impact, either positive or negative. If you make a gain in an ISA it is UK tax free, and if you realise a loss in an ISA it cannot be claimed or offset against other gains.Ok, I opened a stocks and shares ISA recently, thinking that it was ok as I had retained a UK address. Turns out this is not the case so I want to shut it down. It has lost money so would I be liable for tax on it?
Depending on which country you have moved to, and perhaps how long you have lived there, you may have some weird local tax issues to handle. However, if you have a genuine capital loss in the ISA over its entire lifetime, that is from purchase to sale, then it is hard to imagine any country taxing that.
Depending on your future plans an ISA could still be a benefit if you are able to retain it. Even if your current host country ignores the ISA wrapper and taxes you on gains inside it, if you plan to return to the UK at some point then holding it would help you keep a useful UK tax shelter. Once as ISA is withdrawn or closed, the UK annual allowances that let you build up that ISA can generally not be recovered. How much of a benefit that is depends on how many years you have spent building it up. It sounds like not too many, but you don't say.Is just shut it down the best thing to do here? Please, help with your advice and suggest any alternative ways in which a non resident can legitimately open an account for funds/share dealing.
Finally, Interactive Brokers seem popular among expats as an investing platform. Somewhat complex interface, but the company is well used to catering to folk that have an international lifestyle and their annual charges are reasonably low. I don't believe they offer ISAs, though.0 -
Thank you for your kind help. May I just check one thing... I set up the ISA through HL online, I was living in Japan at the time but thought having a bank in the UK with address and credit cards in the UK made it ok. Are you saying I can keep the ISA with no issue with the UK authorities (HMRC)?0
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Hi. I was actually in Japan when I opened it.0
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Thank you for your kind help. May I just check one thing... I set up the ISA through HL online, I was living in Japan at the time but thought having a bank in the UK with address and credit cards in the UK made it ok. Are you saying I can keep the ISA with no issue with the UK authorities (HMRC)?Hi. I was actually in Japan when I opened it.
If you weren't UK tax resident when you opened it, the declaration that you agreed at the time of opening that you qualified for the tax break (UK resident over18, etc etc) was not correct. So, the ISA wasn't valid and should be closed. Effectively dissolving the tax wrapper and leaving your assets in a normal taxable account. Meanwhile the gains and losses and incomes that occurred inside the ISA since it was set up in contravention of the ISA regulations, are all chargeable to UK tax, although there may not actually be any taxes to pay if you've had net capital losses and no significant income.
Rather than try to 'unwind' the ISA, the simplest practical thing to do is just to sell everything, making some final gains or losses in the process, and close the ISA account. You could then send a letter to HMRC and say that due to a misunderstanding you opened and subscribed £X to a HL ISA account #12345 on Y date when you aren't actually UK tax resident for this year; you did not make any net capital gains, nor income in excess of your personal allowance and you have now realised the error and closed the account.
That way, HMRC would be aware of the error so that when HL report that Mr ABC with national insurance number AA123456A subscribed £x to an ISA account this year, HMRC won't think, "hmm that's strange I'm sure that Mr ABC said he wasn't a UK resident and wasn't going to pay us tax on all his worldwide income, yet he must have told HL he was a UK resident, wonder what's going on with this guy?"
Probably though, the 'official' way to do it is to tell HL as your ISA manager of your misunderstanding and have them do whatever they need to do to fix it through the relevent procedures and just see what happens and what admin fee they levy etc.0 -
Well, looks like I'll shut it down then. Thanks very much for your advice. Why do HMRC not allow ISAs? Would I be able to open a general investment account if I live outside the UK? I take it that this is ok as the issue is that it's an ISA, right?0
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Why do HMRC not allow ISAs?
ISAs are an option open to UK residents. It is a tax wrapper that is only recognised in UK taxation. If you are tax resident in another country, they will just treat the iSA as a general investment account. So, there is no point a non-resident having an ISA.
And, why should the UK taxpayer give tax perks to non-residents?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
ISAs are an option open to UK residents. It is a tax wrapper that is only recognised in UK taxation. If you are tax resident in another country, they will just treat the iSA as a general investment account. So, there is no point a non-resident having an ISA.
And, why should the UK taxpayer give tax perks to non-residents?
Thanks for the reply. I think the question I’m asking is whether I can just have a standard Fund/share or general investment account, rather than an ISA. Would that be ok with HMRC?0 -
Thanks for the reply. I think the question I’m asking is whether I can just have a standard Fund/share or general investment account, rather than an ISA. Would that be ok with HMRC?
Yes, you can have a general investment account.
However, as a non UK resident, you will struggle to open such an account as few providers offer them due to Money laundering Regulations.
Here are a couple of links from research I did for my son some time ago.
http://www.iii.co.uk/other-accounts
https://the-international-investor.com/2011/uk-stock-broker-accounts-nonresidents0
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