Help Please! Long Absence From UK - Tax/Pension Considerations...

Hi,

My wife and I are planning to go travelling abroad for maybe up to 4 years or so, partly funded from sale of our house and also from a compensation claim. Long term plan is to possibly move to Oz, but we would probably end up living back in UK for about a year before this. During these 4 years away, we would return here every few months to visit relatives and would probably do some occasional work.

Are there any considerations to bear in mind with regards to not paying income tax/national insurance for this time (apart from the occasional work and tax on savings)? How would this affect our state pensions long term (were we to stay in the UK)? We've got occupational pensions which will be frozen.

Thanks for any help.....

Terry.

Reply to
terzal
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To be considered non-resident for tax purposes you have to intend to stay out of the UK for at least one full tax year. After that, you cannot return to the UK for more than an average of 90 days a year, or

182 days in any single year if you want to retain that status.

You don't have to pay UK NI contributions while you are away, but its a good idea to continue paying at the Class 3 rate of £7.55 a week in order to eventually qualify for your full state pension.

Chris

Reply to
Chris Blunt

You can legitimately move your savings off shore and not suffer the UK deduction at source on this income. But.....

...As someone who is UK resident before this period starts it is more complicated than this. Technically one should satisfy the requirement to move 'permamently' before this calculation is done The OP is entitled to return to the UK for a holiday during an extended period away, but if he returns to 'work' the IR will not allow the move to be called permanent and will be able to treat each period away spararately and none of them will qualify. Whether they notice that they can/should do this, is going to be down to luck.

This doesn't actually have any effect on the earnings during the period in the UK, as these will be taxable anyway. But it will affect the taxation status of the offshore funds I suggest above.

Agreed. Though you can miss IIRC 4 years of contributions and the last 5 years will be automatically credited, so you need to get a statement of entitlement from the DHSS to see if it is actually necessary to contribute every year.

tim

Reply to
tim (in sweden)

You reckon that's a good bet? 400 quid a year now on the chance that the rules don't change? and even if they don't change you'll probably end up with benefits equivalent to the pension you would've got?

Jim.

Reply to
Jim Ley

Not if you've moved to Oz you wont :-(

tim

Reply to
tim (in sweden)

It's possibly an even worse bet if they move to something like "flat rate pension for all residents" - a much more logical and equitable pension provision, as it doesn't penalise those unable to work and is of course cheap to administer.

Jim.

Reply to
Jim Ley

Whether its a good bet or not depends on how long you expect to live after retirement age, but a man who is 65 today can expect to live until he's 83 years old.

Based on today's figures, after 44 years of NI contributions you would have put a total of about £17,300 into the system. Upon retirement you start taking out of the system at a rate of £4,300 a year, so you get you money back by the time you reach age 69. You can tweak those figures a bit to take into account things like accumulated loss of interest on your contributions, but if you then live for a further 14 years it seems to be a fairly good deal.

Its true the rules may change in future, but they would probably be phased in in such a way so as not to have a major impact on those already in the system.

Chris

Reply to
Chris Blunt

So you're suggesting that a new non-contributions based system would exclude people who hadn't made contributions? that seems unlikely.

Jim.

Reply to
Jim Ley

I'm not making any predictions on what specific changes might be made. However, I do think it likely that whatever is done will be introduced in a way that causes the least financial impact to those approaching retirement age who have already made a lifetime of contributions.

Chris

Reply to
Chris Blunt

Thanks for the replies....

As things stand at the moment then, if we didn't make the voluntary NI contributions while we were away, for say 4 years, then stayed in the UK until we retired, can those years be bought back at a later date, or if not, how much difference is this likely to make to our pensions? We're currently in our early 30s, if that makes any difference.

I'm gonna speak to the tax office before we go, and I'm sure they will tell me all this, but it is helpful to have a bit of knowledge beforehand, and I don't know anything about taxes and pensions!

Terry.

Reply to
terzal

Oh certainly a low financial impact to those approaching retirement age - but the advice could've been being given to a 30yr old, the advice wasn't qualified by age.

Jim.

Reply to
Jim Ley

Up to five years I believe.

Ah, are you thinking of moving to Oz permanently?

tim

Reply to
tim (in sweden)

Hi,

Bit of a long story....

Was planning to move to oz, permanently. Wife broke her neck in car accident and was off work for nearly three years. Thats put life in perspective a bit and had been catalyst in us selling up and jacking our jobs in to spend hopefully a few years travelling and seeing the world.

The long term plan still is to move to Australia, possibly permanently. We would be getting visa to live there on the basis of her qualifications (as a nurse) and some of her family there. Being slightly pessimistic, there is always the possibility that her injury which has left some permanent nerve damage might prove a problem in getting a visa. So, we might end up stuck here. If we went to Oz, plan is to comit to being there at least long enough to get citizenship, so that then we could come and go as we wish, even maybe move back here for a while but then retire over there.

Although ideally, we'd rather go travelling for a while, then move there for good, we're flexible and don't see it as a lifetime change for ever. maybe we'll even end up living somewhere else for a few years as well....

Reply to
terzal

So the problem is you going to leave 15 years of pension in the UK and have 25 years somewhere else.

You need to find out what your long-term options are, before deciding whether to continue funding the UK pension short term.

Sorry don't know the answer to this question

tim

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Reply to
tim (in sweden)

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