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The never ending cruise

Holiday Ideas & Foreign Travel
BBLSP1
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Re: The never ending cruise

#666823

Postby BBLSP1 » May 31st, 2024, 11:20 am

Lootman wrote:I think that in most cases, no. The toddler would return to the UK or wherever and the issue of US taxation would quite simply never arise. For example US citizens who work overseas get an exemption for the first $75,000 a year of income. And when you also take into account the double taxation treaty and the fact that UK taxes are higher than US taxes, then it really would not be worthwhile for the IRS to chase such people down.

However if that person happens to later become rich and famous, then Uncle Sam might decide to take a special interest in their success. :D


From personal experience you are still expected to do an annual tax return and declare all bank accounts, property, bonds, stocks etc. etc. regardless of whether you end up owing nothing. And 75k is easily exceeded in certain jobs. Plus, if like some, you end up in the middle east in a zero-tax environment…..

I acquired British citizenship when I was in my mid-40s, and ‘expatriated’ a few years after. Even now, alarm bells start ringing when I deal with non-US financial institutions, as they assume you are still a US citizen (by birth) when you declare your birthplace.

didds
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Re: The never ending cruise

#666831

Postby didds » May 31st, 2024, 12:14 pm

BBLSP1 wrote: And 75k is easily exceeded in certain jobs.



and is subject to the vagaries of the exchange rate... one week you might be $74,999 pa and "clear" then next you are $75,001 and not!

modellingman
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Re: The never ending cruise

#668361

Postby modellingman » June 11th, 2024, 12:07 am

Lootman wrote:AIUI you can still spend up to 3 months a year in the UK without being liable for UK tax. So 365 a days a year on a boat could be overkill.


The determining test for those who care about such things is the Statutory Residence Test - a fiendishly complex set of rules which HMRC used to publish as a single pdf but, alas, no longer. Instead, you have to work through the piecemeal presentation in the HMRC manual, Start at https://www.gov.uk/government/publicati ... t-srt-rdr3 or see the primary legislation - https://www.legislation.gov.uk/ukpga/20 ... 45/enacted .

Depending on an individual's circumstances UK tax residency can result from spending as few as 16 days (effectively midnights) in the UK in a tax year. In some circumstances, though, an individual might be able to spend as many as 182 days in the UK in a tax year and still not qualify as a UK tax resident.

Be careful not to fall overboard or otherwise shuffle off this mortal coil in the first few years. At present, IHT on an estate is determined not by residency of the deceased but by domicile. It is possible to acquire a domicile of choice by being non-resident for, IIRC, 5 full tax-years but without a foreign-born father an individual's domicile will generally be his/her domicile of origin which is where the father was born.

modellingman

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Re: The never ending cruise

#668379

Postby Lootman » June 11th, 2024, 8:17 am

modellingman wrote:
Lootman wrote:AIUI you can still spend up to 3 months a year in the UK without being liable for UK tax. So 365 a days a year on a boat could be overkill.

The determining test for those who care about such things is the Statutory Residence Test - a fiendishly complex set of rules which HMRC used to publish as a single pdf but, alas, no longer. Instead, you have to work through the piecemeal presentation in the HMRC manual, Start at https://www.gov.uk/government/publicati ... t-srt-rdr3 or see the primary legislation - https://www.legislation.gov.uk/ukpga/20 ... 45/enacted .

Depending on an individual's circumstances UK tax residency can result from spending as few as 16 days (effectively midnights) in the UK in a tax year. In some circumstances, though, an individual might be able to spend as many as 182 days in the UK in a tax year and still not qualify as a UK tax resident.

Be careful not to fall overboard or otherwise shuffle off this mortal coil in the first few years. At present, IHT on an estate is determined not by residency of the deceased but by domicile. It is possible to acquire a domicile of choice by being non-resident for, IIRC, 5 full tax-years but without a foreign-born father an individual's domicile will generally be his/her domicile of origin which is where the father was born.

Yeah, I took a look at all that a while ago and decided that I would look more closely if and when it became relevant. That might be sooner rather than later depending on a new government of course.

My main takeaway from the new rules (apart from why make this so complex?) is that it seems to be different rules if you are trying to become non-resident than if you are already non-resident. So it is relatively harder to lose UK residency but, once lost, you can spend more time in the UK.

So to remove doubt I would likely spend zero days in the UK in my first year away, and then relax things somewhat thereafter. From what other expats have told me, the UK taxman loses interest in you if you leave the country for more than about a year. And then only takes an interest in you again if and when you return.

As for domicile and IHT, that is a separate issue, but I can see a few ways around that problem and so am not worried about it.

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Re: The never ending cruise

#668382

Postby Tedx » June 11th, 2024, 8:45 am

This boat (which has yet to sail btw - the next scheduled leaving date is the 15th of June, so a month overdue), is almost like a Golden Visa, which many countries have decided to do away with. I can certainly see the appeal for many looking to, say, retire to warmer climes but without the hassle of arranging Visa's etc

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Re: The never ending cruise

#668383

Postby Lootman » June 11th, 2024, 9:00 am

Tedx wrote:This boat (which has yet to sail btw - the next scheduled leaving date is the 15th of June, so a month overdue), is almost like a Golden Visa, which many countries have decided to do away with. I can certainly see the appeal for many looking to, say, retire to warmer climes but without the hassle of arranging Visa's etc

Portugal still has a "Golden Visa" scheme. There are a few options but they all involve making some kind of business or property investment.

As I understand it, a key feature is that you are not liable for Portuguese taxation on your income. So assuming that you successfully lose UK residency then you could be in the joyful position of paying tax nowhere for the duration of that "visa".

Although it seems to me that you could achieve a similar thing without investing anything, merely by splitting your time between 2 or 3 different countries. For example Canada and the US both let you stay up to 182 days a year without becoming tax resident.

So if you are really determined to avoid taxation AND you are flexible and mobile, then there are cheaper and easier methods of achieving that than golden visas and eternal cruises.

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Re: The never ending cruise

#668387

Postby Tedx » June 11th, 2024, 9:14 am

I think you can flit between Canada, Mexico and the US - as well as a whole host of other suspect central American countries I guess.

....And you can do the same in Europe with EU and non EU states (although for much shorter time periods).

Most of the customer videos I've watched are folk who are definitely in the decummulation stages of life (which is what you'd expect). And the boat appeals to the 'one stop / no hassle here's your pre packaged retirement market.

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Re: The never ending cruise

#668394

Postby Lootman » June 11th, 2024, 9:31 am

Tedx wrote:I think you can flit between Canada, Mexico and the US - as well as a whole host of other suspect central American countries I guess.

....And you can do the same in Europe with EU and non EU states (although for much shorter time periods).

Most of the customer videos I've watched are folk who are definitely in the decummulation stages of life (which is what you'd expect). And the boat appeals to the 'one stop / no hassle here's your pre packaged retirement market.

Those central American countries go further. They will give you citizenship and a passport, in some cases in any name you choose! You might choose Eduardo Ximenez, for instance, for your incognito doppelganger and international man of mystery disguise.

But I think that is for a different target demographic than we are considering here. :D

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Re: The never ending cruise

#668400

Postby Tedx » June 11th, 2024, 9:48 am

Eduardo Ximenez...I like it!

But I think that is for a different target demographic than we are considering here

A bit like...:

https://youtu.be/hxcKmOUGY2w?si=POfdaYUmC74OLdH-

servodude
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Re: The never ending cruise

#668410

Postby servodude » June 11th, 2024, 10:32 am

Tedx wrote:I think you can flit between Canada, Mexico and the US - as well as a whole host of other suspect central American countries I guess.

....And you can do the same in Europe with EU and non EU states (although for much shorter time periods).

Most of the customer videos I've watched are folk who are definitely in the decummulation stages of life (which is what you'd expect). And the boat appeals to the 'one stop / no hassle here's your pre packaged retirement market.


It sounds like a terrifying Dr Who, or Tales of the Unexpected episode
- and probably smells

modellingman
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Re: The never ending cruise

#668424

Postby modellingman » June 11th, 2024, 11:05 am

Lootman wrote:
modellingman wrote:The determining test for those who care about such things is the Statutory Residence Test - a fiendishly complex set of rules which HMRC used to publish as a single pdf but, alas, no longer. Instead, you have to work through the piecemeal presentation in the HMRC manual, Start at https://www.gov.uk/government/publicati ... t-srt-rdr3 or see the primary legislation - https://www.legislation.gov.uk/ukpga/20 ... 45/enacted .

Depending on an individual's circumstances UK tax residency can result from spending as few as 16 days (effectively midnights) in the UK in a tax year. In some circumstances, though, an individual might be able to spend as many as 182 days in the UK in a tax year and still not qualify as a UK tax resident.

Be careful not to fall overboard or otherwise shuffle off this mortal coil in the first few years. At present, IHT on an estate is determined not by residency of the deceased but by domicile. It is possible to acquire a domicile of choice by being non-resident for, IIRC, 5 full tax-years but without a foreign-born father an individual's domicile will generally be his/her domicile of origin which is where the father was born.

Yeah, I took a look at all that a while ago and decided that I would look more closely if and when it became relevant. That might be sooner rather than later depending on a new government of course.

My main takeaway from the new rules (apart from why make this so complex?) is that it seems to be different rules if you are trying to become non-resident than if you are already non-resident. So it is relatively harder to lose UK residency but, once lost, you can spend more time in the UK.

So to remove doubt I would likely spend zero days in the UK in my first year away, and then relax things somewhat thereafter. From what other expats have told me, the UK taxman loses interest in you if you leave the country for more than about a year. And then only takes an interest in you again if and when you return.

As for domicile and IHT, that is a separate issue, but I can see a few ways around that problem and so am not worried about it.


Your takeaway is correct. For people who are retired, the thing to understand is the SRT's "ties test", the precise definitions of what constitutes a "tie" (they are legally defined in the legislation) and how the limit on days in the UK varies according to the number of ties held in each tax year. The other gotcha can be the type of assets held - UK property, in particular, can be problematic from a non-UK tax resident's perspective.

modellingman

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Re: The never ending cruise

#668432

Postby Lootman » June 11th, 2024, 11:54 am

modellingman wrote:
Lootman wrote:My main takeaway from the new rules (apart from why make this so complex?) is that it seems to be different rules if you are trying to become non-resident than if you are already non-resident. So it is relatively harder to lose UK residency but, once lost, you can spend more time in the UK.

So to remove doubt I would likely spend zero days in the UK in my first year away, and then relax things somewhat thereafter. From what other expats have told me, the UK taxman loses interest in you if you leave the country for more than about a year. And then only takes an interest in you again if and when you return.

As for domicile and IHT, that is a separate issue, but I can see a few ways around that problem and so am not worried about it.

Your takeaway is correct. For people who are retired, the thing to understand is the SRT's "ties test", the precise definitions of what constitutes a "tie" (they are legally defined in the legislation) and how the limit on days in the UK varies according to the number of ties held in each tax year. The other gotcha can be the type of assets held - UK property, in particular, can be problematic from a non-UK tax resident's perspective.

Yes and in a way those rules are fair. The benefits should accrue to those who are genuinely leaving rather than to those just temporarily parking themselves elsewhere out of tax expediency.

So if I did this at all then I would abandon "ties" such as ownership of a UK home. And investment in a UK ISA, along with other assets and accounts. And give up my UK passport assuming that I can get another one. This would all also help to lose UK domicile.

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Re: The never ending cruise

#668449

Postby the0ni0nking » June 11th, 2024, 1:48 pm

Lootman wrote:Portugal still has a "Golden Visa" scheme. There are a few options but they all involve making some kind of business or property investment.

As I understand it, a key feature is that you are not liable for Portuguese taxation on your income. So assuming that you successfully lose UK residency then you could be in the joyful position of paying tax nowhere for the duration of that "visa".

Although it seems to me that you could achieve a similar thing without investing anything, merely by splitting your time between 2 or 3 different countries. For example Canada and the US both let you stay up to 182 days a year without becoming tax resident.

So if you are really determined to avoid taxation AND you are flexible and mobile, then there are cheaper and easier methods of achieving that than golden visas and eternal cruises.


Portugal still have a golden visa but it is no longer allows you to do so by buying residential property. Spain golden visa I believe is ceasing later this year.

As that isn't the route re Spain that I was going down, I've not looked at it in detail but suspect the taxation point is slightly different to what you suggest (although for all intents and purposes it may have the same result depending on where investments are held etc).

ISTR that you are taxed on income generated in the country (so if you were to have what is classed as "earned" income while in Spain that would be taxed in Spain). However, what you are not taxed on income from your assets held outside of Spain.

The golden visa in Spain also had some bizarre rules around what constituted residency - which was a lot less on a Golden Visa than it was on other types of visa. That was why I thought the EU was pushing hard on countries to stop the golden visa route via residential property as it basically allowed the evil Russians to buy there way in to the EU.


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