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Where Taxpayers and Advisers Meet

Does investment in ISA automatically makes one a tax resident

skray
Posts: 36
Joined: Mon Oct 29, 2012 5:01 pm

Does investment in ISA automatically makes one a tax resident

Postby skray » Sat Apr 13, 2019 8:43 am

Hi
My query is partly academic but I have been exposed to an unusual situation.
My intention was to invest in Cash ISA for the year 6APR18-5APR19 but I left everything until the last moment and I initiated a same day fund transfer on the last day of the tax year i.e. 5APR19. The Building Society assured me as long as funds are received by 4PM I am safe.
Apparently the funds were received the next day 6APR19 and the Cash ISA investment has been made for the year 6APR19-5APR20.
I am aware ordinarily only a UK resident is eligible to invest in ISA.

There is a possibility I will have to move out of the UK for the remainder of the year and may become a non-resident. (I know if I am present in the UK fewer than a certain number of days I become a statutory non-resident, then residency is based on past 4 years residency and ties to the UK etc, and in excess of 6 months then statutory resident). There are certain tax advantages for becoming non-resident.

Can this Cash ISA investment make me automatically a UK resident for tax purposes regardless of any other criteria?
Or, residency status may not be established until the end of the year - what happens to the ISA investments made during the year before residency status was established?

Regards

darthblingbling
Posts: 240
Joined: Wed Aug 02, 2017 9:09 pm

Re: Does investment in ISA automatically makes one a tax resident

Postby darthblingbling » Sat Apr 13, 2019 9:14 am

Investing in a ISA does not make you resident.

When are you planning to leave the UK?

skray
Posts: 36
Joined: Mon Oct 29, 2012 5:01 pm

Re: Does investment in ISA automatically makes one a tax resident

Postby skray » Sun Apr 14, 2019 2:39 pm

Thanks for the response.

I have not fixed any date yet but simply considering my options. I am a consultant and I receive my fees in my business bank account out of which I pay myself a salary and dividend. I have substantial overseas income (interest and rent) and since becoming deemed domicile (I was born overseas) I am having to pay tax on my worldwide income which is why I cannot pay myself a large salary or dividend.

This is year I have not managed to secure a contract yet and not sure when I eventually will. So I am wondering it could make sense to move out and become non resident for the tax year thus no longer liable to pay tax on my worldwide income then I can draw a large dividend out of the reserves of my business bank account. (I do not have any real knowledge of UK tax laws but do my own tax planning by searching information over the internet or posting queries in forums).

I understand if my presence in the UK is less than 16 days then I am always non-resident. (Between 16 days and 183 days the rules are complicated, though I am all by myself and have few “ties”). I think I have time until around 20/April. So wondering if I should move out to France or Ireland and return only if I need to e.g. I have to attend a job interview in the UK at the end of April. (Then again each day of presence will start adding up).

Thanks

darthblingbling
Posts: 240
Joined: Wed Aug 02, 2017 9:09 pm

Re: Does investment in ISA automatically makes one a tax resident

Postby darthblingbling » Sun Apr 14, 2019 3:08 pm

16 days is a safe bet yes

AnthonyR
Posts: 268
Joined: Wed Feb 08, 2017 2:33 pm

Re: Does investment in ISA automatically makes one a tax resident

Postby AnthonyR » Tue Apr 16, 2019 9:21 am

Just be aware that spending too much time in France or Ireland (or elsewhere) could lead to you becoming tax resident in those countries and subject to their tax regime which may not be any better than just staying put in the UK.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

darthblingbling
Posts: 240
Joined: Wed Aug 02, 2017 9:09 pm

Re: Does investment in ISA automatically makes one a tax resident

Postby darthblingbling » Tue Apr 16, 2019 9:53 am

And France isn't exactly any better than the UK with regards to tax rates


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