Investboy
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Post by Investboy on Oct 19, 2016 15:26:25 GMT
I've seen this term mentioned many times in this forum. How can one be a non tax payer?
I can come up with 2 possibilities:
1. Very low income below 11k (Personal Allowance). But how can you survive on that?
2. Living abroad (that means not paying tax in UK but somewhere else)
Anything else? What am I missing?
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Post by gaspilot on Oct 19, 2016 17:40:29 GMT
I've seen this term mentioned many times in this forum. How can one be a non tax payer? I can come up with 2 possibilities: 1. Very low income below 11k (Personal Allowance). But how can you survive on that? 2. Living abroad (that means not paying tax in UK but somewhere else) Anything else? What am I missing? I think this year there is a £1000 savings allowance and a £5000 dividend allowance too, This brings the non tax payer up to potentially £17k.
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ilmoro
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Post by ilmoro on Oct 19, 2016 17:48:46 GMT
I've seen this term mentioned many times in this forum. How can one be a non tax payer? I can come up with 2 possibilities: 1. Very low income below 11k (Personal Allowance). But how can you survive on that? 2. Living abroad (that means not paying tax in UK but somewhere else) Anything else? What am I missing? I think this year there is a £1000 savings allowance and a £5000 dividend allowance too, This brings the non tax payer up to potentially £17k. £5k 0% savings rate band plus PSA makes 17k, divend allowance additional to this
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adrianc
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Post by adrianc on Oct 19, 2016 17:51:41 GMT
I've seen this term mentioned many times in this forum. How can one be a non tax payer? I can come up with 2 possibilities: 1. Very low income below 11k (Personal Allowance). But how can you survive on that? 2. Living abroad (that means not paying tax in UK but somewhere else) Anything else? What am I missing? I think this year there is a £1000 savings allowance and a £5000 dividend allowance too, This brings the non tax payer up to potentially £17k. ...which is £34k in a household. Not only is that nearly 60% over the national average household income, but if there's no mortgage being paid because you already own the house outright, then that gives the potential for a very decent lifestyle.
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registerme
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Post by registerme on Oct 19, 2016 17:56:43 GMT
And £8500 tax free available in terms of lodger income.
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adrianc
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Post by adrianc on Oct 19, 2016 18:02:52 GMT
And £8500 tax free available in terms of lodger income. So we're now up to £42,500 tax-free...
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hazellend
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Post by hazellend on Oct 19, 2016 18:37:31 GMT
+ tax free income from ISAs, VCTs etc.
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jonah
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Post by jonah on Oct 19, 2016 20:11:55 GMT
+ tax free income from ISAs, VCTs etc. Vcts as well as providing tax free dividends also have income tax rebates... 30%... so In theory could be used to remove c60k of income tax (I think it's 200k maximum annual subscription but I'm sure google would confirm) if you had the cash to invest. Also a personal pension can be used to reduce your tax liability through rebates, up to your marginal tax rate of 40k per year with various limits imposed as well as carry forward. Neither is additional income but can reduce the tax you pay on those elements you do have as income. Also, friendly societies can have 'with profits' funds which I think are tax free. Please research carefully as I'm going from old memories and I think the quality of return was 'variable '.
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stevio
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Post by stevio on Oct 20, 2016 5:48:24 GMT
Are there still HMRC tax free savings accounts?
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jlend
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Post by jlend on Oct 20, 2016 6:32:48 GMT
Are there still HMRC tax free savings accounts? There are nsandi savings that are tax free but there are no current offers available. If you already have them you can roll them over into another term that is tax free. They still do premium bonds which are tax free
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Post by dualinvestor on Oct 20, 2016 6:34:19 GMT
Whilst most of the above are generally correct thay do not make the person a non-tax payer they reduce the rate of tax to nil whilst keeping within the various limits.
When most prople claim to be a "non UK tax payer" they are stating that their income, at any level is not subject to UK tax. In most cases this is because they are not UK resident and interest is taxable in their country of residence under the terms of the bi-lateral between the UK and that country and they do not have any other income taxable in the UK (eg even if one receives a pension from the UK in most cases it is taxable in the country of residence). Some countries have a very benign tax regime where little or no income tax is payable at all and yet more do not treat interest as income for tax purposes unless it is earned by way of trade (eg a Bank or Finance House). Most bi-lateral tax treaties are under the same general terms with the exception of those with the United States that are different due to differences in that country's tax system. If there is no treaty between the UK and a certain country the UK apples the terms of the "model tax treaty" unilaterally.
The interest may, or may not, be subject to tax in their country of residence.
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jlend
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Post by jlend on Oct 20, 2016 6:41:11 GMT
There is also a tax free annual allowance for capital gains tax so you can buy and sell shares etc and make use of this.
There are various other things that are tax free. E.g. you don't pay tax on any capital gain made by trading corporate bonds on the London stock exchange ORB market. You are liable for income tax on the interest payments on the bonds though.
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r00lish67
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Post by r00lish67 on Oct 20, 2016 9:27:00 GMT
I'd imagine a large part of the non-taxpayer P2P community are any stay at home partners who may have a full juicy tax free limit to use up whilst the primary breadwinner goes out to the office.
Myself, I'm on a long sabbatical allowing me at least a year of non tax payer status. I don't think I'd invest in the same way at all if I had to shell out 40% tax on my returns.
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Investboy
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Post by Investboy on Oct 20, 2016 10:21:38 GMT
Thanks all for replies!
First I must say it is an interesting thought to reach the "under tax threshold passive income status":
2x (11,000 Personal allowance + 5,000 dividend (from own ltd I assume) + 1,000 interests (P2P) + Unlimited (ISA)) = 34,000 upwards
When owning a home and earning this especially outside (as far as possible) of London that is a great living.
But then if you make a lot of interests in P2P then they will at some point breach the thresholds and become a tax-payer so there must be something else. Probably living abroad but this is not really "UK-only-non-tax-payer-but-tax-payer-somewhere-else".
So I'm wondering if there is 3rd option that the posters talk about.
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Post by trentenders on Oct 20, 2016 11:42:04 GMT
People don't tend to talk about the third option, in case they get caught!
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