Non tax payer

Some people set up Limited companies to invest in P2P, there are two obvious advantages, a small salary can continue to earn National Insurance contributions at zero cost and if you draw £5,000 or less in dividends from the company there is a special allowance to cover that.  You can run that alongside a personal account to still get the savings allowance.  The disadvantage is bureacracy and cost, especially if you are not confident enough to prepare the accounts and run the payroll.

You should take professional advice on this (i.e. not only rely on the various threads here) as it is possible that HMRC might consider the whole set up a sham upn investigation.

In general that is correct, there are various anomolies covered in the various treaties (e.g. pensions received from an overseas government in respect of government service, like, say, working as a teacher in a state run school in France) and some income is firstly taxable in the country where it is earned, eg rent, but that remains taxable in the UK jusst with a credit for any tax paid in the country where it arose.  There are pending changes to non-domiciled status.

It has changed, many years ago.

The Portugal scheme mentioned by stevio doesn't make someone a non-taxpayer, rather it sets a zero income tax rate for non-Portugese pension income for those who opt in to it. Tax is still due, the rate is just 0%. The double taxation treaty with Portugal provides that income will be taxed in the country of tax residence. The 75% taxable part of a pension pot is income even if taken as one or a few lumps so you can take out the whole 75% and have a nil income tax cost. HMRC will charge you as if the transaction happened in the UK if you return to the UK in the following few years unless the amount is below a set limit.

A UK tax resident who is domiciled in the UK is due income tax on foreign investments as of the date when the interest is paid into the foreign account, you are not allowed to choose when to bring the money into the UK and only then pay tax on it. Just like any UK account. A non-dom does get to choose the option of paying the tax when the money is brought into the UK instead.

While a UK tax resident, unlimited "income" in the UK is free of income tax from:

1. ISA.
2. VCT dividends - tax exempt, so regardless of your tax bracket.

3. Profits from sales of simple debts on P2P secondary markets are tax exempt unless considered by HMRC to be trading (as a trade, not as a trader). Platforms that allow trading at a premium and which have loans (either all or just some) that pay interest at maturity are of interest for this potential. (Don't sell to your own ISA or pension at a non-market price, the platform should have monitoring that would catch this, particularly a sale to an ISA at below value ISA limit breaching scheme] or purchase by a pension at above value [pension liberation scheme].)

Large amounts of income can have tax eliminated due to tax relief on the purchase of:

4. VCT, 30% of purchase price up to £200k of buys a year, relief can be given by tax code change in year of purchase if in PAYE.
5. EIS, 30% of purchase price up to £1 million of buys a year.
6. SEIS, 50% of purchase price up to £100,000 of buys a year.

The reliefs for those three are capped at the income tax otherwise due in the tax year of purchase. Each has a minimum holding period and if sold within that period the relief must be repaid. They allow you to eliminate much income tax if you can afford to defer the relevant portion of your income for the minimum holding period.

Other things include:

7. Foreign investment trust withdrawals of up to 5% of initial investment per year are treated as return of capital and are tax free, you can accumulate the 5% if not used in a particular year, total capped at 100% of initial investment.

8. A person aged between 55 and 74 inclusive can pay up to their qualifying income (usually earned income) into a pension and almost immediately take out the 25% tax free lump sum. Also capped at the annual allowance level currently £40k but with carry-forward from the past three years available if you were in any pension scheme during that year. Take a penny of the taxable 75% and the allowance is reduced to £10k per year and carry forward is eliminated. Also less for those with high incomes who have lower allowances. A 55-74 year old person with no qualifying income who has £2,700 of personal allowance unused can pay in £2,880 net and withdraw £3,600 each year with no income tax due, a gain of £720 a year. A person under 75 who has a life expectancy of less than a year can take 100% of a pension pot tax free and still make more contributions, they do not have to pay any tax if they don't die until later or after a normal life but the qualifying requirement is a little severe for most of us.

9. There are amount-limited friendly society investments that pay tax exempt but the limits are very low and the investments aren't really worth owning anyway.

10. Premium Bonds and not currently available various other potential NS&I schemes.

11. Rent a room.

12. The usual personal allowance, savings allowance and dividend allowance. Also CGT allowance.

13. Purchased life annuities have a portion of their income treated as a return of capital. The rates are so dire that this is not really a desirable option to pursue in most cases.

14. Immediate needs annuities can have money paid to a care home directly free of income tax but since you're normally within a couple of years of death at the time of purchase this is not a product of interest to most of us.

15. Life insurance or assurance can be used to provide someone tax exempt money at death, outside an estate, and can be a useful tax dodge sometimes, whether by the to be deceased or a party with a sufficiently close relationship and insurable interest.

But those just reduce the potential tax bill, they don't make the person not subject to income tax. Those saying they are non-taxpayers usually seem to mean that their income is within their allowances but in a place like this it can also mean being tax resident in a place with no tax cost for P2P.

I've undoubtedly missed something but that's a fair list to get started with.

Move to a jurisdiction with no income or capital gains tax (in a way that ensures you are no longer tax-resident in the UK for income tax purposes - the mere act of moving doesn't always mean that you immediately become a non-tax payer in the UK). Invest in UK P2P at a level where the income does not exceed a threshold that will mean you are no longer a non-tax payer.

Note: for this to work you obviously need to have very little or no other UK source income (otherwise the UK-source income + your P2P earnings will start to push your income to a level where you'll need to pay tax).