Malta - British Expat Forum

I wonder if anyone can help me with this issue.
I understand giving up UK Residency requires cutting Social/Financial ties with the country , visiting UK no more than 91 days a year and off course informing HMRC through a P85 form.
I plan to leave most of my funds in UK banks and expect to earn an interest income on it .Will that make me a resident in UK ?

The primary reason I want to leave funds in UK , is because I consider most UK banks to be safer than most European banks as of now. By giving up UK residency , will I be excluded from the usual deposit insurance by the government ?

If interest rates rose in the future and my interest income cross the tax threshold , then would I have to pay tax in UK. Or will I be only liable for tax in Malta only , if necessary.

Any opinion is highly welcome

Leaving funds in the UK does not automatically make you UK resident. As you say, you need to cut ties with the UK, and make a clean break.

You'll only be liable for tax on income you bring into Malta.

I can't comment on the deposit insurance, although I believe its all depositers, not just those that are UK resident. I could be wrong.

Hi., and welcome to the forum

deposit insurance isn't tied to residency

"I plan to leave most of my funds in UK banks and expect to earn an interest income on it .Will that make me a resident in UK ?" no, residency is down to your physical location, not your monetary location

"If interest rates rose in the future and my interest income cross the tax threshold , then would I have to pay tax in UK. " - yes, unless you get paid gross - you could also move your money offshore and get it paid gross

"The primary reason I want to leave funds in UK , is because I consider most UK banks to be safer than most European banks as of now." - of course, not all banks in the UK are UK banks, and not all UK banks are safer than European banks

Thanks SteveGill.
What about liability for tax in UK for interest income earned in a UK bank ?
I have read one pays tax (in UK ) if they rent their property.

As for interest income, all I am aware is that I can apply at my bank to receive gross interest. Does that mean I would not be liable for any tax , well as long as I am not resident in UK ?
Does everyone leaving UK has to fill a P85 or only those who are expecting some tax refund ?
Sorry too many questions

gozomark wrote:"The primary reason I want to leave funds in UK , is because I consider most UK banks to be safer than most European banks as of now." - of course, not all banks in the UK are UK banks, and not all UK banks are safer than European banks

Yes UR right . I mainly meant UK banks of UK origin and off course that would exclude those that merely operate geographically in UK for eg now extinct Icelandic banks. Main reason I believe Uk banks are safer is because of a strong backing of a government which is far more resourceful then many if not all european countries. Northern Rock , RBS and Halifax are living example of that however unfortunate it may have been for ordinary taxpayers so far

gozomark wrote:Hi., and welcome to the forum deposit insurance isn't tied to residency "I plan to leave most of my funds in UK banks and expect to earn an interest income on it .Will that make me a resident in UK ?" no, residency is down to your physical location, not your monetary location "If interest rates rose in the future and my interest income cross the tax threshold , then would I have to pay tax in UK. " - yes, unless you get paid gross - you could also move your money offshore and get it paid gross

Thanks gozomark . I have been thinking about offshore though there are few downsides like very low interest rate and probably little deposit insurance if at all. will need to explore more

interest rates are generally comparable to onshore (I've just done a 3.4% 1 year fixed deposit) - deposit protection is lower, but still decent

Its also possible to set up current accounts offshore, with a credit or debit card, cheque book, standing orders, DD etc, and in £, € and $, something I've done recently

rasputinluv wrote:Thanks SteveGill. What about liability for tax in UK for interest income earned in a UK bank ? I have read one pays tax (in UK ) if they rent their property. As for interest income, all I am aware is that I can apply at my bank to receive gross interest. Does that mean I would not be liable for any tax , well as long as I am not resident in UK ? Does everyone leaving UK has to fill a P85 or only those who are expecting some tax refund ? Sorry too many questions

My understanding (might be wrong) is that as a non UK tax payer (when you are non resident) you will NOT have to pay UK tax on interest earned, but I believe you need to advise them of your tax reference in Malta and elect for it to be paid gross. You'll need advice on this for sure. (Like Mark, I bank offshore)

The advice I was given is not to fill in a P85 form if I fill in a self assessment form - thats how to declare you are non resident.

gozomark wrote:interest rates are generally comparable to onshore (I've just done a 3.4% 1 year fixed deposit) - deposit protection is lower, but still decent

Wow ! That is better then any bank in UK..and I guess one may be able to receive it all tax free by turning into capital the following year .
I had checked offshore of my main bank (HSBC) only. They pay very little both onshore or offshore , may be because of their real or perceived safety.

The advice I was given is not to fill in a P85 form if I fill in a self assessment form - thats how to declare you are non resident.

Quote:

Did you do self assessment form as a one off to settle account after you left UK or are you still required to file annual self assessment in UK ?

rasputinluv wrote:I guess one may be able to receive it all tax free by turning into capital the following year .

You should talk to the tax authorities in Malta (or better still an accountant in Malta) to see how income may become capital, but its not just a matter of waiting till the next year.

I saw in some of the older posts that any income becomes capital on 1st January of the following year and bringing capital from abroad is not taxed in Malta.
Has that changed lately or have I just got it wrong ?

That was never a confirmed policy, and certainly isn't now