Singapore Resident - UK citizen investment question

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JCexpat
Posts: 2
Joined: Wed May 15, 2019 12:23 am

Singapore Resident - UK citizen investment question

Post by JCexpat » Wed May 15, 2019 12:36 am

Hi,

I live in Singapore and I am from the UK. I am not sure where I will retire (looking less and less likely it will be the UK).

I would like to know if I would be taxed or have to declare tax in the UK if I used a Singapore broker (like Saxo) to buy an ETF, such as VWRL/VWRD, on the LSE? I am assuming there will be no CGT but wasn’t 100% about dividend payments with regard income tax? Is this counted as income derived from the UK or not?

Thanks in advance for your help

TedSwippet
Posts: 2178
Joined: Mon Jun 04, 2007 4:19 pm

Re: Singapore Resident - UK citizen investment question

Post by TedSwippet » Wed May 15, 2019 3:01 am

Welcome.
JCexpat wrote:
Wed May 15, 2019 12:36 am
would like to know if I would be taxed or have to declare tax in the UK if I used a Singapore broker (like Saxo) to buy an ETF, such as VWRL/VWRD, on the LSE? I am assuming there will be no CGT but wasn’t 100% about dividend payments with regard income tax? Is this counted as income derived from the UK or not?
These should not be UK taxable for you. Vanguard's non-US domiciled ETFs are domiciled in Ireland, so their dividends are strictly 'Ireland sourced'. Ireland does not tax dividends paid to non-Irish residents, and the fact that you trade these ETFs on the LSE does not magically make this dividend income UK sourced. If you really want complete isolation from the UK, you could equally well buy these ETFs on Euronext or Swiss instead of LSE.

Even for UK based investors, these ETFs count as 'foreign' when it comes to filling out annual tax returns. It's a bit of a pointless distinction for the UK investor, since the tax treatment (provided the fund is 'HMRC reporting') is the same as if it were a UK domiciled fund.

What you do not want to do, of course, is to buy any US domiciled ETFs, such as the ones used by US investors and regularly discussed elsewhere on this site. That would open you up to both 30% US tax on the dividends and a threat of extortionate US estate taxes. Stick to Ireland domiciled ones instead.

glorat
Posts: 3
Joined: Thu Apr 18, 2019 2:17 am

Re: Singapore Resident - UK citizen investment question

Post by glorat » Wed May 15, 2019 4:12 am

As a non-UK resident you definitely don't have to pay UK CGT and I'm pretty sure you don't have to declare anything on your UK tax return either. But if you happen to get some proper tax advice on this, do let us know!

Topic Author
JCexpat
Posts: 2
Joined: Wed May 15, 2019 12:23 am

Re: Singapore Resident - UK citizen investment question

Post by JCexpat » Thu May 23, 2019 1:11 am

Even for UK based investors, these ETFs count as 'foreign' when it comes to filling out annual tax returns. It's a bit of a pointless distinction for the UK investor, since the tax treatment (provided the fund is 'HMRC reporting') is the same as if it were a UK domiciled fund.

TedSwippet, thanks so much for your reply. It is much appreciated.

Based on what you said above, how would I stand in terms of tax if I purchased VUKE from a UK broker using UK earned funds (from rental properties)? It is domiciled in Ireland but is "UK reporting" for its tax status. I assume I would therefore have to declare any dividends on my income tax return and it would be subject to CGT?

Thanks again.

TedSwippet
Posts: 2178
Joined: Mon Jun 04, 2007 4:19 pm

Re: Singapore Resident - UK citizen investment question

Post by TedSwippet » Thu May 23, 2019 3:03 am

JCexpat wrote:
Thu May 23, 2019 1:11 am
Based on what you said above, how would I stand in terms of tax if I purchased VUKE from a UK broker using UK earned funds (from rental properties)? It is domiciled in Ireland but is "UK reporting" for its tax status. I assume I would therefore have to declare any dividends on my income tax return and it would be subject to CGT?
I don't see any additional UK tax liabilities here. Your UK rental income is 'UK source' and so that is taxable to the UK. However, if you then turn around and put that post-tax money into an investment that returns non-UK source income, in this case Ireland, you shouldn't have any UK tax liability on this. Even if what that investment holds internally is all UK assets.

The VUKE structure should protect you from exposure to UK tax, just as VUSD would protect you from US tax. Same as if you held these assets through a local personal holding company or trust. The UK's 'reporting status' won't come into things. That's an administrative convenience for UK residents who hold these funds, and if you are properly non-resident in the UK it's irrelevant to you. It would be useful if you move back to the UK while holding these assets though, since that way you won't run into any of the UK's anti-offshore-fund tax rules.

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