[Singapore] SRS - withdrawal/taxation for UK expat

[saverinvestor8897]

Hi - I am living in Singapore for a couple of years and as the year end approaches I am considering contributing to an SRS account for the first time where I can invest up to 35,000 SGD annually. I am in a high tax rate bracket so this would mean c. 7K SGD+ saving on tax for me. I intend to stay in Singapore for an extended period (possibly 10 years) as I intend to maximize net earnings during my high potential years. Eventually I will return to London and become a UK tax resident. I feel comfortable locking the money away for long periods and will withdraw this post retirement age when no penal taxes apply locally. Will invest in index trackers - i gather amundi is available which has 10bps fee global tracker.

I have a few questions for those who may have experience in a similar situation - assuming at the time of withdrawal i am a UK tax resident - my main concerns have to do with taxability at the time of withdrawals...

1. When I withdraw money, do SRS withdrawals count as taxable income in the UK or not taxable? If they are taxable and given UK tax laws/direction, this could mean that I am taxed at 40%+ on withdrawals (I expect to be in a high tax bracket at that time), which would imply SRS is actually worse off than simply keeping the money in a normal Singaporean brokerage account where i pay 20% tax now, but no taxation later.

2. If i leave Singapore, is SRS usually a straight forward account to be managed online or am I adding a lot of complexity in life when it will come to withdrawal? My other portfolio is almost entirely in Vanguard ETFs...

3. I understand Endowus is a good platform for SRS, but has 0.4% platform fees + 0.1-0.2% OCF on the ETF. This implies additional 0.5% fee compared to my usual IBKR + vanguard options. Over 20 years, that would add up to c. 10% of the invested amount (0.5%X20) - which is about the same as the tax saving on day 1 (after adjusting for the 50% tax benefit at the time of withdrawal). So after netting off the fee element is this SRS complexity worth it?

Appreciate any help on this rather complicated query.

Cheers

[glorat]

Hi - I am living in Singapore for a couple of years and as the year end approaches I am considering contributing to an SRS account for the first time where I can invest up to 35,000 SGD annually

I was waiting for a reply on this thread with interest as I could be in a similar situation in terms of being Singapore resident for long time but might end up in the UK and I hadn't ever considered the SRS.

I can answer some of these but not authoritatively as UK tax rules change...

> When I withdraw money, do SRS withdrawals count as taxable income in the UK or not taxable?

UK residents consider global income taxable so essentially yes. The two potential buts against this are 1) double taxation agreements and 2) potential tax rule changes for people returning to the UK after an extended period. Also, my understanding is that you're supposed to withdraw from SRS when you retire, not while you're still earning a high salary. But your calculation is right - take 20% income tax now or defer to some semi-known future rate

And who knows if it would be income tax, or capital gains tax, or how double taxation helps or not.

> Fees
For a cumulative 0.5% annual fee, that's a lot for an unknown tax benefit. And don't forget the FX conversion that could take another 1% off on many platforms, whereas IBKR would be next to nil.

So having looked into this in a cursory manner,I continue to be happy managing all my investments through IBKR. I like that I have
1) Liquidity any time, not just at retirement
2) Zero CGT/dividend tax while in Singapore
3) Simplicity
And a good chance of low cost resetting of cost basis before moving to UK to make use of capital gains tax allowances in the UK for withdrawals, and clearly avoid income tax. Generally have a very clean tax situation.

[saverinvestor8897]

I was waiting for a reply on this thread with interest as I could be in a similar situation in terms of being Singapore resident for long time but might end up in the UK and I hadn't ever considered the SRS.

Thanks for this response

it is indeed odd that for a country where so many expats live, so little is said about the eventual taxability of SRS withdrawals for eventual europe/uk tax residents

I eventually decided against investing anything into SRS this year - for now the unknowns seemed to be too many vs the potential tax savings, and UK tax laws are heading in the direction of taxing everything that can possibly be done, so i'd rather have it in IBKR and at least i know what the tax situation will be

the new IHT laws in the UK do make me wonder if i will ever go back to London...but thats for another day

[glorat]

And just to throw in one more... what about taking up Singapore PR? If one is staying there so long, PR comes with many benefits. It also comes with CPF like the locals, which perhaps is similar to SRS in treatment. So two thoughts are
1) In the individual's situation, is it worth getting PR if you're staying for 10 years, noting that you'll have to build up CPF
2) Is it a good assumption that withdrawal/taxation of CPF would be the same as for SRS (from a UK point of view). If so, I'm sure there's plenty of material on how this is handled since it must be more common