Exit Plans?

[jamesbrown]

It's funny that someone made a video about a fairly rudimentary part of our tax system. Um, yes, most jurisdictions, including the UK, tax on the basis of residency, not citizenship . Sure, if you're not a UK resident, you are not chargeable to UK tax, subject to the anti-avoidance provisions mentioned. Big deal. For most people who have a life in the UK, it's pie in the sky and you aren't going to save a life-changing amount anyway. To get rich, you need a skillset that will make you rich. Tax is always at the margins and trying to optimise it to that degree (leaving the UK for 5 full tax years with tax as the main motivation) is a waste of time and a bit sad/pathetic, really.

[willendure]

It's funny that someone made a video about a fairly rudimentary part of our tax system. Um, yes, most jurisdictions, including the UK, tax on the basis of residency, not citizenship . Sure, if you're not a UK resident, you are not chargeable to UK tax, subject to the anti-avoidance provisions mentioned. Big deal. For most people who have a life in the UK, it's pie in the sky and you aren't going to save a life-changing amount anyway. To get rich, you need a skillset that will make you rich. Tax is always at the margins and trying to optimise it to that degree (leaving the UK for 5 full tax years with tax as the main motivation) is a waste of time and a bit sad/pathetic, really.

If you had £1 million in your Ltd and payed it out all at once in dividends, you would pay £379K in tax. You could easily bum around and have a wonderful time for 5 years on £379K visiting all sorts of cheap and sunny places. Or buy a house in Spain, or whatever. Its not completely unrealistic that a long term contractor might have that kind of money or a decent chunk of it in their Ltd.

[jamesbrown]

If you had £1 million in your Ltd and payed it out all at once in dividends, you would pay £379K in tax. You could easily bum around and have a wonderful time for 5 years on £379K visiting all sorts of cheap and sunny places. Or buy a house in Spain, or whatever. Its not completely unrealistic that a long term contractor might have that kind of money or a decent chunk of it in their Ltd.

If you have £1m in your Ltd, you didn't get it there by being a complete moron and presumably, therefore, you wouldn't take a £1 million dividend in a single tax year, as a moron might do. But, by all means, close your company if you're planning an extended break (or leave it open), leveraging BADR where appropriate/applicable, and then travel, without limits. Specifically moving overseas for 5 full tax years to avoid being temporarily non-resident is very silly and the sort of behavior daydreamed about by contractors that have little hope of accruing £1m in retained profits.

[SussexSeagull]

I would imagine the type of people who have a £1 million in their company aren't the types to back pack round the globe and are probably more interested in in earning their next million!

Good problem to have though.

[NotAllThere]

https://www.youtube.com/watch?v=9ATQ-QccVzQ

Go travelling for 5 years and take all the cash out the Ltd tax free. Has a certain appeal to it.

That's a myth. You're always tax resident in one country or another and will need to pay tax there.

[jamesbrown]

That's a myth. You're always tax resident in one country or another and will need to pay tax there.

I think his point was that you become tax resident in a country with low or zero taxes for the type of distribution planned, which is perfectly possible, but also a little bit insane when tax is dictating your life plans.

[willendure]

Fair enough - I can dream! But also there are some pretty nice 0% tax jurisdictions and I would not mind spending a year in one, if you even need to spend that long. Say kids are off to university or finding jobs I could leave them to look after our UK house because god knows they won't be buying their own any time soon.

I have been thinking about cutting back on SIPP contributions recently. I have managed to put away a decent amount through that route, but I also start to wonder what happens when the UK needs to use financial repression? Money in a pension is locked away in ways that make it vulnerable to that kind of thing, and I do think it is going to happen between now and when I retire. I don't think I want to put everything into a pension plan but should diversify the way my investments are held.

So considering routes that involve keeping money in the Ltd, which naturally leads to considering what the exit strategy could be. Does there even need to be one? An ltd could generate passive income too if it buys rental property, and why not consider doing that outside of the UK.

[willendure]

Malta probably has one of the best arrangements suited to UK people.

[sadkingbilly]

Malta probably has one of the best arrangements suited to UK people.

great if you speak russian

[WTFH]

... tax is dictating your life plans.

This.
The thread started out with "what are your exit plans?", but as is common with some, it's turned into "how do I pay minimum tax?"
Exit plans should revolve around what you love, what you want, what you enjoy.

If money is more important to you than having a life, then the thread is "ho do I avoid paying tax?"
If you have family, or a desire not to be the richest body in a graveyard, then exit plans should be about how you want to enjoy time with people who matter, and time doing things that make a positive difference to others.

But, as I say, personal plans revolve around what you love, and if money is what you love, choose a soft currency to stuff in your mattress.