UK Non-Resident tax for investment income

There is no point in having high performing investments if you have to pay equally high rates of tax. Smart investors aim for a portfolio of investments with good returns; you should also aim for maximum tax efficiency. If you are a UK Non-Resident and have significant investment income in the UK then finding the most tax efficient ways for your investment income is simple, just ask a UK Non-Resident tax advisor at The Taxman UK

Investment income strategies

Some investments are much more tax efficient than others. Investment income can be safeguarded in tax shelters like ISAs and SIPPs, or even a company if you are a UK Resident. If you are a UK Non-Resident then your options may be different or more limited.

Some investments produce more capital gains than income and often capital gains are much better than income as tax rates are lower.

Investment income strategies for non uk residents
Interest on investment income for non UK residents

Interest on investment income

Investments that generate interest income should generally be avoided, particularly if you are a higher-rate taxpayer, unless the interest is sheltered from tax. With inflation running at around 1.25%, if you pay 40% tax you would need to earn substantially more than the inflation rate before tax just to maintain the real value of your capital.

Most interest bearing investments are not able to deliver more than 5% annual returns, so the value of your savings will be eroded by inflation. There may be times in life when you cannot avoid it such as when you sell your house and have a large lump sum of cash. ISAs are the easiest way to make sure your interest is tax free but if you are a UK Non-Resident then this is not an option.

Stock Market Dividends

The main difference between dividends from your own company and dividends from stock market companies is that stock market dividends can be completely sheltered from income tax by investing via an ISA or SIPP. This means you should be able to shelter all of your stock market dividends from tax. If you are a UK Non-Resident this is not possible.

Stock Market Dividends for non UK residents
Income Tax on Dividends for non UK residents

Income Tax on Dividends

Unlike dividends from your own company, you cannot control the amount of income you receive from stock market companies. If you have significant dividends from stock market companies in the UK, you may want to reduce the dividends you pay yourself from your own company to avoid paying more tax. Stock market dividends are generally only a tax problem for wealthy investors who hold a significant portfolio of shares as a UK Non-Resident.

If you, or your family have significant investment income in the UK and are UK Non-Resident for tax purposes then a good UK Non-Resident tax advisor can make everything more simple for you, quickly.

Please don’t hesitate to contact one of our experienced UK Non-Resident tax advisors by sending us an enquiry at help@thetaxmanuk.com for an initial consultation. If you have high performing investments in the UK then good tax advice will save you time, money and stress.

The Taxman UK “Making Life Less Taxing for UK Non-Residents”