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Phuket expats better buckle up – more changes for UK pension plans

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PHUKET: THE UK government is continuing to shake things up for retirees and expatriate workers trying to make long-term plans for the post-work future with yet another shift of the goalposts, one of many in recent months.

The most dramatic change announced in the new budget, to go into effect next year, is the reduction in lifetime allowance to one million pounds. The UK’s Her Majesty’s Revenue and Customs (HMRC) department also just recently turned 180 degrees on its stance on flexibility for holders of offshore pensions (QROPS), following a directive it issued in December.

The move in lifetime allowance was not a surprise. It had gone up to 1.8mn pounds and then scaled back to 1.5mn, then down to 1.25mn. Budget problems in the UK are not likely to suddenly disappear, and thus I expect the government to continue to find more areas to squeeze a little bit more into its coffers. It will be interesting to see whether the trend continues next year.

A word of warning for people who have small pension pots and would like to cash them in to
access the money – the UK government is likely working on a way to squeeze tax from that scenario as well.

In December, the HMRC announced QROPS would have the same flexibility as domestic pensions, but it just announced the opposite – although apparently only “temporarily”. My guess is that the HMRC has realized that the change it made in hopes of raising revenues from UK residents has had an unintended side effect.

The initial reason for changing the pension rules was to raise taxes from those with small pots that normally wouldn’t attract any tax due to the small drawdown limits. When the new flexibility for pensions remaining inside the UK system comes into effect this month, many people are expected to cash in the entire pot and for that one year move up into a high-tax bracket: 40%
collection on a pension from HMRC as opposed to 0%.

That’s great for raising revenue from UK residents, but it also creates a great opportunity for expats and one opportunity that the HMRC doesn’t want. As many jurisdictions were amending their QROPS legislation to simply follow whatever rules domestic UK pensions must follow, this allowed anyone deemed a non-resident for tax purposes to cash in their pension at taxation as low as 2.5%.

It seems that the HMRC didn’t realize the ramifications when it made the announcement in December, and is now scrambling to come up with a face-saving and revenue-raising solution. It is anybody’s guess where this will go next, and based on the recent history it is also up in the air how long any new rules they make will stay in place before the goalposts are moved again.

Getting your pension out of the UK into a low-tax jurisdiction while you still can is the most sensible thing to do, unless your pension is a small one. The new rules make it much more desirable to leave a five-figure pension in the UK unless you are already in a high-tax bracket from other UK-sourced income.

David Mayes MBA resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at david.m@faramond.com or 085-335-8573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Turbulence ahead for Thailand’s aviation industry | VIDEO

The Thaiger

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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Domestic air passenger numbers double those of January

Maya Taylor

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Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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Coronavirus (Covid-19)

Samut Sakhon’s shrimp market to remain closed until February 15

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Samut Sakhon’s shrimp market to remain closed until February 15 | The Thaiger
PHOTO: Kom Chad Luek

Samut Sakhon’s Central Shrimp Market, the epicentre of Thailand’s recent wave of Covid-19, will remain closed until February 15. The market can reopen once the overall hygiene situation at the market and surrounding area has improved, according to the province’s disease control committee.

Local officials say the shrimp market needs to remain closed until the market structure and nearby residential facilities are inspected. People who violate the order face up to a year in prison and a fine up to 100,000 baht.

More than 12,000 people in the province have tested positive for Covid-19. The increasing number of infections is a result from the active case finding to contain the spread of the virus.

SOURCE: Thai PBS World | Thairath Online

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