Transfer MPF to UK Scheme?

[Michael Tsang]

As a HK resident planning to emigrate to the UK, we are only allowed to withdraw the MPF after I emigrate there and get an address. That means when I withdraw it I'll probably be a UK resident in terms of tax residency and incurring UK tax.

In such case, how is the UK tax calculated? Is there any manipulation I can do before emigrating in order to minimise my tax bill?

[Pauljoecoe]

As a HK resident planning to emigrate to the UK, we are only allowed to withdraw the MPF after I emigrate there and get an address. That means when I withdraw it I'll probably be a UK resident in terms of tax residency and incurring UK tax.

In such case, how is the UK tax calculated? Is there any manipulation I can do before emigrating in order to minimise my tax bill?

Not sure if it is different if you are a permanent HK resident/have HK nationality/passport and are emigrating. I am a British National and was working in Hong Kong. So for me I applied for your MPF to be paid to me while in Hong Kong. You don't need a UK address for that I don't think. Or did I? hmm...trying to remember now - maybe you have to put it on the oath/declaration thing to say you are leaving Hong Kong for ever. Do you have an address in the UK you can use - friend/family?

I left a couple of weeks ago. The MPF could be either transferred to my bank account in HK (if it was a sole name account) or sent as a cheque. As my account was a joint one (with my wife) I had to have a cheque and got it sent to a friend in HK (no point in a cheque in the UK!) They paid it into the HK bank for me.

As for tax - well, Hong Kong earnings are not taxed in the UK as they are taxed in Hong Kong. I assumed MPF would also not be taxable in the UK as this is part of my Hong Kong earnings. I would be interested to know if that was not the case.

[wanderer01]

the key differentiation here is where are you a tax resident for when you earn or get that income.

Person A: UK Passport Holder, but not residing in UK (i.e no tax residency in UK) - Any income earned outside of the UK is tax exempt from UK taxation ... so anything you earned in HK "during the period you were not a resident in UK" will not be taxed by UK.

Person B: UK Passport Holder, with a tax residency in UK (see HMRC for specific rules that establishes tax residency in UK) - World Wide income needs to be declared to HMRC and applicable tax to be paid. Declaration is voluntary, but if you do get audited or "found out" then you start shitting bricks depending on the amount you did not disclose.

Person C: Not a UK Passport Holder, but a "resident in UK" - Same rules as Person B above.

[Pauljoecoe]

the key differentiation here is where are you a tax resident for when you earn or get that income.

Person A: UK Passport Holder, but not residing in UK (i.e no tax residency in UK) - Any income earned outside of the UK is tax exempt from UK taxation ... so anything you earned in HK "during the period you were not a resident in UK" will not be taxed by UK.

Person B: UK Passport Holder, with a tax residency in UK (see HMRC for specific rules that establishes tax residency in UK) - World Wide income needs to be declared to HMRC and applicable tax to be paid. Declaration is voluntary, but if you do get audited or "found out" then you start shitting bricks depending on the amount you did not disclose.

Person C: Not a UK Passport Holder, but a "resident in UK" - Same rules as Person B above.

Nice clear summary!

Just a little additional question though. If you return to the UK and become a Tax resident in the UK again and transfer HK earnings from HK to UK later, once settled as a UK resident, is that still exempt as it was earned in HK before you returned?

I’m assuming the answer is yes, it’s just that if HMRC started looking into your finances they might see reasonably large sums entering your bank account from abroad and question them?

[bdw]

Just a little additional question though. If you return to the UK and become a Tax resident in the UK again and transfer HK earnings from HK to UK later, once settled as a UK resident, is that still exempt as it was earned in HK before you returned?

In my mind, it is exempt. But you may need to prove this fact and provide an explanation as to the source of funds. For example, if you deposit GBP 100k from overseas into you UK bank accout, it could raise some eyebrows and you might need to explain the source of the funds. If you tell them that you worked in HK for 20 years before becoming a UK resident, this was your HK savings and MPF generated over this 20 years, you have now decided to move it from your HK savings account to your UK savings account, then I think this would be a satisfactory explanation and you would not be required to pay tax on this. If they were arseholes, you might need to show proof you've been living overseas for 20 years, employment contracts, visas. etc.

But alternatively if you deposit the same 100k, eyebrows raised, explanation requested, but this time tell tell you just sold a property in HK and this was the proceeds from sale of asset, then you will probably have to pay capital gains taxes on this. You will have to provide evidence how much you purchased the property for, how much you sold it for, etc and they will screw you in taxes.

This is all my laymans understanding. I'm in a similar situation at the moment having moved back recently (to Aus not UK but still same overall concepts) and just doing my Aussie taxes for the first time now actually is doing my head in. But I'm not declaring any money transfers as I genuinely don't believe I have to, if I make an honest mistake I don't think the penalties are high as long as it is an honest mistake.

[wanderer01]

This page might help: https://www.gov.uk/government/public...nce-basis-rdr1

Has details on overseas pensions, capital gains, etc.