Thailand-UK Double Tax Agreement (DTA): Tax Planning Essentials for British Expats

In this video, Carl Turner is joined by special guest Peter Ferrigno to discuss how the Thailand-UK Double Tax Agreement (DTA) impacts tax on foreign-sourced income in Thailand. This insightful discussion is designed to help British expats with tax and financial planning and provide them with the necessary knowledge to adapt to the new Thai tax rules.
Peter Ferrigno is an award-winning Chartered Tax Adviser and Chartered Accountant with extensive experience in cross-border tax issues, and his expertise provides valuable perspectives on managing international tax obligations.
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00:00 Intro
00:42 Introducing Peter Ferrigno
01:42 Disclaimer
01:56 Today’s agenda
02:33 Purpose of a Double Tax Agreement
03:16 Introduction to the Thai-UK DTA
03:55 Clarifying Thailand Tax Changes Announced in 2023
05:34 Who is affected by the Thai tax changes?
06:05 What is taxable foreign-sourced income in Thailand?
06:28 What isn’t taxable in Thailand?
08:22 Thailand-UK DTA Common Misconceptions
13:12 Tax Credits Explained
14:45 General DTA Principles
16:16 Overview of UK assets and how they are taxed in the UK
17:56 How pensions are taxed in the UK
20:53 How UK pensions are taxed if remittedto Thailand
23:10 Pension case studies
23:50 Case Study 1 - UK State Pension
26:26 Case Study 2 - Final Salary Pension, Income Drawdown & Annuity
30:03 Case Study 3 - Pension Commencement Lump Sum (PCLS)
32:58 Free Tax Calculation Service
34:09 Case Study 4 - Income from Property Rental
42:44 Case Study 5 - Capital Gains on Investments
48:25 Tax on a UK property sale
51:26 Tax on dividends
51:52 Tax on Overseas QROPS
52:32 Tax on QNUPS
52:44 DTA tips and advice
57:21 Thailand tax filing threshold
50:07 Less than 180 days in Thailand
1:01:33 Calculating tax because Thailand and UK tax years don’t match.
1:03:49 Medical Insurance Allowance
1:04:14 Will the Revenue Department send me a tax return?
1:05:01 Capital Gains
1:05:30 Tax on ISAs
1:06:19 Will Immigration ask for tax returns?
1:08:14 Foreign Currency Account in Thailand
1:09:06 Outro
Disclaimer: The information in this video is for informational purposes only and is not intended as professional tax advice. It provides general guidance on tax matters and should not be the sole basis for making personal tax decisions. Tax situations vary greatly and tax laws may change. We strongly advise consulting with a qualified tax advisor for advice specific to your situation.

[@ExpatTaxThailand]

Thank you for watching. We're sorry, we are unable to answer questions in the comments. If you have a follow-up question, please use the link on the website www.expattaxthailand.com/ask-a-question/, book a call, or send us an email.

[@howardsmith8723]

By far the best information I have seen on this topic for UK nationals.

[@cliffordbaines7195]

Very informative on a 15 minute chat

[@greigfrost290]

Good review of the dta. I'm no tax expert but for uk rental income under Article 7 of the DTA it states 'Income from immovable property may be taxed in the Contracting State in which such property is situated'. Seems to imply taxed in the UK to me and not Thailand?

[@user-zg1qb9rs8m]

can you try to record in better quality?

[@georgecow2734]

So can give me advice on earn 20.000 in UK from property then pay tax in UK. Will be any to pay in Thailand if I bring money here

[@turtlex5994]

It depends on how much UK tax you have already paid on it and what your tax rate is in Thailand but, yes, rental or cap gains from overseas property is assessable for Thai tax, if remitted to Thailand. IF you remit rental income at regular intervals of less then one year, you will have to file a mid year PND 94 as well as the year end PND 91 tax return.

[@turtlex5994]

One thing to take into account is that the Thai Revenue Code has oddly never been amended to take into account the many DTAs since it was promulgated. That means that, not only are there no specific regulations as to how to apply DTAs but that there is a very thin legal basis for applying the DTAs to PIT in domestic law at all. So far there is just one very basic ruling that even suggests DTAs can be applicable in domestic law. I know that international treaties take precedence over domestic statutory law but there should normally be some domestic linkage to confirm that they are applicable and how which is totlly absent in this case. This is likely to result in some bizarre and inconsistent individual interpretations by RD officers, particularly in remote areas where some expat retirees live. Understanding Thai law is more than just reading the English translations and making ones own assumptions based on that.

[@michaelleiper]

Should highlight that Hong Kong specifically does have a double taxation agreement with Thailand. And on the Thailand/Hong Kong DTA, pensions are only taxable in the source country. - a Hong Kong pension is only taxable in Hong Kong. Now I'm not sure if any current Hong Kong pension schemes are still QROPS (government website is not clear on that), so I don't know if you can transfer assets from a UK pension into a Hong Kong one without paying the UK government significantly more than Thailand would ask you for. But if you've built up a pension in Hong Kong from working there, or transferred it to Hong Kong back when Hong Kong schemes were QROPS - it is exempt from income tax in Thailand. One thing. I would have wanted to ask.. the 220K reporting requirement. Is that on a remittance of 220K, or on a remittance of income that is taxable of 220K. (i.e. If I remitted 300K, but it was from a capital gain of 50%, so 200K of capital and 100K of gain, then only 100K would be taxable - would I report because the 300K transferred is over the 220K limit, or not report because the 100K taxable component of the remittance is under the 220K limit)?

[@turtlex5994]

Section 18 of the Hong Kong DTA says that pensions are taxed in the contracting state where the recipient is resident but subject to certain exceptions.. This seem to be pension rights earned while working in HK that were HK tax exempt at the time. I guess that refers to the QROPS you mention. No idea about the remittances in and out you mention. I guess it needs to be extremely plain vanilla to pass a Thai RD officer who has simply no clue about any of the treaties and will just make an arbitrary judgement.

[@michaelleiper]

@@turtlex5994 QROPS is a British HMRC "thing" - 'qualifying recognised overseas pension scheme' - where you can transfer assets to it from a UK pension fund without a withholding tax. Otherwise a transfer of pension assets would carry (I believe) a pretty hefty 35% withholding tax on transfers if it's to a scheme that is not still classified as QROPS (i.e. acceptable to the UK government). HK has schemes that were QROPS in the past, but it's very hard to tell if they would still be eligible for the withholding tax free transfer of assets any more. If, as you suggest, the second part of Section 18, only covers pensions built up by people working in Hong Kong, and doesn't cover pension assets transferred to Hong Kong by someone from another country, that would, indeed, make my suggestion of a QROPS transfer to Hong Kong irrelevant for Thai tax purposes. Personally, I'm currently working in Hong Kong. I have a pension built up in the UK (from years working in the UK), along with a pension built up in Hong Kong (from years where I was employed in Hong Kong previously as well as my current time here) - all from the same employer... - with currently about the same amount of pension assets in each - but I'm obviously only adding to my pension in HK at the moment - which seems to be the better option financially because of the better tax treatment of HK pensions... I'm paying into a HK government approved scheme for employees (an ORSO scheme - the other type available here is called an MPF scheme), so I'm pretty sure I'm covered by the second part of section 18 even if people with a QROPS aren't. I believe Hong Kong tends to put pensions in their double taxation agreements because, pretty much unlike every other country, you pay into your pension out of taxed income, but it's not taxed, at all, when you're withdrawing it, so HK pensioners would be especially badly hit by taxes where there was no double taxation agreement covering their pension income (taxed on the way in AND on the way out). I've already got confirmation from HMRC in the UK that my HK pension would not be taxed in the UK (because of the UK-Hong Kong double taxation treaty) - as at least when I start my retirement, my wife (who is Thai - but we met in London) and I are planning to spend winters in Thailand, and summers in the UK. - so I believe we're more likely to be tax resident in the UK initially (and if we're still doing that at state pension age - our UK state pensions won't be frozen - until we start spending the majority of our time in Thailand).

[@sohantanna625]

Are you based in Hua Hin? I saw a lot of ads in various shops here

[@turtlex5994]

At 14:19 he says that, if you received 20K income in the UK and paid 2k UK tax on it and remit the net amount of 8K to Thailand, you will have to declare the gross amount of10K on your Thai tax return and pay tax on that after deducting the UK tax credit. This is not correct because the Thai Revenue Department only considers foreign source income remitted to Thailand as assessable income. Since the 2K paid in UK tax was not remitted to Thailand, it is not assessable and you don't need to declare it, unless you feel particularly generous.

[@samhavoc1066]

All this does is confirm that I won't go live somewhere if I'm going to pay double income tax to do it. I will spend my money somewhere else.

[@The_Blueyonder]

I don't pay UK tax on my pensions and just won't pay any Thai tax on my other incomes. As long as the UK freezes our pensions I will avoid tax. When I work abroad I, like others will now be paid in cash. There's many ways to bring money into the country to avoid notice.

[@michaelleiper]

So your ploy is to break the law. And announce that you're going to do it on a comment on KZbin. The simple fact is they have stated they won't tax loans. So spend on a home country credit card. Take out cash on a credit card. - That's always going to be a loan, and so exempt from tax. Admittedly the charges for taking out cash on a credit card in Thailand are quite high, so it might actually be better to just take in a certain amount of money... But spending on a card - double-check the charges before doing this - will be effectively tax-free. Then you pay off the credit card in your home country with money never remitted to Thailand. I fully expect them to turn around and close that credit card loophole at some point, but it's unlikely to be this year... Also, depending on which country you're working in, if you're working outside Thailand, check the DTA for the country where you're working. For instance the Thailand-Hong Kong double taxation agreement says pensions are only taxed in the source country - so if you build up a Hong Kong pension it's not liable to tax in Thailand (or the UK - under the Hong Kong/UK DTA). I would highlight if you're working abroad in the oil industry. i.e. doing 4-on / 4-off and living in Thailand in your 4-off, because your travel days come out of the 4-off, you're probably not going to spend 179 days in Thailand in the tax year (or if you are - take a week's holiday somewhere), so you generally wouldn't be a tax resident of Thailand.

[@Kernowking101]

So if I moved to Thailand tomorrow and transferred £300k in the first 6 months of living there. Is tax due for that money in Thailand or am I only eligible to pay tax once I have lived there for over 6 months?

[@turtlex5994]

If you moved to Thailand tomorrow, you would become a tax resident in 2024 because you would be resident for over 180 days in the tax year which is 1 Jan to 31 Dec. If you moved after 1 July, you would not become a tax resident in 2024. So you could remit as much as you like tax free in 2024 as you would become a tax resident only in 2025. Even if tax resident, you are not liable on remittances of foreign source income earned before 1 Jan 2024 as a one off concession.

[@user-ql9vu3zg3n]

@@turtlex5994You still have to be tax resident in some Country. In their Vid titled Double Tax Agreements For Expats In Thailand posted 1 month ago at 53.30 the woman says if your not tax resident in any other Country Thailand Tax as if you was a tax resident on any money you transfer to Thailand regardless of how many days you are in Country.

[@johnforrest4373]

Don't enter Thailand till after the 5th July to avoid being tax resident

[@joepaluka9031]

Interest discussion. Easiest way is not to become tax resident.

[@michaelleiper]

If it was tomorrow - and you couldn't prove the money came from the sale of assets, or money you already held before the start of January 2024. Then you'd be liable to tax on it. But if you did it in July (6th or later), so that you didn't spend more than 179 days in Thailand in this tax year (Thailand tax year is January-December, not April 6 to April 5), then you wouldn't have to pay anything. Because you would fail to be tax resident in Thailand in the current tax year.

[@georgecow2734]

Not really a lot of help dame as other I've watch

[@stumpytkd1774]

All the money I remit to Thailand is from savings and inheritance! How do I prove inheritance!

[@michaelleiper]

Copy of the will from the executor, ideally highlighting your personal inheritance amount. At least that usually works when needing to prove a source of income for "know your client" rules for people doing things like getting a mortgage - when explaining the source of the deposit.