UK savings account

I am an Irish tax payer who has been on a contract in the UK for the past few years. I bought an apartment in the uK and will be selling it before it gets flooded!
It is my only property.

I have a savings account in the UK.
As the saving rates are so much higher in the UK and I'm not quite ready to splurge on a house back home-I will be leaving the lump sum in the UK savings account for a year or so .
Are there any legal issues I should be aware of ?
You must be a UK resident to open an account but next year I will not have an address in the UK.
Could it be tricky to get my money out if I'm no longer a UK resident!?

I will be paying the standard 20 % uk tax on the interest.
Technically I don't have to pay this again but I should declare the account for Irish tax purposes.Once I pay the dirt tax in the UK I'm covered right?

What about when I eventually transfer the money to my Irish account will the tax man come after me ? If I keep my pay slips I can prove where the money came from & I paid tax on the interest in the UK.
So I should be fine shouldn't I?
I'd prefer if the revenue don't find out the fact that I owned a property in the UK - because I'd lose my first-time-buyer status.


cheers

tara

tara mc adam said:

Are there any legal issues I should be aware of ?

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If you are an Irish taxpayer then you must declare this account/interest. The interest may be assessable for income tax rather than DIRT (20%). You may get a credit for any tax witheld in the UK. You probably need professional advice.

Once I pay the dirt tax in the UK I'm covered right?

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I don't think that this is necessarily the case.

Don't forget that while interest rates may be higher in the UK you are taking on currency fluctuation risk while saving there.

tara mc adam said:

I will be paying the standard 20 % uk tax on the interest.
Technically I don't have to pay this again but I should declare the account for Irish tax purposes.Once I pay the dirt tax in the UK I'm covered right?

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Don't take this as gospel, but as far as I know, as an Irish taxpayer you would be liable for income tax at your top rate for interest earned on overseas accounts. You would be credited with any tax paid to the UK authorities, but if you are on the Irish top rate, you would end up paying 41% on the UK interest.

tara mc adam said:

I'd prefer if the revenue don't find out the fact that I owned a property in the UK - because I'd lose my first-time-buyer status.

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If you claim first-time buyer status here when buying another property it would be tax evasion and you would be committing a criminal offence. You would be liable to prosecution and payment of interest and penalties which could end up as multiples of the tax you originally evaded. (By the way, if your real name is Tara McAdam, you'd better hope the Revenue don't read this site!)

It's also possible that you could be liable for PRSI on UK deposit interest but I'm not 100% sure.

Missed the bit about FTB status but agree with gonk - there is no legal way to claim FTB status in Ireland having owned a property elsewhere (unless you inherited it). On the other hand if you buy a new home as an owner occupier then stamp duty is irrelevant and apart from this you can also claim 7 years of owner occupier mortgage interest relief at the higher FTB rate in your situation so claiming FTB status may not be that important depending on what you are thinking of buying.

thankfully my name is not tara mc adam (tarmacadam- as i would have had a hard time in school!)
thanks for your advice so far - the currency fluctuation is a good point.
I have a limited understanding of this but I'm guessing the closer EU interest rates get to the UK , the stronger the euro will get relative to the pound.
I'm sure its way more complex than that!
But along with the taxation issues - you've definitely made me rethink.

I didn't know the FTB status was such a big deal - better be safe there too.
I'm back to square one - I'll have a lump sum in my uk account once I sell my flat. Where's the best place to put it for a year?

tara mc adam said:

I'll have a lump sum in my uk account once I sell my flat. Where's the best place to put it for a year?

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Over there - no idea. Over here - see the Financial Best Buys forum for the best deposit rates on offer.

Yes sterling rates are higher in the UK. You are now in the currency speculation business.

Thanks for your help guys
The deposit rates from the financial best buys section are better than expected.
I don't think its worth the hassle to keep my UK savings a/c.
I now have to investigate club man's post "if you buy a new home as an owner occupier then stamp duty is irrelevant"
thanks again

tara mc adam said:

I now have to investigate club man's post "if you buy a new home as an owner occupier then stamp duty is irrelevant"

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There's no real mystery to it - any owner occupier (FTB or non FTB) who buys a new build property (as long as it's under 125sqm floor area) is exempt from stamp duty. Over 125sqm and the rules get a little more complicated. Recent changes to the SD rules mean that FTBs buying second hand homes are exempt from SD but non FTB buyers are still liable unless the property costs €127K or less.

apologies - this thread is going off topic.
The 125sqm - is this basically an apartment?
I won't even consider an apartment so I'll be lumped with the stamp duty -oh well !

tara mc adam said:

The 125sqm - is this basically an apartment?

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Not at all. 125 sq. m. (1345 sq. ft.) would be a very big apartment by modern Irish standards. There would be plenty of new houses on the market which would come in under the size limit for stamp duty.

Even if the property is over 125sqm SD only actually becomes an issue in specific circumstances - see here:

If the area of the house or flat is greater than 125 sq. metres (1,346 sq. feet), some stamp duty is payable if the Chargeable Consideration is above the relevant exemption threshold. (The stamp duty is assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever is the greater figure. This figure is called the Chargeable Consideration.

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thanks again clubman & gonk
It looks like I didn't understand this stamp duty at all.
The excerpt in bold below,caught my attention
This is the first time I've heard of "Chargeable Consideration"
So If I get a new house - its the cost of the site (most likely dearer option) that counts not the full purchase price.
This is my last post here (hopefully) I've lead us off on a tangent! - Do any estate agents actually advertise the stamp duty cost of the house - because its not possible for us to know the site/building costs and make a calculation.
Also what is the cost of the site for the stamp duty calculation - todays market price or when the developer bought it?

"If the area of the house or flat is greater than 125 sq. metres (1,346 sq. feet), some stamp duty is payable if the Chargeable Consideration is above the relevant exemption threshold. (The stamp duty is assessed on eitheror 25% of the cost of the site plus the building costs (less VAT), whichever is the greater figure. This figure is called the Chargeable Consideration."

tara mc adam said:

So If I get a new house...

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Bear in mind that the rules above about chargeable consideration etc. are only relevant if the property you buy is (a) new and (b) over 125sqm in floor area. If you are unlikely to be in that position then you don't really need to understand/worry about the "SD on new builds over 125sqm" rules.

Do any estate agents actually advertise the stamp duty cost of the house

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They usually highlight if it is not applicable (to at least some buyers) but I would not bank on getting accurate tax advice from an EA.