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Old 28.03.2013, 08:33
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Investing in UK ISA from Switzerland?

One for the Brits.

I know the rule: to invest in a UK ISA account, you have to be resident in the UK. (An ISA is roughly the UK equivalent to 3rd Pillar -- an annual opportunity to put a smallish sum into a tax-free savings wrapper.)

I have had a small windfall in the UK. Not much in the great scheme of things -- just under 10K UKP. The exchange rate is so poor at present that I don't want to transfer here, and yet the sum is too large to have sitting around in my UK current account for any length of time.

Ideally, I'd like to chuck it in my UK ISA stocks and shares account, but I'm not supposed to do this. So. Just wondering how naughty it would be to break this rule. I don't want to do something seriously illegal or underhand, but some rules are pretty much ignored, while others are taken seriously. Is paying into a UK ISA regarded with a smile and a shrug of the shoulders, or is it one of those things that could result in a punitive fine or having the sum seized by the Revenue?

Do any Brits here still use their ISA allowance on the QT?

I will be going back to the UK to live one day.

Thanks for any info / insight / advice.
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Old 28.03.2013, 09:16
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Re: Investing in UK ISA from Switzerland?

As far as I understand, unless you are a UK taxpayer, there is no tax advantage to investing in an ISA. Maybe you are one, though.

I have no idea about fines and such though.
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Old 28.03.2013, 09:43
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Re: Investing in UK ISA from Switzerland?

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Do any Brits here still use their ISA allowance on the QT?
I have tried this and got caught by the tax man.

HMRC tried to make the argument that since I had opened an ISA I must have considered myself a UK resident for tax purposes and I should pay tax on my worldwide income. My accontant made a good argument against this since the sums involved were small.

Overall, I would say the risks outweigh the benefits.
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Old 28.03.2013, 09:51
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Re: Investing in UK ISA from Switzerland?

As others have pointed out, an ISA only has tax advantages if you are a UK taxpayer. If you have money in ISA accounts that you invested in while you were still in the UK, you need to declare the interest and values for your Swiss income tax and wealth tax respectively.

Most UK ISA programs will not take deposits from anyone with a foreign address.

Since there is no tax benefit in investing in an ISA wrapper, you might as well follow the rules and invest the funds in a taxable account, either with your bank or with a brokerage if you want to go the stocks-and-shares route.

Lots of people here are happy with Interactive Brokers, if you're looking for the cheapest way into taxable stocks-and-shares dealing.
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Old 28.03.2013, 09:52
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Re: Investing in UK ISA from Switzerland?

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Overall, I would say the risks outweigh the benefits.
+1 to this, certainly not a stocks and shares ISA where there is so much more complications. If you have a cash ISA already open you might get away with sticking some cash in it every year but I would certainly not attempt to open one while you are residing in Switzerland as you are not allowed to open one.

Keep an eye on nsandi.com for their index linked certificates or premium bonds which are open to non residents and are tax free. Alternatively an easy access savings account or fixed term bond will return nearly as much as a Cash ISA as you would get interest net of income tax of course you have to declare that to the Swiss taxman but maybe you want to keep that on the hush hush
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Old 28.03.2013, 09:58
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Re: Investing in UK ISA from Switzerland?

I have an ISA in the UK and when I moved to Switzerland my bank froze the account. The cash is still there, it's just not getting paid the interest anymore. It's a small amount and it's not forever so I can put up with it.

If I was you I would talk to my banks about other investments. If you are genuinely resident in Switzerland there must be a few investments out there that are not too punishing from a UK tax perspective.
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Old 28.03.2013, 10:07
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Re: Investing in UK ISA from Switzerland?

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I have an ISA in the UK and when I moved to Switzerland my bank froze the account. The cash is still there, it's just not getting paid the interest anymore. It's a small amount and it's not forever so I can put up with it.
The account should not be frozen. Interest should still be paid. However, you are not allowed to pay any more money into the account.

http://www.hmrc.gov.uk/isa/faqs.htm#14
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Old 28.03.2013, 10:16
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Re: Investing in UK ISA from Switzerland?

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The account should not be frozen. Interest should still be paid. However, you are not allowed to pay any more money into the account.
FWIW, this is exactly the same with pension plans, if you choose not to move them to Switzerland. I have a UK SIPP, and I can still manage the funds within the SIPP but I cannot contribute any new funds.
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Old 28.03.2013, 10:19
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Re: Investing in UK ISA from Switzerland?

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The account should not be frozen. Interest should still be paid. However, you are not allowed to pay any more money into the account.

http://www.hmrc.gov.uk/isa/faqs.htm#14
Very correct.
But also note, if there have been no new deposits into the ISA for 12 months, the bank has to freeze it, meaning you cannot put any new money it, but you can withdraw / get interest. To unfreeze, need to fill in a 'reactivation' form and give it to the bank.
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Old 28.03.2013, 10:30
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Re: Investing in UK ISA from Switzerland?

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Very correct.
But also note, if there have been no new deposits into the ISA for 12 months, the bank has to freeze it, meaning you cannot put any new money it, but you can withdraw / get interest. To unfreeze, need to fill in a 'reactivation' form and give it to the bank.
I have old PEP's that became ISA's, I can still administer them.
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Old 28.03.2013, 10:49
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Re: Investing in UK ISA from Switzerland?

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I have old PEP's that became ISA's, I can still administer them.
Just remembered the old TESSA's, they were great.
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Old 28.03.2013, 10:57
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Re: Investing in UK ISA from Switzerland?

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Just remembered the old TESSA's, they were great.
Problem with a Tessa is that it could not be rolled over.
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Old 28.03.2013, 11:09
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Re: Investing in UK ISA from Switzerland?

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Problem with a Tessa is that it could not be rolled over.
True, but they were a fantastic incentive to get onto the property ladder in the early naughty's once matured. Pity the youth of today do not invest and save with the current ISA's available, they would rather buy the next gadget.
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Old 28.03.2013, 12:35
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Re: Investing in UK ISA from Switzerland?

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I have tried this and got caught by the tax man.

HMRC tried to make the argument that since I had opened an ISA I must have considered myself a UK resident for tax purposes and I should pay tax on my worldwide income. My accontant made a good argument against this since the sums involved were small.

Overall, I would say the risks outweigh the benefits.
This is actually a very important point for both UK and ROI citizens, although both revenue services normally apply the simple 180 days test for residency there is in fact an array of other tests they can use! Even worse for UK citizens is that the IR have stated that they intend to make more frequent use of those tests, in a practice note.

Now I doubt that this will result in many people having to pay extra taxes, but it could cost time and accountant fees to get it sorted out. And continuing to operate an ISA is a good example of the kind of thing that can cause problems.
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Old 28.03.2013, 13:13
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Re: Investing in UK ISA from Switzerland?

Buy Premium Bonds with it, you never know you might win the £1M prize. But you will have to pay tax on the win in Switzerland.
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Old 29.03.2013, 10:02
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Re: Investing in UK ISA from Switzerland?

Would that be possible Bichon? I've had a look at the T&C for the bonds and they don't say you have to be a UK resident, but they do undertake anti-moneylaundering security checks so I wonder if a Swiss address would preclude the possibility. Given that they're UK tax free I suspect only UK residents would be able to purchase them, but the T&C doesn't specify this.
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Old 29.03.2013, 12:37
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Re: Investing in UK ISA from Switzerland?

I do not believe that anyone but a UK resident can purchase Premium Bonds. If you had them prior to leaving the UK you can transfer them to a Swiss address as was our case.
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Old 31.03.2013, 10:54
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Re: Investing in UK ISA from Switzerland?

Thanks, everyone. Some very useful points, in particular the one about ISA contributions being taken down and used in evidence by the UK taxman when it comes to residency status.

On balance, I've realised this not a good idea, and will not try adding to my existing UK ISA.

A couple of points:

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As far as I understand, unless you are a UK taxpayer, there is no tax advantage to investing in an ISA. Maybe you are one, though.
In the short term, no, but my ISAs are long term investments, so at some point in the distant future, if and when I return to the UK and want to withdraw the ISA proceeds, UK tax would become a consideration.

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I have tried this and got caught by the tax man. HMRC tried to make the argument that since I had opened an ISA I must have considered myself a UK resident for tax purposes and I should pay tax on my worldwide income.
Great point, thanks.


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...Since there is no tax benefit in investing in an ISA wrapper, you might as well follow the rules and invest the funds in a taxable account, either with your bank or with a brokerage if you want to go the stocks-and-shares route.

Lots of people here are happy with Interactive Brokers, if you're looking for the cheapest way into taxable stocks-and-shares dealing.
I do have a UK-based brokerage account for non-ISA stocks and shares. I've heard good things about IB but already have an account with SwissQuote who match my (modest) trading needs while in CH. Thanks for the info though.

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I have an ISA in the UK and when I moved to Switzerland my bank froze the account. The cash is still there, it's just not getting paid the interest anymore. It's a small amount and it's not forever so I can put up with it.
As others have said, that doesn't sound right. An existing cash or S&S ISA should still operate as normal with deposits made while you lived in the UK. Where you subsequently move to should not affect that.

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FWIW, this is exactly the same with pension plans, if you choose not to move them to Switzerland. I have a UK SIPP, and I can still manage the funds within the SIPP but I cannot contribute any new funds.
Depends on how long you've been non-UK resident. I believe you can contribute to a SIPP for up to 5 years after leaving Blighty, and still get tax relief on anything up to 3,600 UKP.

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Buy Premium Bonds with it, you never know you might win the £1M prize. But you will have to pay tax on the win in Switzerland.
No thanks! There is a tiny chance you'll win the jackpot but the stats show that on average, your winnings amount to about 2.5% interest. Unless you have a big win, you are actually losing money in real terms with Premium Bonds.

Looks like my best option is to pay the sum into my standard stocks and shares account.
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