UK savings While abroad

[Scuff_]

Hi,
My brother is currently working in Australia and has transferred a Lump sum back to his UK account to put away for his (possible return). He will continue to send money back on occasion and has asked me to put this in savings for him.
Given he is not a UK tax payer currently, can he claim tax relief on the savings, the amount exceeds his annual ISA allowance (which i'm planning to open for him) so we are looking at conventional notice and instant access accounts.
The Rates in Aus look a lot higher, however he will pay 40% on any tax and I suspect there is an eliment that if he sends it back, he can't touch it so savings in AU are not really in question.

thanks,

[Eric Mc]

If he is properly a non-UK tax resident (i.e. he fulfills all the usual non-tax residence criteria), he should not be liable to BOTH UK and Australian tax on the interest. However, he probably needs to ensure he notifies the Australian Tax authorities of his UK interest income where he will become liable to Australian tax on that income. However, he will get a credit against his Australian tax liability on this interest for the UK tax he has already paid at source on it.

[LC23]

http://www.hmrc.gov.uk/pdfs/uk-australia-dtc.pdf

Article 11 of the UK/Australia double tax treaty. Assuming he is resident in Australia and non resident in the UK, UK tax is limited to 10%. He also needs to check if Australia tax on non Australian source income. As Eric says, if so then he will get credit for the UK taxes.

He could look to hold his investments outside the UK and Australia. This would move it outside the UK tax net as a non UK tax resident - it's an investment decision though and he should take advice on this.

Edited by LC23 on Wednesday 8th September 21:40

[cannedheat]

Scuff_ said:

Given he is not a UK tax payer currently, can he claim tax relief on the savings, the amount exceeds his annual ISA allowance (which i'm planning to open for him) so we are looking at conventional

You need to be a UK resident or Crown employee living abroad in order to open an ISA so if he's a non-UK tax payer and living abroad, you won't be able to open an ISA.