I am a British national and have been a Hong Kong resident for almost 20 years. Upon relocating here, I continued to make National Insurance contributions. I recently found out that these payments lapsed some time ago as my bank account was overdrawn. I am wondering if it is worthwhile to bring the payments up to date or to stop paying. What are the benefits of continuing to make the contributions? If I do, could my claim to be domiciled outside of the United Kingdom be challenged?
Andrew Patrick
The amount and the length of your National Insurance contributions in Britain affects your entitlement to UK state pension. To receive full state pension, you need to have paid national insurance contributions for 30 years. If you have already done so, there may be no benefit in continuing. If you haven't, it would be wise to bring your contributions up to date and continue with them until you have made the requisite 30 years of contributions. Making National Insurance contributions in Britain should not, by itself, mean a claim to domicile outside Britain would be adversely affected.
I took out a life insurance policy 14 years ago for my son, who was a student in the US at the time. Now he is a green-card holder married to a US citizen. As he needs money now, I suggested he surrender his policy (the insurance company is based in US) and take the guaranteed cash value along with the bonus, which would amount to about US$50,000. Would it be taxable? If it is, should I get the money in my account since I had paid for the policy?
Kamal Sajnani
Both US citizens and holders of US green cards are subject to US tax on their worldwide income irrespective of where they live and how long they have lived there. On the face of it, your son will have to pay tax on the profits of the life insurance policy. There are exemptions for life insurance policy proceeds that he may be able to avail himself of, but without more information on the policy, it is not possible to comment further.
I am writing on behalf of a senior citizen, L.B. Poon. Mr Poon lived and worked in the UK for over two decades and wanted to return to Hong Kong after retirement. He came back to the city and lived here for two years from 2005 to 2007. In the UK, his local tax office told him that since he was a British citizen, there was no need to fill in yearly tax returns for those two years and he could do so once he returned to the UK. But during that period, the British tax authorities bombarded him with tax return forms and quite unpleasant letters at times. Mr Poon contacted them, explained the situation and promised that he would sort out everything once he returned. But after two years, he decided to stay here for good. In 2007, he gave up his British citizenship and passport and now has a HKSAR passport. He has no assets in the UK. The little pension he receives from his former UK employers is taxed at source. The UK tax authorities are aware of all these. Now, does he still have to declare everything to the UK authorities and fill in the yearly tax returns? Secondly, where does Mr Poon stand vis-a-vis those unfilled tax forms for 2005 to 2007? Thirdly, many years ago he took out an insurance policy in the UK. It is due to mature sometime soon. What should he do with the money - declare the amount to the UK tax office or here?