Converting capital to income

[stockton]

One consequence of BREXIT is that some of us may need a substantially increased nominal income in order to keep our foreign paperwork in order.
The best solution that I have thought of to date has been to engage in repeated "dividend washing" to create that income.
Has anyone got any better ideas ?

[TUK020]

One consequence of BREXIT is that some of us may need a substantially increased nominal income in order to keep our foreign paperwork in order.
The best solution that I have thought of to date has been to engage in repeated "dividend washing" to create that income.
Has anyone got any better ideas ?

Somewhat tongue in cheek:
HFEL, IMB?

[dealtn]

One consequence of BREXIT is that some of us may need a substantially increased nominal income in order to keep our foreign paperwork in order.
The best solution that I have thought of to date has been to engage in repeated "dividend washing" to create that income.
Has anyone got any better ideas ?

Can you rephrase the question? I have no idea what the issue is, nor whether the downsides to your "solution" are important to you.

[richfool]

One consequence of BREXIT is that some of us may need a substantially increased nominal income in order to keep our foreign paperwork in order.
The best solution that I have thought of to date has been to engage in repeated "dividend washing" to create that income.
Has anyone got any better ideas ?

Yes, buy into a couple of the highest dividend paying shares or IT's, take the income and don't worry about the capital, which may "ebb" away or may even grow. E.g.'s LGEN, BSIF, HFEL, ASEI, GSF.

[Lootman]

One consequence of BREXIT is that some of us may need a substantially increased nominal income in order to keep our foreign paperwork in order.

What foreign paperwork? Why does that require more income? What does Brexit have to do with that? What tax effect concerns you? What is the problem with capital?

[scrumpyjack]

Dividend washing is an almost guaranteed expensive money waster, with commissions, market spreads, stamp duty etc creating an enormous headwind.
Really not a good idea at all! If you haven't got enough income, just spend some capital. It is an arbitrary distinction.

[stockton]

To explain.
I own a house in the EU. To visit that house for more than 90 days in 180 one needs a residence permit, although in reality I am only a long-term tourist.
To obtain and maintain a residence permit one needs to demonstrate an income of an amount which is difficult to determine, but could well be significantly above my current income. The permit process has no interest in capital.
It is consequently appropriate to find a way to generate income.

"Dividend washing" seems to be a reasonable way to create that income and, if one used the US market, I would expect it to be marginally profitable although rather a waste of time. However there may be better ways of achieving the same result.

[Arborbridge]

One consequence of BREXIT is that some of us may need a substantially increased nominal income in order to keep our foreign paperwork in order.
The best solution that I have thought of to date has been to engage in repeated "dividend washing" to create that income.
Has anyone got any better ideas ?

Can you rephrase the question? I have no idea what the issue is, nor whether the downsides to your "solution" are important to you.

I'm glad you asked that

This post is complete gobbledegook. Neither sentence conveys any clear meaning whatsoever, except to the writer, I suspect.

[Arborbridge]

To explain.
I own a house in the EU. To visit that house for more than 90 days in 180 one needs a residence permit, although in reality I am only a long-term tourist.
To obtain and maintain a residence permit one needs to demonstrate an income of an amount which is difficult to determine, but could well be significantly above my current income. The permit process has no interest in capital.
It is consequently appropriate to find a way to generate income.

"Dividend washing" seems to be a reasonable way to create that income and, if one used the US market, I would expect it to be marginally profitable although rather a waste of time. However there may be better ways of achieving the same result.

Would income from shares even count as "income" for the EU purpose?

[richfool]

To explain.
I own a house in the EU. To visit that house for more than 90 days in 180 one needs a residence permit, although in reality I am only a long-term tourist.
To obtain and maintain a residence permit one needs to demonstrate an income of an amount which is difficult to determine, but could well be significantly above my current income. The permit process has no interest in capital.
It is consequently appropriate to find a way to generate income.

"Dividend washing" seems to be a reasonable way to create that income and, if one used the US market, I would expect it to be marginally profitable although rather a waste of time. However there may be better ways of achieving the same result.

Is it sufficient to show the income as credits to a bank account (on a bank statement), or would you have to show the source? If so, could you just recirculate capital (from a savings account or wherever) into your bank account, and then draw it out and put it back where it started and repeat.

Failing that, for the highest dividend yields, take a look at: BIPS, NCYF, SMIF, which currently yield between 6% and 8%. Your capital would be at risk!

https://citywire.co.uk/funds_insider/in ... ePeriod=12

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

https://www.hl.co.uk/shares/shares-sear ... ncome-fund

https://www.hl.co.uk/shares/shares-sear ... td-ord-npv

[scrumpyjack]

Presumably you would then become tax resident in that country and subject to their income and capital gains tax? If so you might end up paying a lot more tax than you would in the UK as most countries in the EU tax dividends more highly. Also any income in your ISA would also become taxable in that country as other countries do not recognise UK ISAs as a tax shelter. Maybe just stay there just under half the time and not be resident?

[stockton]

To cover some points in the recent posts:
Income is income, and the easy way to accredit income is via a tax return which consolidates various sources.

The residence bit is complicated. To stay more than 90 days (and the British winter tends to be more than 90 days) in the EU you need some sort of visa or permit, and the appropriate document in many cases is a residence permit. It is apparently simply a permit and, in principle, does not require residence.

Simply circulating capital is probably possible but I would view it as less satisfactory than dividend washing.

[dealtn]

To explain.
I own a house in the EU. To visit that house for more than 90 days in 180 one needs a residence permit, although in reality I am only a long-term tourist.
To obtain and maintain a residence permit one needs to demonstrate an income of an amount which is difficult to determine, but could well be significantly above my current income. The permit process has no interest in capital.
It is consequently appropriate to find a way to generate income.

"Dividend washing" seems to be a reasonable way to create that income and, if one used the US market, I would expect it to be marginally profitable although rather a waste of time. However there may be better ways of achieving the same result.

OK, so nothing to do with Taxes then, which is where you chose to post, adding to my confusion.

My "better idea", and presumably one that you considered and dismissed as less good than yours of dividend washing, is to get a part-time job doing something I enjoyed - or to monetize a hobby in a small way - to create additional income in a non-painful way.

[stockton]

OK, so nothing to do with Taxes then, which is where you chose to post, adding to my confusion.

My "better idea", and presumably one that you considered and dismissed as less good than yours of dividend washing, is to get a part-time job doing something I enjoyed - or to monetize a hobby in a small way - to create additional income in a non-painful way.

Given that the requirement is to fill a particular box on a tax return it seems that my question is most appropriate to the Taxes board. Do you have a better idea ?

And as to a part-time job I suspect you are underestimating both the amount of income which may be required, and the number of people who are likely to have the same problem.

[dealtn]

OK, so nothing to do with Taxes then, which is where you chose to post, adding to my confusion.

My "better idea", and presumably one that you considered and dismissed as less good than yours of dividend washing, is to get a part-time job doing something I enjoyed - or to monetize a hobby in a small way - to create additional income in a non-painful way.

Given that the requirement is to fill a particular box on a tax return it seems that my question is most appropriate to the Taxes board. Do you have a better idea ?

And as to a part-time job I suspect you are underestimating both the amount of income which may be required, and the number of people who are likely to have the same problem.

Well given this is a "practical" board, and you are seeking help, my underestimate on either count, if true, is solely down to you providing no information. Can you elucidate?

[stockton]

The income typically required for a couple of third country citizens to obtain an EU residence permit is about 1700 euros per month. There are many retired British citizens living in Europe who do not have this level of income and do not know whether they will be expected to demonstrate such an income at some time in the future.
There are also others who have not, for one reason or another, do not yet have their paperwork in order.

[Kantwebefriends]

Why not buy a temporary annuity?

[stockton]

Why not buy a temporary annuity?

Thanks. I never knew such things existed so it looks to be well worth investigating further.

[gryffron]

Do you or spouse qualify for dual Irish nationality? I think you have to have drunk a pint of Guinness at least once. Or any other EU nation?

Gryff

[Lootman]

Why not buy a temporary annuity?

Thanks. I never knew such things existed so it looks to be well worth investigating further.

You might also take a look at the wreckage of the once-popular split capital investment trusts.

In their heyday (20 odd years ago) they were useful vehicles for choosing how to get return. You could avoid income if that was your goal, by holding capital or zero dividend shares. Or emphasise income by using income or so-called annuity shares.

But I haven't looked at that sector in a few years now and so am not sure if there is still a reasonable choice of vehicles.

There are also some regular ITs that pay out part of their capital each year as income, boosting the dividends at the expense of growth.