How to retire to Thailand – and navigate tricky expat property rules

South-east Asian country’s rich culture is a major draw but UK expats should do their research, reports Alexa Phillips

With its warm climate, affordable cost of living and rich culture, Thailand could be a tempting choice for those who want to retire somewhere that offers something a little different to the usual pensioner hotspots in Europe.

Known for excellent standards of healthcare, stunning beaches and natural scenery, Thailand also has a sizable community of British expats who can help new arrivals settle in.

Some of the most popular destinations are Bangkok, Phuket and Chiang Mai. Making the move isn’t always straightforward, however, and it’s important to make appropriate financial arrangements before you relocate – from taxes and visas, to pensions and property prices.

How much money do you need to retire in Thailand?

If you are classed as a “wealthy pensioner” under the Thai visa system, you may be able to get a 10-year long term residents (LTR) visa.

Only over-50s can qualify and you must have an annual pension or stable passive income of at least 2.9m baht (£65,600) a year at the time of application. Eligible income sources can include your pension, capital gains, rental income and dividend income – salary income is not included. If your income is less than this, but more than £33,000, you may qualify on the proviso you invest at least £205,000 in Thai property, Thai government

Thailand has great beaches and scenery, along with high standards of healthcare

bonds or foreign direct investment. Alternatively, you can apply for a non-immigrant O-A visa, which initially grants you a one-year stay. You will need to be at least 50 to be eligible, according to the Thai embassy in London, and employment is strictly prohibited. Each year, you will need to apply for a further year’s stay.

You will need financial evidence showing monthly income of not less than £1,650 per month, or a savings balance of at least £20,000.

What happens to your pension?

If you move to Thailand and you have a British pension, it will be taxed in the UK when you take money out of it.

Philip Teague, executive director at Cross Border Financial Planning, recommends keeping a UK bank account open while you are abroad, because it can be difficult to get pension providers to pay into an overseas account. If they do, a common issue is for pension funds to refuse to do monthly payments, and instead they will only make payments quarterly or every six months.

How you will be taxed in Thailand

Thailand isn’t specifically a low- tax jurisdiction, but until recently there was a gap in the remittance rules, meaning that earnings from a previous year weren’t taxed if brought into Thailand in a later year.

Peter Ferrigno, director of tax services at Henley & Partners, says this rule is changing to bring it into line with other countries, so “it isn’t totally clear what the exact position will be”.

He says: “The tax change applies to remittances not earnings, and so with the cost of living being relatively low, and tax rates being progressive, the net tax cost to sustain a certain lifestyle may still be low.

“Thai tax residency only applies if someone is in the country for over 180 days in the tax year, so someone being there part of the year without locally sourced income wouldn’t have any Thai tax to worry about.”

After a personal allowance of £1,400, the top rates cut in at quite a high level compared with the cost of living.

Income below £22,800 is taxed on a sliding scale up to 20pc. You pay 25pc up to £45,600 and 30pc above that. The top rate of 35pc is charged on income above £114,000.

Savings interest and dividends are taxable, but at a lower rate if the income is from Thai sources.

Ferrigno says that capital gains are also taxable, but with an exemption for locally listed shares and securities.

As for inheritance tax, anyone who comes into the scope can expect to pay a significantly lower rate than they would in Britain. Farrigno says: “Inheritance tax rates are low ( 10pc, 5pc for direct descendants, and exempt between spouses), but for someone that remains UK domiciled that won’t necessarily be a benefit as there isn’t a significant nil-rate band.”

How to buy Thai property

Non-residents can buy apartments, but can’t make up more than 40pc of the building’s total unit owners, according to the bank Wise.

Foreigners are not allowed to directly purchase land on which buildings are built – and the only way around this is to set up a private limited company that is partly owned by a local. The company can then be used to buy properties.

Alternatively, you can rent land on a long-term lease – for example, 30 years – and build a home on it, you just won’t be the owner of the land itself.

If you decide to use a Thai estate agent to help you find a property, note that there’s no regulation or training requirements to enter the profession. If possible, choose an agent based on personal recommendation.

Getting private health insurance in Thailand

Retirees must have a comprehensive health insurance policy in place in order to be granted a Thai visa, so it’s important to sort this well before you plan to move. The “wealthy pensioner” LTR visa requires coverage of at least £40,900, or at least £81,900 deposit available to cover treatments.

To get the non-immigrant O-A visa you will need to show evidence of health insurance issued by a Thai or foreign insurer for general illnesses with the insured sum of not less than £81,900.