RetireJapan

- £50,000 into NS&i premium bonds for a chance of win up to £1 million. As a Japanese resident you can open an account via post. For that you will need a UK bank account with a UK bank account with cheque book in your name and a £25 cheque (stupid old fashioned way of doing things I know). Opening the account is the hardest part. Once the account is opened you can then just make digital payments into it with your UK bank.

It can be done. But people have asked in other chats whether premium bonds are compliant with Japanese gambling laws. The NS&I page will ask new account holders to confirm that that premium bonds are legal in their jurisdiction before proceeding. Has anyone from the RJ community got an authoritative answer on this point?

Not an authoritative answer by any means but a British financial adviser based in Japan I spoke to said he believes it's fine because it's a legal product in the UK that's entirely administered in the UK. But not sure if I'm convinced by that.

kuma wrote: ↑Sun Dec 06, 2020 12:47 pm

- £50,000 into NS&i premium bonds for a chance of win up to £1 million. As a Japanese resident you can open an account via post. For that you will need a UK bank account with a UK bank account with cheque book in your name and a £25 cheque (stupid old fashioned way of doing things I know). Opening the account is the hardest part. Once the account is opened you can then just make digital payments into it with your UK bank.

It can be done. But people have asked in other chats whether premium bonds are compliant with Japanese gambling laws. The NS&I page will ask new account holders to confirm that that premium bonds are legal in their jurisdiction before proceeding. Has anyone from the RJ community got an authoritative answer on this point?

I never considered it that way before. I would like to know this too.

Technically, you're safely saving money in the NS&i premium bonds account which you can withdraw anytime. Is it really considered gambling if you're not actually actively at risk of losing any money?

To counter, Japan does have ジャンボ宝くじ which I play every Halloween and New Year. Going to assume they do something like it weekly too?

The way the ジャンボ宝くじ works is that you buy a ticket for 300 yen which has a unique ID number on it. In practice Premium bonds work no different. Each £1 bond has unique ID number on it.

The only difference between the ジャンボ宝くじ and NS&I premium bonds is that each ジャンボ宝くじ ticket you lose the 300 JPY cost of the ticket, each NS&I Premium bond you don't lose the £1 cost of the bond.

If you live outside the UK, please check if local regulations let you hold Premium Bonds. For example, the US has strict gaming and lottery laws which mean that it might not be possible or practical to hold Premium Bonds while in the US. If you're allowed to hold them, you'll need to apply first by post. Once your holding has been set up, you can register for our online and phone service.

https://www.nsandi.com/help/join-nsandi ... 20Sterling.

If NS&I questions whether the bonds are possible or practical for US residents, presumably there are question marks for Japan residents too.

Chris's point about the original stake not being at risk is a good one. But another way of looking at it is that the legal lotteries in Japan are run by the Japanese government (national or local, right??), so they are gaining funds for (Japan-based) social benefit from this rare form of legal gambling. That of course does not hold true of UK premium bonds. So the premium bond holder has their fun* without benefitting wider (Japanese) society (though UK society benefits from the £80billion stashed in premium bonds).

Also, attempting to get a ruling from the Japanese tax office is likely to be weighted towards the 'no' response due to it being (a) outside of usual questions, (b) the easy answer, and (c) answerer-san not wanting to make a mistake and approve something that his seniors may disapprove of.

That's my slightly pessimistic tuppenceworth. But others may have already got an authoritative response either through thorough understanding of the relevant laws and regulations, or from asking the Japanese authorities.

* it might be noteworthy that NS&I introduces premium bonds as:

A fun way to save, with the chance to win tax-free prizes each month

https://www.nsandi.com/products/premium-bonds

That sounds very much like the language of lotteries.

Not the right timing now obviously, but options seem so limited for non-residents, it could seriously be worth moving back for six months or so to get a Vanguard account as a legitimate resident, then move back. I think money laundering regulations require 3 years of addresses (or at least that used to be the case). But as long as you're a resident and they can prove they've done their due diligence, it could work.

Just hypothesising...

If anyone did move to the UK for a short stint (but long enough to gain residency), providing they set things up correctly, they could get tax relief on pension contributions up to £3,600p for 5 years after becoming non UK-resident, despite potentially paying no UK tax. So, effectively, pay in £2,880pa (and get this topped up by £720pa via tax relief) = pay in £14,400 over 5 years and get a cumulative £3,600 of tax relief, meaning a total of £18,000 invested.

I wish I'd have set up direct debits before leaving the UK to take advantage of this. Whilst HMRC accepts the above, my pension providers all did not allow non-residents to make new instructions; only to continue contributing via direct debit if direct debits were already in place and if the person was still a 'relevant individual', ie with ongoing taxable UK earnings (not transferred to Japanese taxable earnings via the double tax convention) OR via having been resident in the UK in any of the previous 5 tax years.

kuma wrote: ↑Mon Dec 07, 2020 8:06 am

If you live outside the UK, please check if local regulations let you hold Premium Bonds. For example, the US has strict gaming and lottery laws which mean that it might not be possible or practical to hold Premium Bonds while in the US. If you're allowed to hold them, you'll need to apply first by post. Once your holding has been set up, you can register for our online and phone service.

Chris's point about the original stake not being at risk is a good one. But another way of looking at it is that the legal lotteries in Japan are run by the Japanese government (national or local, right??), so they are gaining funds for (Japan-based) social benefit from this rare form of legal gambling. That of course does not hold true of UK premium bonds. So the premium bond holder has their fun* without benefitting wider (Japanese) society (though UK society benefits from the £80billion stashed in premium bonds).

But Japan can directly benefit from it.

I've opened my NS&i account with my Japanese address. NS&i also ask if you're a resident of another country. I have obviously, selected Japan. It then asks for your Tax ID number for that country, which for Japan is MyNumber.

This means I have input my MyNumber into NS&i's system. Should I win any money on my premium bonds, they should in theory alert Japan of my windfall.

After 5 years in Japan you have to declare all income including foreign sourced income.

This means should anyone residing in Japan, for over 5 years wins any amount of money on the UK premium bonds that Japan does directly benefit from those winnings.

Chris wrote: ↑Mon Dec 07, 2020 9:38 am I've opened my NS&i account with my Japanese address. NS&i also ask if you're a resident of another country. I have obviously, selected Japan. It then asks for your Tax ID number for that country, which for Japan is MyNumber.

This means I have input my MyNumber into NS&i's system. Should I win any money on my premium bonds, they should in theory alert Japan of my windfall.

After 5 years in Japan you have to declare all income including foreign sourced income.

This means should anyone residing in Japan, for over 5 years wins any amount of money on the UK premium bonds that Japan does directly benefit from those winnings.

I would be very wary of assuming anything to do with the law, especially the law in Japan. Ignorance is not a legal defence

(I don't know if premium bonds are legal, and in fact owned some during my first few years in Japan)

Also it seems as though since 2017 only foreign *income* is exempt for the first five years of residence, investments/interest/dividends etc appear to be treated based on the owner's residence, not where they are held.

RetireJapan wrote: ↑Mon Dec 07, 2020 9:43 am

Chris wrote: ↑Mon Dec 07, 2020 9:38 am I've opened my NS&i account with my Japanese address. NS&i also ask if you're a resident of another country. I have obviously, selected Japan. It then asks for your Tax ID number for that country, which for Japan is MyNumber.

This means I have input my MyNumber into NS&i's system. Should I win any money on my premium bonds, they should in theory alert Japan of my windfall.

After 5 years in Japan you have to declare all income including foreign sourced income.

This means should anyone residing in Japan, for over 5 years wins any amount of money on the UK premium bonds that Japan does directly benefit from those winnings.

I would be very wary of assuming anything to do with the law, especially the law in Japan. Ignorance is not a legal defence

(I don't know if premium bonds are legal, and in fact owned some during my first few years in Japan)

Also it seems as though since 2017 only foreign *income* is exempt for the first five years of residence, investments/interest/dividends etc appear to be treated based on the owner's residence, not where they are held.

Luckily (or unluckily...) I have not "won" anything from my premium bonds yet. But I do like to do things by the book. The thought of it being illegal gambling did not cross my mind so I would be really interested in any insight about that. I would have no issue closing my NS&i account if it was found to be against Japanese law.

But what you say about overseas interest has me a little worried. I know because of those law changes that overseas capital gains are taxable because they are now defined as another type of income, but wondering if anyone can confirm, ideally with a source if overseas interest and dividends would be taxable for those who have been here for under 5 years too?

Yes, winnings on premium bonds could benefit Japan via taxation. But would every winning get declared and tax properly paid? Wouldn’t some people, even those who have entered MyNumber, have complex circumstances (eg dual tax residency and UK has primary taxation rights via double tax treaty) have no obligation to pay tax to Japan on winnings? And wouldn’t others be required to declare and pay but fail to do so, even having entered MyNumber?

Also, the money for Japanese governmental coffers would only be from winnings rather than from every ‘ticket’. This revenue could potentially be heavily delayed, with potential non-payment (both legal, ie no tax due to Japan; and illegal, ie tax due but not paid).

So, UK premium bonds are different from Japanese lotteries in which:

* Japanese government receives money at point of sale
* every sale results in Japanese government money (whereas only winnings would result in government money for premium bonds)
* the Japanese government regulates and understands the Japanese lotteries

It would be great to have an authoritative answer on the matter at some stage. As people point out, if legal, premium bonds would form part of a small set of GBP ‘investment’ options for Japan residents. The safety of the principal and the chance of winning prizes are an attractive combination for many.

But what you say about overseas interest has me a little worried. I know because of those law changes that overseas capital gains are taxable because they are now defined as another type of income, but wondering if anyone can confirm, ideally with a source if overseas interest and dividends would be taxable for those who have been here for under 5 years too?

Sorry, I can't clear the hurdle of an authoritative source. And neither can I answer the question properly! But I can add that I received a ruling directly from the tax office re royalty earnings. These royalties were on books I'd written prior to residence in Japan, and the royalties were from sources in the UK, so I wondered if the royalties would be considered as foreign-sourced income... in which case they'd be untaxable in Japan (as a non-permanent tax resident), and in the UK I could have applied for my personal allowance based on British citizenship, and hence paid no tax on these (modest) royalties in the UK too. The tax office ruled that royalties were related to me as an individual and that since I was currently resident in Japan, they should be treated either as freelance income (if registered as a freelancer) or as miscellaneous income (if not). This seems fair and reasonable.