The Taxation of UK sourced income.
This concerns you if you are not resident for tax purposes in the UK and …..
You have income from Britain such as rents or investments, interest on savings, dividends, or private pensions which are TAXABLE in the UK ---
What’s happening?
The UK Government has a mind to remove the personal allowances used by non-resident individuals to set against their UK taxable income. This change may well increase the amount of UK tax payable by non-resident individuals such as YOU. See examples below.
The allowance may be retained to set against ex-UK Government service pensions.
How can I tell if I am not resident for tax in the UK?
You can check your UK tax residence status using this online tool:
http://www.hmrc.gov.uk/migrantworkers/tax-non-uk.htm#1
Generally all income sourced in the UK is taxable in the UK, whatever, even if you are not resident in the UK for tax purposes.
Note: You can be resident for tax purposes in two countries in the same year, as most countries use a calendar year for tax purposes but the UK uses the year to 5 April.
What is the personal allowance?
The personal allowance represents the amount of your UK income which is exempt from tax. The allowance is currently worth £10,000 for people born after 5 April 1948, and £10,500 or £10,660 for older people.
Where can I find out more?
The consultation paper containing the Government proposals is viewable here….
http://goo.gl/Jj5D2j
This is just a policy idea at this stage, if sufficient numbers of people object to the proposals (and provide good reasons why), those changes may not happen. The deadline for responses is 9 October 2014. Any one can respond. You may provide comments other than answers to the questions posed.
The Govt tends to count the numbers of responders as an indication of how sensitive a change would be. So please do just that! nonresidentspersonalallowanceconsultation@hmtreasury.gsi.gov.uk
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The effect of the proposal on the citizens abroad who would be affected---
Example 1
Mr Smith was born on 25 July 1949, so he is 65, so only gets the ordinary level of personal allowance for 2014/15: £10,000
Lets say his gross( before tax deducted) UK income is:
UK pensions: £12,000
rent: £12,000
interest (gross): £1000
total £25,000
Less allowance of £10,000 = £15,000 all taxed at 20%
tax payable: £3000.
In practice tax will have been deducted from all of those sources of income before he received them - even the rent , under the non-resident landlord scheme
If Mr Smith did not have the use of the personal allowance he will pay tax of £5,000 on that income - an increase of £2,000
Example 2
Mrs Jones was born on 10 April 1936, so she is now 78. She is entitled to the higher a personal allowance of £10,660, as she was born before 6 April 1938.
Her income is
UK pensions: £20,000
rent: £21,000
interest (gross): £1000
total £42,000
Less allowance of £10,660 = £31,340 all taxed at 20%
tax payable £6268.
If Mrs Jones does not have her personal allowance of £10,660 her income is taxed as:
£31,865 @20%= £6373
£10,135 @40% = £4054
total tax payable = £10,427
A tax increase of £4,159, as her personal allowance is keeping her out of the 40% band
I repeat, the proposals would in particular effect UK citizens who are treated as not resident in the UK for tax purposes, but continue to receive income from the UK such as rent, interest, dividends or pensions.
The added effect of the Double Taxation Treaties on this.
There is a serious error of fact in the consultation paper. It claims that a foreign Govt (such as France) gives a tax credit against the individual’s tax liability in say France of the amount of tax paid in the UK. The Double tax Treaties do not work like that! The foreign Govt ( ie not UK) gives a tax credit of the amount of tax that would have been demanded by France if the income were taxed in France –In many cases that tax credit is a very much lower sum than the actual tax paid in the UK.
Many British Citizens resident in France already lose out considerably. It could get worse.
Email responses to:-
nonresidentspersonalallowanceconsultation@hmtreasury.gsi.gov.uk
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It is surely so obvious that UK citizens abroad need protection from the excesses of the UK Government!
Even though this consultation paper may not affect yourselves it would greatly help those who need a democratic voice to counter this unfairness, to register to vote https://www.gov.uk/register-to-vote
70,000 overseas registrations are needed – I am not asking you to actually vote , but to show solidarity with other British Citizens who are seeking fairness.
It is also necessary to encourage signatures to ---- http://epetitions.direct.gov.uk/petitions/55085
A 70,000 response to the first could trigger the Government to act on the second. It would also assist in the removal of the 15 year limit on political representation - the Vote.