Good morning All,
I have been reading a lot of your posts and replies on AE and other tax issues with interest and have already learned a lot. As we now have a move date, 28 June, everything is becoming a little more real. We will be moving permanently whilst maintaining a UK address.
So, when I read the Times article yesterday regarding fines for non declared UK bank accounts, now €1,500 per account per year undisclosed, my wife and I started to panic a little.
Our situation will be that we will have my oh’s midwifery pension that will be taxed at source. I will pay UK income tax in this and the next financial year, but beyond that may wish to operate as an AE.
If any of you have any thoughts or tips on how best to approach our situation we would be very grateful. Perhaps we will be able to get a good night’s sleep again!
A few queries that come to mind
1-who should we go to see to declare are accounts and income etc?
2-will the authorities accept that my wife pays UK tax eventhough we are French resident?
3-we will have a lump sum in a UK savings account. I hope they cannot touch this!
4-I will want to work under the AE scheme in due course, however, my classification will be somewhat wide ranging. I am currently a chartered surveyor and I shall be looking to do some property management for non resident owners. Inspections, maintainance, over seeing building works that sort of thing. Is this possible under AE?
Sorry that this is so long winded but there seems a lot to take I to account.
Many thanks in advance to anyone who might be able to help.
Roland
Gird thy loins with the info. I have given & thou shall be victorious! If you need any more help just ask.
Thank you again Vic for this insight.
Looks as if we will need to take on these dragons as well. Wish us luck!
Roland
Roland. We are full time here. My wife sorted this out with an epic battle with the tax dragons which resulted in a personal apology from the head dragon & lots of help hence the tax codes I gave.
We have private & state pensions plus UK rental income & have never found the need for an accountant. My wife normally sorts it out as she has a degree in fonctionaire desk thumping & is tenatious to the extreme. It really helps to speak the language.
From memory we went to the tax office to tell them we are here permanently after receiving our normal large Habitation bill 'cos they still though our house was a holiday home. We picked up the relevant forms & went from there. At that stage, about 12 years ago, we only had rental income as I had not started my pensions & were surprised to receive a large credit for the Tax Habitation we had paid as our income was then below the threshold.
The Connexion publication produces excellent guides for tax etc & are well worth buying via the net. The codes I gave you should help ease your way as we still hear of people struggling to convince intransigent tax dragonettes of their rights.
Roland. I cocked up with my previous reply. I have just checked again & no social charges are payable on GB rental income :-
you pay income tax in England on the rental income & declare it here on a French form 2047-K called "declaration des revenues encaisses a l'etranger" (sorry about lack of accents) under 111 "revenue fonciers" you would also declare other income such as pensions on this form.
under V1 on the same form "revenus imposables de source etrangers ouvrant droit a un credit d'impot egal au montant de l'impot francais correspondent a ces revenus" enter beneficiare(s) ie 1 & 2 if in joint . Nom du pays ie GB, nature du revenue Rev. fonciers . enter same sum as 1 iii ie rent . If you feel it necessary to explain their job to the Tax Dragon write "exoneration contributions sociales (8tu -8zr) these being the tax office codes given to us by the Head Tax Dragon in return for not slaying her!
This information is also put on the normal "French" tax return 2042K under 4 "revenues fonciers" column 4Ba "revenue fonciers imposables" & also under E1 " renseignments complimentaires" write "revenues 1AS exoneres de charges sociales"
Job done. you will now pay English tax less your personal allowances on the rent & pay NO tax or social charges on it in France.
The rent will attract tax habitation & may be included in the cotisations for the health system depending on your age & circumstances.
The above info. is based on our 2012 declaration completed in May 2013.
Hope it makes sense:-)
Note. Edited 1 hr later to correct a couple of things. It should now be correct.
Dear Vic,
Really helpful, thank you very much. And more positive from our perspective!
May I ask whether you are French residents or spend time in UK as well? I am not sure if this makes a difference. We will be French resident. Did you work this out yourself or would you recommend using an accountant? The forms you refer to can be filled out at the local Tresor or Mairie?
Sorry to bombard you, but this is so helpful in giving us comfort on how to deal with this important aspect.
Kind regards
Roland
Hi Vic
Thanks for your comment here. This is very interesting to us. We have a 50% share in an office building and an industrial unit that we will rely on for top up income in due course. Could you spell out for me how the tax/social charge elements work please?
Also, my wife’s pension, our only income of note to begin with is nhs so I wonder if she would actually be better off declaring that she no longer pays UK tax and enters the French system?
Maybe but the fact we can offset our English tax allowances against the rental income helps to soften the blow.
unfortunately the social charges are the 24% I was talking about.
Hey Dom. I've said it before. We have commercial property in England with the rents being taxed in England. We declare them here & pay social charges on them but not Income tax.(or whatever they call it here:-)) Ex. civil servants pensions apart I think it is the only anomaly. Weird maybe but it saves us a bit of tax.
This is what I thought as well then I met my taxman and if you live in France you pay in France so he said! He seems to be a nice bloke so I believe him... But I would like to be proved wrong.
dom
Thanks again Dominique. Very useful. I had thought that there was something called the double tax treaty where income on UK assets can only be taxed in one country, either UK or France but not both. I obviously need to look at this again.
Kind regards
Roland
Yes if you are residents in France, this is where you pay all your taxes.
By the way, the taxes on 'unearned' income i.e. bank interests etc do not appears to be influenced by how little your income is.mine is minute and well below taxation levels but I still paid 24% of the £400 I got on my bank account.
Many thanks for your swift response Dominique,
Just to clarify, my wife’s pension needs to be taxed in France rather than the UK?
Roly
1/ Nearest 'Tresor public' office to your home
2/No you have to arrange with UK tax that they do not charge you under the double taxation arrangement.
3/ you will have to pay (around) 24% of the interest to the French
4/ Sorry I do not really know enough about that.