Consultation on non residents tax allowance
#1
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Consultation on non residents tax allowance
Can anyone put this into plain English from an expat perspective living in Hungary?
https://www.gov.uk/government/consul...onal-allowance
https://www.gov.uk/government/consul...onal-allowance
#2
Re: Consultation on non residents tax allowance
Can anyone put this into plain English from an expat perspective living in Hungary?
https://www.gov.uk/government/consul...onal-allowance
https://www.gov.uk/government/consul...onal-allowance
Or at least that is what I think it means!
#3
Re: Consultation on non residents tax allowance
See section 6.6 which relates to pensioners. I would copy and paste but I think it might infringe copyright.
#4
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Re: Consultation on non residents tax allowance
Hi Polly
I am interested as a non resident landlord and I also have a small job here (I earn very small amount though). I was looking at annex A where it describes the country of residence tax arrangement. Under Hungary it says Credit and Deduction????? I don't want to lose the UK personal allowance obviously and will want to reply to the consultation once I have a better grip on how it would affect us.
It's all very confusing
I am interested as a non resident landlord and I also have a small job here (I earn very small amount though). I was looking at annex A where it describes the country of residence tax arrangement. Under Hungary it says Credit and Deduction????? I don't want to lose the UK personal allowance obviously and will want to reply to the consultation once I have a better grip on how it would affect us.
It's all very confusing
#5
Re: Consultation on non residents tax allowance
I think you understand it as I do Pol, it's been on the news quite a bit.... If not a pensioner, section 6.5 is relevant and my understanding of it would be that by losing your personal allowance, you would then be liable for UK income tax.
Assuming you currently pay tax on your rental income in Hungary, you will not have had to claim double tax relief as, again an assumption, your income was lower than the personal allowance so you wouldn't have paid it in the UK. However, losing the personal allowance would mean you must now also pay income tax in the UK though relief can be claimed in Hungary but only if you are paying enough tax to do so.
#6
Re: Consultation on non residents tax allowance
I think you understand it as I do Pol, it's been on the news quite a bit.... If not a pensioner, section 6.5 is relevant and my understanding of it would be that by losing your personal allowance, you would then be liable for UK income tax.
Assuming you currently pay tax on your rental income in Hungary, you will not have had to claim double tax relief as, again an assumption, your income was lower than the personal allowance so you wouldn't have paid it in the UK. However, losing the personal allowance would mean you must now also pay income tax in the UK though relief can be claimed in Hungary but only if you are paying enough tax to do so.
Assuming you currently pay tax on your rental income in Hungary, you will not have had to claim double tax relief as, again an assumption, your income was lower than the personal allowance so you wouldn't have paid it in the UK. However, losing the personal allowance would mean you must now also pay income tax in the UK though relief can be claimed in Hungary but only if you are paying enough tax to do so.
#7
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Re: Consultation on non residents tax allowance
Assuming you currently pay tax on your rental income in Hungary, you will not have had to claim double tax relief as, again an assumption, your income was lower than the personal allowance so you wouldn't have paid it in the UK. However, losing the personal allowance would mean you must now also pay income tax in the UK though relief can be claimed in Hungary but only if you are paying enough tax to do so.
Thus an ex pat. pensioner landlord pays Hungarian tax on their pension (currently zero rated) and UK tax on any UK property
From the consultation document Para 6.6
The government does not intend to raise taxes on vulnerable groups or in situations where the UK is the principal taxing authority and an individual has no recourse to relief as a result of the UK having sole taxing rights under a tax treaty. If the government were to restrict non-residents’ entitlement to the Personal Allowance, it would intend this to apply to types of income which are taxable both in the UK and overseas (such as that from immovable property) but to retain the Personal Allowance on income that is taxable exclusively in the UK.
From this as UK property income for those living in Hungary would be taxable exclusively in the UK then the personal allowance IMO would be retained.
Of equal concern is what happens if 'dear Nigel' get his way and the UK votes to leave the EU, would the State pension revert to the position it was prior to Hungary joining the EU (frozen at the amount they first receive with no increases) whereas those living - for example - in the old Yugoslavia countries got their annual increases.
#8
Re: Consultation on non residents tax allowance
Does income from property not come under worldwide income Peter or is it treated differently?
#9
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Re: Consultation on non residents tax allowance
My understanding of the tax treaty between Hungary and the UK is that pensions (state OAP and private pensions), are taxed in Hungary and property income is taxed in the country in which the property is located. So UK property in taxed only in the UK and Hungarian property is taxed only in Hungary. (Government work related pensions are taxed in the UK)
Thus an ex pat. pensioner landlord pays Hungarian tax on their pension (currently zero rated) and UK tax on any UK property
From the consultation document Para 6.6
The government does not intend to raise taxes on vulnerable groups or in situations where the UK is the principal taxing authority and an individual has no recourse to relief as a result of the UK having sole taxing rights under a tax treaty. If the government were to restrict non-residents’ entitlement to the Personal Allowance, it would intend this to apply to types of income which are taxable both in the UK and overseas (such as that from immovable property) but to retain the Personal Allowance on income that is taxable exclusively in the UK.
From this as UK property income for those living in Hungary would be taxable exclusively in the UK then the personal allowance IMO would be retained.
Of equal concern is what happens if 'dear Nigel' get his way and the UK votes to leave the EU, would the State pension revert to the position it was prior to Hungary joining the EU (frozen at the amount they first receive with no increases) whereas those living - for example - in the old Yugoslavia countries got their annual increases.
Thus an ex pat. pensioner landlord pays Hungarian tax on their pension (currently zero rated) and UK tax on any UK property
From the consultation document Para 6.6
The government does not intend to raise taxes on vulnerable groups or in situations where the UK is the principal taxing authority and an individual has no recourse to relief as a result of the UK having sole taxing rights under a tax treaty. If the government were to restrict non-residents’ entitlement to the Personal Allowance, it would intend this to apply to types of income which are taxable both in the UK and overseas (such as that from immovable property) but to retain the Personal Allowance on income that is taxable exclusively in the UK.
From this as UK property income for those living in Hungary would be taxable exclusively in the UK then the personal allowance IMO would be retained.
Of equal concern is what happens if 'dear Nigel' get his way and the UK votes to leave the EU, would the State pension revert to the position it was prior to Hungary joining the EU (frozen at the amount they first receive with no increases) whereas those living - for example - in the old Yugoslavia countries got their annual increases.
From what I can glean from this consultation they are proposing to look at the amount of income you are getting overall and if your main source of income is in the UK and meets a certain percentage then you will be entitled to your personal allowance. An administrative nightmare I should think.
#10
Re: Consultation on non residents tax allowance
#11
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Re: Consultation on non residents tax allowance
Cathyg
The norm for non resident landlords is that the tax is deducted at source by the letting agent, rent collector or tenant and forwarded to HMRC with the landlord reclaiming as appropriate at the end of the financial year. At least this was the case when I set up my arrangement in 2006. You can get 'Non-resident landlords scheme - Approval to receive rental income with no tax deducted' from HMRC, I did in 2006 and have heard nothing since to make me believe the situation has changed. I am still liable for any tax due on over the personal allowance (I should be so lucky) but this would be my responsibility to pay, not the rent collector paying tax and then a reconciliation at year end - a real pain. Whilst I don't know your situation, if you are not approved for this scheme it may be worth looking into. I certainly find it much easier.
Whilst I agree with your interpretation of the consultation document
"From what I can glean from this consultation they are proposing to look at the amount of income you are getting overall and if your main source of income is in the UK and meets a certain percentage then you will be entitled to your personal allowance."
The document also provides for exceptions such as pensions and immoveable assets (property) and these may still get a personal allowance (see para 6.6)
As always the devil will be in the detail when the regulation is passed.
Unfortunately whilst they have issued a 'consultation document' I wonder how much notice they will take when non of the 1.2 million ex pat pensioners can vote in the UK!! After all there are over 500,000 ex pat pensioners with frozen pensions and successive governments fail to listen to their complaints, hence my concern if the UK opt out of the EU.
The norm for non resident landlords is that the tax is deducted at source by the letting agent, rent collector or tenant and forwarded to HMRC with the landlord reclaiming as appropriate at the end of the financial year. At least this was the case when I set up my arrangement in 2006. You can get 'Non-resident landlords scheme - Approval to receive rental income with no tax deducted' from HMRC, I did in 2006 and have heard nothing since to make me believe the situation has changed. I am still liable for any tax due on over the personal allowance (I should be so lucky) but this would be my responsibility to pay, not the rent collector paying tax and then a reconciliation at year end - a real pain. Whilst I don't know your situation, if you are not approved for this scheme it may be worth looking into. I certainly find it much easier.
Whilst I agree with your interpretation of the consultation document
"From what I can glean from this consultation they are proposing to look at the amount of income you are getting overall and if your main source of income is in the UK and meets a certain percentage then you will be entitled to your personal allowance."
The document also provides for exceptions such as pensions and immoveable assets (property) and these may still get a personal allowance (see para 6.6)
As always the devil will be in the detail when the regulation is passed.
Unfortunately whilst they have issued a 'consultation document' I wonder how much notice they will take when non of the 1.2 million ex pat pensioners can vote in the UK!! After all there are over 500,000 ex pat pensioners with frozen pensions and successive governments fail to listen to their complaints, hence my concern if the UK opt out of the EU.