nun

Here are the current rules about personal allowance and an explanation of expected changes.

https://www.gov.uk/government/consul...onal-allowance

ukthesis

Thanks for that and I have printed out some pages for when I see the Tax bloke. In particular, I was definitely told that in Moldova, I do not have a personal allowance on UK sourced income. BUT this one says:

"Current UK statute provides that UK nationals are entitled to UK Personal Allowances wherever they are resident. The non-discrimination provisions found in most UK tax treaties extend the entitlement to UK Personal Allowances to nationals of the treaty partner state who are also resident there. Some of the UK’s tax treaties also expressly provide that UK Personal Allowances will be granted to residents of the partner state regardless of nationality, or nationals of the partner state wherever they are resident."

However, later it says that "overseas residents" do not get the UK personal allowance. When it says overseas residents, does this include UK nationals (those holding a UK passport)? Or UK nationals living somewhere else, which is the case here?

The document also proposes restricting access to the UK personal allowance for some UK passport holders living elsewhere. But so far as I know, this is not yet in place.

nun

Right now you will get your UK personal allowance. However, that might not make much difference if Moldova taxes the foreign income of it's residents. Have you researched the taxation regime of Moldova as that is going to be your primary taxation authority. Even if you have to pay UK tax you'll probably be able to take a foreign tax credit in Moldova. I these cross-border situations you usually end up paying the larger of the taxes of the two countries involved.

ukthesis

I will be basically living off my UK sourced income in Moldova. There is a double taxation agreement with Moldova. The tax rates in Moldova are very low, about 7-15 percent. But as prices are usually lower there than in the UK, my UK income will be enough. Clearly, though, if I have to pay UK tax on all my income (losing the UK personal allowance) this is not good news because I depend so much on my UK sourced income over there and I will be liable to pay the 20 percent basic UK tax rate on all my UK sourced income, as I was told will happen.

nun

How are you producing the income....rental, dividends, capital gains, pension, bank interest, ISA etc?

ukthesis

Three main UK sourced income streams in Moldova: UK state pension, UK landlord rental and an NHS injuries pension. Plus, a small sum of bank interest from my UK bank account paying about 1.5 percent interest (instant access)

nun

Take a careful look at the UK/Moldova DTA. State and government pensions are often special cases for taxation. I can't see any specific mention of how state pensions and benefits are dealt with in the DTA.....it's interesting to note though that a UK pension paid to a Moldovan resident would only be taxable in Moldova and state pensions and benefits are usually not taxed at source when paid to non-residents.....so I bet they'll be no UK tax on the UK state pension....just Moldovan tax.....the NHS pension might be different if it is a government service pension, if it's just a private pension then again no UK tax.

ukthesis

I have the Moldovan double taxation thing, but it's very brief. I can email it to you if you give me your email address. Can you also please refer me to your refence to the fact that: "UK pension paid to a Moldovan resident would only be taxable in Moldova."?

nun

Its in the DTA under "Pensions". Most DTAs follow a pretty standard pattern....as they have to if you think about it. Here is all the information you need

https://www.gov.uk/government/public...-in-the-uk-r43

https://www.gov.uk/government/upload...n_Treaties.pdf

Usually if there's a DTA in place and you are a UK non-resident you will only pay tax on your UK state pension to the country where you live. There is a standard for to claim UK tax free status on pensions etc.

https://www.gov.uk/government/upload...individual.pdf

I will be filing the US version of the DT-Individual when I start getting UK basic state pension as US residents get full UK tax relief on it.....everything I've read indicates the situation is the same for Moldovan residents.

ukthesis

Thank you and much appreciated. When I have a bit more time, I will go through the links you sent. It's all good material that I am printing out to take to that meeting with the HMRC bloke I'm meeting in a week or so, so that I have an idea of the questions I need to ask him and to challenge him if I think he's talking rubbish. Will get back if I have more to ask your good self.

I think the USA may be one of the exceptions with respect to some UK pension arrangements. For example, my UK state pension is definitely frozen in value in Moldova, whereas UK pensions paid in the USA are not. So I think in some respects, the arrangements for Brits living in the USA tend to be more favourable than in many other countries.

nun

Yes US residents get cost of living increases on he UK state pension. However, the exemption from UK tax is the norm for someone resident in a country with a DTA with the UK.

ukthesis

And neither of us will get the UK Winter Fuel Allowance, of course.

nun

Yes that's true, but if I was living in the UK, being a US citizen I'd have to pay US tax on it.

ukthesis

I'm classed as self-assessment by the HMRC. Is there anything else you think I need to know?

ukthesis

If I rent out my property to rent in the UK, which I own, and manage it through a local letting agency, what is the tax situation? From what I've read, I will pay basic rate UK income tax for ALL the rental sum (since it seems like I lose my UK tax allowance in Moldova). However, I also know there are various allowances that landlords can normally get from the HMRC before the sum is taxed. Are these allowances active if I am in Moldova? Or do I lose those as well?