UK bank interest/tax question
#1
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As many of you know, we live in Australia now, and have done for the past 11 months. We do still have our UK bank account and bank online as do many others of you. My question is, the account has a couple of grand in it, and covers pensions etc. Should I still be paying tax on the interest credited to that account, as I noticed the other week, I had earned some interest, but there was also a deduction for tax. Can I reclaim this tax, should I still be paying tax, and how do I go about claiming back or not paying the tax???
Advice would be much appreciated.
Advice would be much appreciated.
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Originally Posted by CadburysFingers
As many of you know, we live in Australia now, and have done for the past 11 months. We do still have our UK bank account and bank online as do many others of you. My question is, the account has a couple of grand in it, and covers pensions etc. Should I still be paying tax on the interest credited to that account, as I noticed the other week, I had earned some interest, but there was also a deduction for tax. Can I reclaim this tax, should I still be paying tax, and how do I go about claiming back or not paying the tax???
Advice would be much appreciated.
Advice would be much appreciated.
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My instincts as an accountant are that you should be exempt from paying tax in the UK (do the declaration as advised). But you should be declaring it on your Aus tax return and paying tax on it there instead (probably at a higher tax rate
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Originally Posted by worzel
My instincts as an accountant are that you should be exempt from paying tax in the UK (do the declaration as advised). But you should be declaring it on your Aus tax return and paying tax on it there instead (probably at a higher tax rate
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Originally Posted by CadburysFingers
As many of you know, we live in Australia now, and have done for the past 11 months. We do still have our UK bank account and bank online as do many others of you. My question is, the account has a couple of grand in it, and covers pensions etc. Should I still be paying tax on the interest credited to that account, as I noticed the other week, I had earned some interest, but there was also a deduction for tax. Can I reclaim this tax, should I still be paying tax, and how do I go about claiming back or not paying the tax???
Advice would be much appreciated.
Advice would be much appreciated.
As others have said apply to have the "tax paid at source" stopped in the UK.
For interest you have already earned and tax that has already been taken, you declare the interest on your Oz tax form and deduct the tax paid as a foreign tax credit. You will (probably) have to pay the difference to the ATO (for example, if your Oz tax rate is 31.5% then you will pay 11.5% to the ATO because you have already paid 20% to IR).
Once you have stopped the UK bank taking tax, you declare the interest on the OZ tax form and pay the appropriate amount of tax on it.
There is a lower limit of foreign interest that can be earned before you have to declare it to the ATO. I'm not sure what it is (I'll have a dig around later) but I remember it being rather small.
Also, as you have a small amount in the account, you should do the following election (see the end of the web page) http://www.ato.gov.au/large/content....tent/34043.htm. This is just a piece of paper that you stick in your tax file – you do not have to send it to the ATO. This advantage of doing this is that you can round up all of the interest payments (for the Oz tax year) and convert this into A$s in one go. If you don’t do this election you’re supposed to convert each interest payment into A$ on the date you received it.
Personally, for a couple of grand and approximately a £100 of interest, I wouldn’t bother with professional advice, which would cost a few £100s.
I’ll post later when I find the minimum amount (unless ABC beats me to it)
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Originally Posted by kirsty&al
Hello,
As others have said apply to have the "tax paid at source" stopped in the UK.
For interest you have already earned and tax that has already been taken, you declare the interest on your Oz tax form and deduct the tax paid as a foreign tax credit. You will (probably) have to pay the difference to the ATO (for example, if your Oz tax rate is 31.5% then you will pay 11.5% to the ATO because you have already paid 20% to IR).
Once you have stopped the UK bank taking tax, you declare the interest on the OZ tax form and pay the appropriate amount of tax on it.
As others have said apply to have the "tax paid at source" stopped in the UK.
For interest you have already earned and tax that has already been taken, you declare the interest on your Oz tax form and deduct the tax paid as a foreign tax credit. You will (probably) have to pay the difference to the ATO (for example, if your Oz tax rate is 31.5% then you will pay 11.5% to the ATO because you have already paid 20% to IR).
Once you have stopped the UK bank taking tax, you declare the interest on the OZ tax form and pay the appropriate amount of tax on it.
A work-around is to move the money to the Channel Islands/Isle of Man but these accounts tend to have a lower interest rate.
Either way, you are liable to Australian tax on the full amount.
Jeremy
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