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Hello HMRC ... anyone there?

Hello HMRC ... anyone there?

Old Aug 12th 2015, 7:09 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by robin1234 View Post
....... except that in fact I started to receive US SS in May 2015, which coincidentally was when I returned to UK so that makes it a bit easier....
Agreed, that makes it much easier.

Originally Posted by robin1234 View Post
I'm seeing a problem with continuing to file married filing jointly. My wife still lives in the US, I was assuming we would continue to file giving our US address. When I send in the 1040 with $0 as the taxable amount on line 16, SS, there would be no clue in our address at the top of the 1040 about this new foreign residency I'm asserting..? Especially as 2015 filing (to be submitted March 2016) there won't be any foreign tax credits claimed at that point.
When I did my rough calculations of your situation, I couldn't help but think your filing jointly with a wife in the US would be to your advantage, and would likely result in an even lower tax amount to start with (before any available foreign deductions). You could wing it, put $0, and if it comes back, explain the situation. Or, although it isn't strictly required, you could file form 8833 (Treaty position) and note your foreign address there and very briefly indicate the two residences.


Originally Posted by robin1234 View Post
Then I asked about self assessment,..... He said, you're retired? Retired people don't need to pay tax....... Then I mentioned US SS and US based pensions and annuities. He said, oh no, we don't tax those here, you'll pay any tax over there.....
I suggest you send this person birthday cards, Hanukkah or Chanukah/Diwali/Christmas/New Years/Seasons Greetings cards, and boxes of chocolate/Fosters, PROVIDED they guarantee to hold HMRC to this statement forever and ever.


I suppose if he meant you could pay the tax in the US and claim a tax credit on the UK return, then he's close.


It's sad to see HMRC deteriorate to the current state of lack of expertise and helpfulness. 30 years ago, they were the top agency in the world and advice on the phone was most reliable. One wonders why they include all the areas to declare foreign pensions on the form if what he says is true.


I have a yearly conversation with them to correct their initial tax coding. It's always wrong (I even had a letter of apology from the Dept. head) and it's down to my (untaxed foreign per a treaty) pensions.

Originally Posted by robin1234 View Post
Which leads me to another thought. US SS is taxable in UK. Simple example, I formerly received $1200 per month. But from August 2015 I'll be getting about $1095, because Medicare part B premiums will now be deducted at source. Will I still have to pay UK tax on the whole amount?
I've never given this any thought since I don't have part B. An off the cuff comment, which may or may not be worth listening to: HMRC tends to weigh foreign pensions by the amount that is remitted to the UK,....only.
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Old Aug 12th 2015, 8:37 pm
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Default Re: Hello HMRC ... anyone there?

I actually don't remit ANY of my US SS to the UK, at present. We keep it in the U.S. to help fund our various bills over there.
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Old Aug 12th 2015, 10:33 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by robin1234 View Post
I actually don't remit ANY of my US SS to the UK, at present. We keep it in the U.S. to help fund our various bills over there.
Does this mean you are going to choose to be taxed on a remittance basis?

This is all very confusing to me, but if you are going to be taxed on an arising basis then I believe (perhaps wrongly) that a UK resident is taxed on US SS regardless of whether or not it is left in the USA.
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Old Aug 12th 2015, 10:58 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by theOAP View Post
HMRC tends to weigh foreign pensions by the amount that is remitted to the UK,....only.

Tough one, and not enjoyable.


I should clarify the above from my previous post. My non-UK pensions (from an EU country) have very small (read insignificant) amounts deducted for public health assistance. It comes off everyone's pension in that country. I tend to declare only the remaining 99.9% (-10%) pension payments that are made in the UK in £'s, and which are tax free in the other country per a treaty.


Robin's situation is entirely different. Being resident in the UK and taxed on the arising basis, as I believe he intends, means US SSA is taxed in the UK per the treaty. How to explain the situation of payments being made in the US to the IRS is a good question especially since he is filing MFJ with a US resident spouse.


Robin, what are your long term intentions? Perhaps, since little/nothing (?) is remitted to the UK, might it be worth while exploring being taxed on the remittance basis for a few years? I haven't a clue how you would explain your current residence in the UK as temporary which would mean a permanent home in the US which you intend to return to.
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Old Aug 13th 2015, 12:05 am
  #20  
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Default Re: Hello HMRC ... anyone there?

Originally Posted by robin1234 View Post
On another topic, I held on for 25 minutes and got someone on the 03002003506 number. He recorded my new address, and said I could go ahead and pay the voluntary NIC for the period 6/4/14-11/4/15 as invoiced, 145.74 pounds. He told me despite moving to UK, there was no change, I was still eligible for class 2.
Well that's a surprise given that Class 2 NICs back in the UK are for the self employed. If you are below UK retirement age you might be able to pay top up Class 3 voluntary NICs or if you work you will probably pay Class 1. I believe that you got poor advice apart form being told to go ahead and pay the invoice for the Class 2. I would contact the International Pensions office in Long Benton and tell them about your return to the UK and they will probably give you more accurate information.


Then I asked about self assessment, he transferred me to another dept. The person who answered the phone sounded totally nonplussed when I said I had returned to live in the UK and wanted to register as such, for self assessment etc. He said, you're retired? Retired people don't need to pay tax. There's no tax on the state pension. He said, do you have rental income or capital gains? I said, no. Then I mentioned US SS and US based pensions and annuities. He said, oh no, we don't tax those here, you'll pay any tax over there....
This is almost 100% incorrect. Please do not take advice on international tax matters from HMRC agents over the phone. Your UK tax status and the type of income/pension will decide whether it is UK taxable and of course a thorough comprehension of the US/UK tax treaty is also required. Your HMRC person obviously has no idea that your US SS and private US retirement accounts and annuities will definitely be UK taxable (assuming you are taxed on an arising basis).

Which leads me to another thought. US SS is taxable in UK. Simple example, I formerly received $1200 per month. But from August 2015 I'll be getting about $1095, because Medicare part B premiums will now be deducted at source. Will I still have to pay UK tax on the whole amount?
This is a great question. I don't think you can get tax relief in the UK for health insurance premiums you pay yourself so I don't think you'd get tax relief on Medicare payments.....so my first take would be that you pay UK tax on the entire US SS amount.

Last edited by nun; Aug 13th 2015 at 12:56 am.
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Old Aug 13th 2015, 6:01 am
  #21  
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Default Re: Hello HMRC ... anyone there?

I have phoned HMRC twice and had prompt answers on this number 44 161 931 9070. It is supposed to be used by callers who are overseas, however I used my US based Skype account while sitting here in England and got through OK.
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Old Aug 13th 2015, 7:24 am
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Default Re: Hello HMRC ... anyone there?

Originally Posted by durham_lad View Post
Does this mean you are going to choose to be taxed on a remittance basis?

This is all very confusing to me, but if you are going to be taxed on an arising basis then I believe (perhaps wrongly) that a UK resident is taxed on US SS regardless of whether or not it is left in the USA.
I had always assumed opting for the arising basis. And I think you're correct, makes no difference to tax liability, whether income remains in US or I bring it over here. My assumption has always been it is my residence that determines the tax liability.

Now, I know that HMRC has a way of defining whether or not one is resident in the UK. From memory, it's something to do with thresholds of presence in the UK (90 days, 180 days, something like that.) Also certain other qualifying factors are counted in, such as whether you own property in the UK... It is complicated but capable of being used to make a judgement as to whether or not you're a resident. I plan to be a resident, starting May 2015.

By contrast, I don't think the IRS judges whether a U.S. citizen is resident in the US or not. It is up to the non resident citizen to claim foreign tax credits, and assert that they paid tax to HMRC on the U.S. SS (for instance.)

Originally Posted by theOAP View Post
Tough one, and not enjoyable.


I should clarify the above from my previous post. My non-UK pensions (from an EU country) have very small (read insignificant) amounts deducted for public health assistance. It comes off everyone's pension in that country. I tend to declare only the remaining 99.9% (-10%) pension payments that are made in the UK in £'s, and which are tax free in the other country per a treaty.


Robin's situation is entirely different. Being resident in the UK and taxed on the arising basis, as I believe he intends, means US SSA is taxed in the UK per the treaty. How to explain the situation of payments being made in the US to the IRS is a good question especially since he is filing MFJ with a US resident spouse.


Robin, what are your long term intentions? Perhaps, since little/nothing (?) is remitted to the UK, might it be worth while exploring being taxed on the remittance basis for a few years? I haven't a clue how you would explain your current residence in the UK as temporary which would mean a permanent home in the US which you intend to return to.
I haven't explored the remittance basis, as I believe there's some high initial fixed cost that it involves, making it unattractive for a person with low to average income?

I feel I shouldn't publicly declare my intentions on BE, until I've declared them to my wife Seriously, we haven't 100% decided where to make our primary home. We need to downsize in the US, so that we have "lock up and leave" capability in both countries, and I assume sometime over the next couple of years we will have figured it out. Me paying a Medicare premium is a sign of hedging bets for the time being.

What's the thing about only ninety percent of US SS being taxable in UK?
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Old Aug 13th 2015, 7:28 am
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Default Re: Hello HMRC ... anyone there?

Originally Posted by Janelle View Post
I have phoned HMRC twice and had prompt answers on this number 44 161 931 9070. It is supposed to be used by callers who are overseas, however I used my US based Skype account while sitting here in England and got through OK.
Thanks. Holding on for 25 minutes was frustrating. The music they played in a short loop was weird.
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Old Aug 13th 2015, 8:55 am
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Default Re: Hello HMRC ... anyone there?

Originally Posted by nun View Post
This is almost 100% incorrect.
Agreed, maybe almost 110% incorrect.

Originally Posted by nun View Post
This is a great question. I don't think you can get tax relief in the UK for health insurance premiums you pay yourself so I don't think you'd get tax relief on Medicare payments.....so my first take would be that you pay UK tax on the entire US SS amount.

In spite of my previous ramblings, I agree with this given the monetary amount of Part B we're talking about.


Originally Posted by robin1234 View Post
I haven't explored the remittance basis, as I believe there's some high initial fixed cost that it involves, making it unattractive for a person with low to average income??
I'm not sure there's an initial cost. It's really NonDom status, so it's £30,000/year after 7 years. I do think you'll struggle to have this status accepted given your circumstances (retired), but it might work if it results in the best scenario for you. If you were a Brit, head of HSBC, Hong Kong was your main home to which you would return, and you're in the UK to fulfil the position for a limited period, it would definitely work (at least it does for the current head of HSBC).

Originally Posted by robin1234 View Post
What's the thing about only ninety percent of US SS being taxable in UK?

For US SSA, on the SA form (on the additional foreign income pages) under foreign pensions, you first list the gross amount (in £'s), then in the last column you list the taxable amount which is 90% of the gross amount. (See the instructions for the additional foreign income pages.)

Last edited by theOAP; Aug 13th 2015 at 9:00 am.
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Old Aug 13th 2015, 11:57 am
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Default Re: Hello HMRC ... anyone there?

Originally Posted by theOAP View Post

I'm not sure there's an initial cost. It's really NonDom status, so it's £30,000/year after 7 years. I do think you'll struggle to have this status accepted given your circumstances (retired), but it might work if it results in the best scenario for you. If you were a Brit, head of HSBC, Hong Kong was your main home to which you would return, and you're in the UK to fulfil the position for a limited period, it would definitely work (at least it does for the current head of HSBC).
As a dual US/UK citizen I don't think you'll see a vast difference in your tax bill between the UK remittance or arising basis. There might be some advantages with capital gains rates or allowances, but any money you leave in the US will be taxed by the IRS and money you bring to the UK will get taxed there. So whether you choose the arising or the remittance basis all you money will be taxed by someone.
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Old Aug 13th 2015, 7:50 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by nun View Post
As a dual US/UK citizen I don't think you'll see a vast difference in your tax bill between the UK remittance or arising basis. There might be some advantages with capital gains rates or allowances, but any money you leave in the US will be taxed by the IRS and money you bring to the UK will get taxed there. So whether you choose the arising or the remittance basis all you money will be taxed by someone.
For this thread, the quick thought was less to do with the actual tax due, and more to do with easing reporting in either country.

In the end, it will probably be a case of Robin filing in the UK on the arising basis and finding a way to do the reporting. HMRC are usually quite relaxed, although I'm sure there are horror stories. As long as an attempt is being made to pay HMRC the tax due, they're quite laid back as compared to the never ceasing threatening IRS letters and IRS own calculations of tax due, pay now.

When thinking of these scenarios, there are always the "complications". If someone files as a NonDom, remittance in the UK, what happens to taxation if the individual receives US SS deposited in the States? Supposedly, remittance basis means only funds sent to the UK are taxed, so if the US SS is deposited in the States, which applies: the UK remittance rules or the Treaty/Totalisation Agreement which says the gross amount is taxed in the UK? I'm not even going to bother thinking more about that!
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Old Aug 13th 2015, 8:12 pm
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Default Re: Hello HMRC ... anyone there?

Inquiries about NICs are best dealt with by writing to Longbenton. This is particularly true where your inquiry has international complications.
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Old Aug 13th 2015, 8:39 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by theOAP View Post
When thinking of these scenarios, there are always the "complications". If someone files as a NonDom, remittance in the UK, what happens to taxation if the individual receives US SS deposited in the States? Supposedly, remittance basis means only funds sent to the UK are taxed, so if the US SS is deposited in the States, which applies: the UK remittance rules or the Treaty/Totalisation Agreement which says the gross amount is taxed in the UK? I'm not even going to bother thinking more about that!
I like this...no US tax due on US SS when paid to a UK resident.....no UK tax due on funds not remitted to the UK....if someone is in that situation and has expenses in the US it might be a little loophole.
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Old Aug 13th 2015, 8:59 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by nun View Post
As there is zero US tax to pay on US SS when paid to a UK tax resident you cannot claim a US tax credit for any UK tax you have to pay on it.
I am trying to understand this thread since I just moved back to the UK. I will have both US and UK earnings (salary) for 2015 and I am also collecting a U.S. company pension. I do have an accountant in the U.S. who will handle my US returns. He has dealt with overseas US residents before but never one from the UK who is also a U.S. citizen so I think there will be a slight learning curve there. I don't yet have an accountant in the UK.

From what I am reading it seems I will be paying taxes only in the UK which will be offset by tax credits in the U.S. Is this correct?

I hope to retire in the next two to three years. I believe I have to work until 66 - I think that is the age at which I become eligible for full US SS. At that point, if I pay taxes in the UK, which are offset by tax credits in the U.S., won't I end up paying more tax on my SS than if I had been resident in the U.S.?

I understand UK tax returns are due in April every year just like the US but is there anything I have to do this December?
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Old Aug 13th 2015, 11:50 pm
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Default Re: Hello HMRC ... anyone there?

Originally Posted by windsong View Post
I am trying to understand this thread since I just moved back to the UK. I will have both US and UK earnings (salary) for 2015 and I am also collecting a U.S. company pension. I do have an accountant in the U.S. who will handle my US returns. He has dealt with overseas US residents before but never one from the UK who is also a U.S. citizen so I think there will be a slight learning curve there. I don't yet have an accountant in the UK.

From what I am reading it seems I will be paying taxes only in the UK which will be offset by tax credits in the U.S. Is this correct?

I hope to retire in the next two to three years. I believe I have to work until 66 - I think that is the age at which I become eligible for full US SS. At that point, if I pay taxes in the UK, which are offset by tax credits in the U.S., won't I end up paying more tax on my SS than if I had been resident in the U.S.?

I understand UK tax returns are due in April every year just like the US but is there anything I have to do this December?
If you intend to retire and live permanently in the UK, HMRC will tax your worldwide income on an arising basis. As a US citizen the US wants to do the same. You, and your accountants, need to pay the correct amount of tax to each country.

The problem with using a US accountant is that they have a US-centric approach and must comply with domestic regulations and often neglect to understand that as a UK resident your primary taxation authority is now HMRC.
A gross generalization is that you pay the UK first...even tax on US income and gains (dividends are a special case)....and then you take a credit on your US taxes for the taxes you have paid to the UK.

As for your US SS that is not taxable in the US and you will pay tax on it in the UK at your marginal income tax rate. You lose the possibility of having some of it be tax free that you'd get if you lived in the US. As for the US company pension that is fully taxable in the UK and you will have to resource that by treaty so you can take a foreign tax credit on your US tax return. If there is any withholding tax you'll also enter that you your US taxes. The result might well be a refund check.
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