spainrico

Anyone got any advice / experience of this one.

I am British. I live full time in Spain and I am fiscally resident. My private UK company pension is paid gross of tax and I declare it in Spain.

I have sterling savings in the UK with Lloyds TSB, their web site advises if you are non UK resident you can claim the interest gross after submitting an Inland Revenue R105.

Today Lloyds have informed me via letter that
"Under Inland Revenue regulations customers who are not resident in the UK (ie me) are not entitled to gross interest payments"

So who is?

What is the point of the R105 which is entitled:
"Application for a not ordinarily resident saver to receive interest without tax taken off"

What am I missing here? Because to me this makes no sense I qualify but I don't according to Lloyds.

I do not understand financial companies can opt out of undertaking this addtional admin - that is a different matter -

If LLoyds said "Tough we don't operate this scheme" then so be it but to claim I don't qualify is nonsense - surely?

snikpoh

I personally think that Lloyds are wrong (unless someone knows better). I do just the same with all my savings accounts and then declare any interest earned via my Spanish tax form.

If I'm not resident in UK, why should I pay tax there? Or, perhaps, I should move my savings out of UK but then I need to make regular payments (endowment policies etc.) in sterling so why should I?

shaggymon

It may be similar to Nationwide:

"Nationwide does not accept the HM Revenue & Customs R105 form for registration of gross interest. To reclaim any tax paid from HM Revenue and Customs please use a Section 975 tax certificate which you can order online or at your nearest branch."

Basically you get your interest net and have to reclaim the tax paid from HMRC.

Fred James

Banks are not obliged to accept an R105 and HMRC do not publish a list of those that do although they will tell you if you ask about a specific bank.

From what I have read previously, Lloyds do not accept it.

All I can suggest is that you move it to a bank that does or put it offshore where it will be paid gross.

shaggymon

...or "use a Section 975 tax certificate"

johncar61

Sorry to disagree, but not so.

With Nationwide and any other bank/building Soc etc who will not pay interest gross, one must claim back from the Customs and Excise (Inland Revenue) They will repay, not sure if it 12% or 8%, its one or the other. They will not repay all the interest. Then one can claim back the percentage kept by the UK tax man by off setting it against the tax due to be paid in Spain. If you don't pay tax you loose it.

The double taxation agreements with different countries lay down different rules.

The forms R105 are I believe for people who live in UK but are not liable to pay, not enough income.

Off shore banks, I believe, will normally pay interest gross and then one declares it in Spain.

spainrico

OK so basically then - Lloyds do not do it, as originally posted I understand that is their option and they keep their admin simple and just take flat rate tax from everybody (and I can understand that - UK business is burdened with enough work from the UK Gov)

I just think their letter is unclear and confusing.

spainrico

Thanks for posting John - but the R105 is called (as originally posted)

Application for a not ordinarily resident saver to receive interest without tax taken off

I still say that is me! (and others)

http://www.hmrc.gov.uk/forms/r105.pdf

johncar61

Further to my post.

I have written to Graham Beale CEO Nationwide, asking why they will not pay gross as it would seem cheaper for them rather than having to deal with claim forms, which probably leave us out of pocket too. The reply, on his behalf, was, that was the way they do it and suggesting I go to Nationwide Off Shore, which I have done. They pay gross.

johncar61

I did say 'I believe' that was who it was for. However, the rest of my post is correct. The Tax Man will not repay all the interest stopped by the bank/building Soc. Most tax officers, on the enquiry lines don't know this, that's why I cannot say if it 12% or 8%.

johncar61

OK straight from the horse's mouth. Just spoke to UK tax woman.

The UK tax man keeps 12% of the standard 20% stopped by the bank etc. if you pay tax on any other income in UK, say a Government employee pension (police officer etc)

Form R105 is for those with no taxable income in UK.

shaggymon

This is the R85.

johncar61

Maybe this explains it:


Residence and domicile issues
Including forms P85, P85(S) and P86


If you have left or are about to leave the UK, you should normally complete form P85, or in certain cases form P85(S). You can find more information on these forms using the links below.

If you have come to the UK for the first time or after a period of absence, you should normally complete form P86.

Individuals who are not ordinarily resident may register with their building society, bank or other deposit taker to receive interest without the deduction of tax. You can do this by completing declaration form R105 and sending it to your building society, bank or other deposit taker. This form is available in a number of foreign languages - see below for languages available

Can I complete form R85?

If your total taxable income is less than the tax free allowance you are due, you can complete form R85 and receive your bank or building society interest without tax taken off. But only if your bank has adopted that system.



But which ever form you need, if you have a taxable source of income (more than the tax free allowance) in the UK, you can only recover 8% of the 20%

Don Limpio

Barclays Bank have also opted out of paying interest gross as from 1st Jan. Although seemingly not Nat West. From what I understand, we then claim back from the Inland Revenue. As our incomes do not exceed our allowances we should get the full amount back.

spainrico

I have studied the R105 again - it says - quote

"To make an application to receive interest with no tax taken off"

(They actually embolden the 'no' not me)