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UK Tax question

UK Tax question

Old Jan 31st 2011, 2:48 pm
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Default UK Tax question

Following on from my thrilling thread about caravans, I'm now after some info about tax. What a wild and exciting life I lead....

Anyway...I've been out of the UK for 16 years, always filed taxes etc etc but am having a wee problem with HMRC about my 2008/2009 return.

I have investment income in the UK (rental, interest, dividends etc) which I've always paid tax on over and above the Personal Allowances etc (its all been declared here and credit taken on my US return for foreign tax paid ). For the year in question I received an invoice for much higher tax than I'd calculated and have been trying to find out why. HMRC seem in total disarry, and it is taking for ever to communicate with them, but I finally got to talk to someone today who said that I am no longer entitled to UK Personal Allowances. She confirmed that I've always been allowed them in the past, but couldn't tell me why they were disallowed this time - she thought maybe there had been a change in the law, but couldn't really say.....

I've googled around and can't find anything that I understand that definitively tells me either way...My UK tax guy is out of town this week so I cant get hold of him to check, and in any case, he's way past retirement age and I'm wondering if he's lost the plot and missed a change.

Does anyone know if we are still entitled to UK Personal Allowances? Or did something happen in 08 that changed it?

Cheers
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Old Jan 31st 2011, 9:04 pm
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Default Re: UK Tax question

If you're not resident in the UK, but remain a UK or EU Citizen, then you are always entitled to your personal allowance. I'm not aware of any changes in this area.
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Old Jan 31st 2011, 11:27 pm
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Default Re: UK Tax question

Peter - thanks for that. Its what my UK tax guy has been saying (reassuring to know he hasn't lost his marbles then!) but HMRC don't seem to want to acknowledge it but can't give a reason why. My tax guy has written to them 3 times since the return was filed, asking for an explanation, but all HMRC do is send out a revised invoce with interest added!
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Old Feb 1st 2011, 1:23 am
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Default Re: UK Tax question

Here's the link from HMRC website:
http://www.hmrc.gov.uk/cnr/allow_nonres.htm
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Old Feb 1st 2011, 2:19 am
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Default Re: UK Tax question

Thanks for that link - that is pretty unequivocal....the references I found kept burbling on about whether the individual was paying on a remittance basis and I had no idea what that meant.
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Old Feb 2nd 2011, 5:38 am
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Default Re: UK Tax question

Originally Posted by Yorkieabroad View Post
Peter - thanks for that. Its what my UK tax guy has been saying (reassuring to know he hasn't lost his marbles then!) but HMRC don't seem to want to acknowledge it but can't give a reason why. My tax guy has written to them 3 times since the return was filed, asking for an explanation, but all HMRC do is send out a revised invoce with interest added!
thanks for the link...
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Old Feb 2nd 2011, 3:35 pm
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Default Re: UK Tax question

Hm, I hadn't heard about the R105 form before. I was about the file the R85 form to have bank interest paid without taxation. Does anyone know which one I should file?

http://www.hmrc.gov.uk/forms/r85.pdf
http://www.hmrc.gov.uk/forms/r105.pdf
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Old Feb 2nd 2011, 4:13 pm
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Default Re: UK Tax question

From the look of those links the 85 is for folk with income below the allowance, and the 105 is for non-residents. I think. Could have sworn it was the 85 I filled in when I left, but may be mistaken.
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Old Feb 2nd 2011, 4:48 pm
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Default Re: UK Tax question

I'm a nonresident with (UK) income below the allowance, so I've emailed my UK bank to ask which one I should file. The R85 form is available directly from their site, whereas the R105 says some banks won't take it.
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Old Feb 2nd 2011, 4:56 pm
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Default Re: UK Tax question

Originally Posted by Yorkieabroad View Post
From the look of those links the 85 is for folk with income below the allowance, and the 105 is for non-residents. I think. Could have sworn it was the 85 I filled in when I left, but may be mistaken.
Hi Yorkie,

It looks to me as though HMRC are regarding you as resident in the UK for tax purposes even though they are not treating you as ordinarily resident or domiciled there (you are a NON-DOM, they say). Possibly it's because the wrong or no form was completed.

I am not domiciled and complete the Residence, Remittance Basis (form sa109) in the printed tax return (the bit that I do not file online) and mail it to Bootle (CAR) each year, showing the days I actually spent in the UK in the tax year and going back several years.

http://www.hmrc.gov.uk/forms/sa109.pdf

Under the new tax rules effective April 6,2008 if you elect to be taxed on the remittance basis (i.e. you only pay tax on what arose in or was remitted to the UK) you lose your personal allowance.

It is from this misguided premise on the part of HMRC that your advisors should work.

Quote:
How to use the Remittance Basis of Taxation from 6 April 2008

As a result of the UK Finance Act 2008, the way we tax the foreign income of people who are resident in the UK but are not ordinarily resident and/or not domiciled here is changing. These changes have effect from 6 April 2008. Assessment return to be sent to you. Unquote:

Last edited by Pistolpete2; Feb 2nd 2011 at 5:41 pm. Reason: misdescribed
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Old Mar 11th 2011, 2:07 am
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Default Re: UK Tax question

Had a call from my tax guy today.

He has received a letter from HMRC apologising for their error, and advising a reasonable chunk of refund is being arranged. The calculation of the refund was not enclosed - that will come by seperate cover(?), but apparently when the data entry clerk transferred my paper return to their computer they inadvertently checked a box that removed my personal allowance.

The letter also released me from any further filing of UK Self Assessment forms (yay!), which is what my guy had been advising me since last year. However last week I received a letter advising me of a 100 pound penalty for late filing last years taxes....My tax guy has followed this up, and received assurances that it will be removed, and HMRC reconfirmed (verbally) no need to file any more.

I will be selling some UK property later this year, and that will not be liable to UK CGT, due to time out of the UK (reconfirmed by HMRC Inspector of Taxes in Wales, in writing) but will obviously be liable to US CGT which will be lower.

So at last making progress - been like pulling teeth, but in the near future I see only one taxing authority in my life, which has to be good news!
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Old Mar 11th 2011, 3:21 pm
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Default Re: UK Tax question

Originally Posted by Yorkieabroad View Post
Had a call from my tax guy today.

He has received a letter from HMRC apologising for their error, and advising a reasonable chunk of refund is being arranged. The calculation of the refund was not enclosed - that will come by seperate cover(?), but apparently when the data entry clerk transferred my paper return to their computer they inadvertently checked a box that removed my personal allowance.

The letter also released me from any further filing of UK Self Assessment forms (yay!), which is what my guy had been advising me since last year. However last week I received a letter advising me of a 100 pound penalty for late filing last years taxes....My tax guy has followed this up, and received assurances that it will be removed, and HMRC reconfirmed (verbally) no need to file any more.

I will be selling some UK property later this year, and that will not be liable to UK CGT, due to time out of the UK (reconfirmed by HMRC Inspector of Taxes in Wales, in writing:thumbsup but will obviously be liable to US CGT which will be lower.

So at last making progress - been like pulling teeth, but in the near future I see only one taxing authority in my life, which has to be good news!
What was the length of time out of interest (and what do they call it so I can look it up).
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Old Mar 11th 2011, 3:26 pm
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Default Re: UK Tax question

It was 5 complete tax years. Not sure what they call it as the letter just confirms that I will no longer be liable after April 5th this year. I have been out of the UK since 1995, but had 5 months back there in 2005, so that reset the clock.
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