Uk Tax Query

[jippytum]

I HAVE LIVED IN THAILAND 25 YEARS. I JUST RECEIVED MY REDUCED OAP AND HAVE SMALL PRIVATE PENSION . I REALISE I HAVE TO PAY TAX ON UK INCOME OVER MY PERSONAL ALLOWANCE.THE TAXMAN HAS DEDUCTED AN AMOUNT FOR UNTAXED INTEREST ON OFFSHORE DEPOSIT. DO I HAVE TO PAY TAX ON OFFSHORE SAVINGS ACCOUNTS IN THE I.O.M.

[Ricardo]

Your UK-government-pension is presumably reduced, on the grounds that you hadn't paid the full 30 years' contributions. Note that the current government are promising a completely new pension-system, with a higher starting-payment, by 2015, which may affect you (nobody seems to know the full-details yet).

Personal-allowances have just been raised again, in the new Budget, and are anyway higher for people aged over-65. If you try www.hmrc.gov.uk you'll see it gives the Personal Allowance as GBP 7,475, unless you're aged 65-74, when it is GBP 9,940. So your "small private pension" and "reduced OAP" may hopefully be under the limit ?

On your offshore-savings, these ought to be paid tax-free if you're resident outside the EC, and should not need to be declared by you on any return to HMRC. But are your bank/building-society and/or HMRC aware that you're non-resident for Income-Tax purposes, did you ever tell them your Thai-address & departure-date, & get an acknowledgement ?

If you've been non-resident for over 20 years, you may also now be considered non-domiciled, which has possible-implications for your Inheritance-Tax liability, when you die. The problem with that is, HMRC don't like to tell you what hurdles you may have to jump, they prefer to keep us in-ignorance, and argue-the-toss after-the-final-event.

Good-Luck in dealing with HMRC and your IoM bank, on the face of it you may not be liable for the tax on your offshore-funds, and should certainly try to claim a refund of the deduction already-made !

[PattayaParent]

Firstly how does the taxman know you have an offshore deposit if you've lived in Thailand for 25 years?

Have you established with your IOM bank that you are not resident in EU and not subject to the EUSD? Otherwise they may have reported your account to the taxman as a EU resident.

What do you mean by 'reduced' OAP? Are you getting the basic pension? (£97) or less than? or a reduced maximum pension?

[jippytum]

Firstly how does the taxman know you have an offshore deposit if you've lived in Thailand for 25 years?

Have you established with your IOM bank that you are not resident in EU and not subject to the EUSD? Otherwise they may have reported your account to the taxman as a EU resident.

What do you mean by 'reduced' OAP? Are you getting the basic pension? (£97) or less than? or a reduced maximum pension?

Thanks for your replies .I was 65 in

[chiang mai]

.. but perhaps didn't make it to 66? Sorry, couldn't resist.

[jippytum]

Firstly how does the taxman know you have an offshore deposit if you've lived in Thailand for 25 years?

Have you established with your IOM bank that you are not resident in EU and not subject to the EUSD? Otherwise they may have reported your account to the taxman as a EU resident.

What do you mean by 'reduced' OAP? Are you getting the basic pension? (£97) or less than? or a reduced maximum pension?

Thanks for your replies .I was 65 in November.Filled in recent tax form . receive reduced pension of £80.40 per week. not paid 30 years. plus private company pension .Together less than personal allowance of £9940 form p84sent to advise when I left the uk . Although not applicable to eu tax.interest is paid without deduction of tax offshore but the banks still advise taxman if uk passport. Recent oap pensions plus interest from offshore deposit take me over the limit and subject to tax according to recent letter .

[chiang mai]

My apologies for my earlier foolishness, now, as to your question:

There seems to be two issues, the first is when you actually left the UK and exactly when HMRC declared you non-resident for tax purposes.

The second issue is whether the banks you invest with understand that you left the UK 25 years ago (see the above question for context), depending on that answer the banks should not deduct UK tax, providing you have a non-UK address/residency. Without wishing to second guess your answers it seems that the offshore banks accept you are not UK resident but that the HMRC does not. Perhaps you can clarify.

[PattayaParent]

Firstly how does the taxman know you have an offshore deposit if you've lived in Thailand for 25 years?

Have you established with your IOM bank that you are not resident in EU and not subject to the EUSD? Otherwise they may have reported your account to the taxman as a EU resident.

What do you mean by 'reduced' OAP? Are you getting the basic pension? (£97) or less than? or a reduced maximum pension?

Thanks for your replies .I was 65 in November.Filled in recent tax form . receive reduced pension of £80.40 per week. not paid 30 years. plus private company pension .Together less than personal allowance of £9940 form p84sent to advise when I left the uk . Although not applicable to eu tax.interest is paid without deduction of tax offshore but the banks still advise taxman if uk passport. Recent oap pensions plus interest from offshore deposit take me over the limit and subject to tax according to recent letter .

errr, no they don't, unless this is a specific rule for pensioners? Or you haven't declared that you are not eligible for reporting under the EUSD and they are treating you as a UK resident?

[jippytum]

Firstly how does the taxman know you have an offshore deposit if you've lived in Thailand for 25 years?

Have you established with your IOM bank that you are not resident in EU and not subject to the EUSD? Otherwise they may have reported your account to the taxman as a EU resident.

What do you mean by 'reduced' OAP? Are you getting the basic pension? (£97) or less than? or a reduced maximum pension?

Thanks for your replies .I was 65 in November.Filled in recent tax form . receive reduced pension of £80.40 per week. not paid 30 years. plus private company pension .Together less than personal allowance of £9940 form p84sent to advise when I left the uk . Although not applicable to eu tax.interest is paid without deduction of tax offshore but the banks still advise taxman if uk passport. Recent oap pensions plus interest from offshore deposit take me over the limit and subject to tax according to recent letter .

errr, no they don't, unless this is a specific rule for pensioners? Or you haven't declared that you are not eligible for reporting under the EUSD and they are treating you as a UK resident?

[jippytum]

yes the offshore banks agree my non resident status the tax people do not. Both small pensions are paid into offshore account .I was advised to close all UK ACCOUNTS WHEN i left. Any tax deductions will be from company private pension .So the tax people know the bank details.Although I completed p84 to advise leaving the UK in 2006 .I have written again to appeal .To me it is a clear case I have no connection with the UK and offshore deposits should be nontaxable.I will take further advice if appeal denied.

thanks to all for replies

[JohnC]

Also have a look at this : http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_4015739

[PattayaParent]

Also have a look at this : http://www.direct.go...ents/DG_4015739

Surely only applicable to interest arising within the UK.

Or interest arising offshore when the accuont holder in UK resident for tax purposes, which the OP apppears not to be.

[chiang mai]

yes the offshore banks agree my non resident status the tax people do not. Both small pensions are paid into offshore account .I was advised to close all UK ACCOUNTS WHEN i left. Any tax deductions will be from company private pension .So the tax people know the bank details.Although I completed p84 to advise leaving the UK in 2006 .I have written again to appeal .To me it is a clear case I have no connection with the UK and offshore deposits should be nontaxable.I will take further advice if appeal denied.

thanks to all for replies

You say that both small pensions are paid into an account offshore, question is where do those pensions arise? If those two small pensions arise in the UK then perhaps the total of them, along with your reduced State pension, exceeds your annual allowance, if that's the case then perhaps that's why HMRC has decided to tax your offshore savings.