Offsetting offshore interest v pension tax relief

Dirty_Den

My wife moved to Guernsey when she was 11 (1989), she subsquently went to University in the UK 1996-1999 and started work in London in 2001. She has always had an offshore current account in Guernsey, registered at her family address.

she has been a higher rate taxpayer since 2003/4 and we calculate that she is entitled to approx £6,000 in tax relief on her pension contributions since 2003. After contacting the tax office she has been asked to fill in a tax return for first time.

I assume we need to declare the interest paid in the Guernsey current account and this will be offset against the tax relief claim. Is this correct?

Is my wife likely to be fined for non-disclosure? Is there anything we need to be aware of or is this a straightforward case?

Thanks in advance
DD

Cook_County

You need to specify whether your wife has a domicile of origin or dependency in Guernsey, if she has remittted funds to UK & if she segregated income & capital.

CLAPTON

presumably your wife is contributing to a personal pension scheme (i.e. contribution paid out of taxed income) and not to an occupational scheme (contributions paid from gross income)?

and she has paid 26,000 into the pension scheme over the four tax years 2003/4 to 2007/8?

Dirty_Den

Thanks for the questions!

You need to specify whether your wife has a domicile of origin or dependency in Guernsey, if she has remitted funds to UK & if she segregated income & capital.

> Not domicile in Guernsey. my wife's parents are domicile of choice in Guernsey. I don't think she would be domicile of dependency on this basis?

> I'm not sure what it means to remitted funds to UK or segregated income /capital? My wife has only ever had a current account and linked saving account in Guernsey plus a UK stocks and shares ISA. There isn't any tax 'planning' schemes in place, just a leftover current account from when she was living in Guernsey. We now have a joint UK account. for the last 2 years my wife hasn't had any money going into the Guernsey account


presumably your wife is contributing to a personal pension scheme (i.e. contribution paid out of taxed income) and not to an occupational scheme (contributions paid from gross income)?

and she has paid 26,000 into the pension scheme over the four tax years 2003/4 to 2007/8?


> Yes personal pension. actually £16k not 26k - so won't be 6k tax relief!