Is it OK to PRE-PAY taxes?

LinLin

Hi - I'm an expat living in the UK and had some investment income last year. UK taxes have already been deducted and paid, even though I didn't bring in (remit) all the money to the UK.
Rather than apply for a refund for 2009-2010 for the overpayment and then pay the tax in 2010-2011, is it OK to NOT apply for a refund, effectively pre-pay the tax, and then bring the rest of the money in this year?

For example, £3,200 in interest earned 2009-2010, £800 UK tax paid at source in 2009-2010.
£1,000 remitted to the UK in 2009-2010 (£250 tax due, £800 paid)
£2,000 remitted to the UK in 2010-2011 (£550 tax due)

Do I HAVE to apply for a refund of £550 (£800-£250) for 2009-2010, and then pay £550 in 2010-2011?

Next time I'll remit it all the year it was made so as to avoid this confusion.

Gertie_Walker

Yes, each income tax year is compeltely separate and so you have to pay at the going rate for each year. (This is because income tax was a temporary measure to raise funds to fight Napoleon - I hope you are not French.)

LinLin

Ha -- no, not French.

That's a very simple, clear answer. Thank you.

Cook_County

If you have had UK tax withheld (eg not EUSTD) than it is all UK source and all taxable whether or not remitted to the UK.

LinLin

If you have had UK tax withheld (eg not EUSTD) than it is all UK source and all taxable whether or not remitted to the UK.

I don't understand what EUSTD means, but the income was from the Isle of Man and they have paid UK tax on the entire amount already.

So do I NOT apply for a refund of the overpaid tax? That _is_ my preference.

Cook_County

LinLin wrote: »

I don't understand what EUSTD means, but the income was from the Isle of Man and they have paid UK tax on the entire amount already.

So do I NOT apply for a refund of the overpaid tax? That _is_ my preference.

An Isle of Man bank will not and could not have withheld UK tax. It was probably EUSTD withholding which is entirely refundable to a UK resident - even if claiming the remittance basis.

LinLin

An Isle of Man bank will not and could not have withheld UK tax.

The statement clearly shows 'tax deducted'. The statement doesn't specify where it was paid to. When I called the Isle of Man bank to find out, they informed me it was tax paid to the UK.

Cook_County

OK you are really confused. You failed to have segregated accounts...so have accounts containing mixed "RFI". Because you failed to segregate, if you remit any of the money to the UK it will be taxable to the extent of income or gains in the account.

This assumes of course that you elect the remittance basis on your return.

You can claim credit for all of the tax anyway as it simply was not UK tax because the IoM is not in the UK. Ask the bank for a certificate - sure - but take proper advice as well.

Cook_County

LinLin wrote: »

The statement clearly shows 'tax deducted'. The statement doesn't specify where it was paid to. When I called the Isle of Man bank to find out, they informed me it was tax paid to the UK.

But in your other thread you clearly said it was EUSTD withholding...you have got the worst possible answer by failing to take advice on this.