EUSTD and retention/withheld tax

LinLin

My bank on the Isle of Man told me over the phone that the retention tax (20%) was paid to the UK (HMRC).

But in researching this, I see some sources that say 75% goes to my country of residence (UK) and 25% is kept by the collector (Isle of Man bank in this case). Is that correct? If so, it would appear that 25% goes into a sort of limbo, and certainly I don't want to simply lose it. Can I claim that 25% as tax paid when it hasn't in fact been paid to HMRC? If yes, then how?

Or was my bank correct in saying that 100% of the tax has in fact gone to HMRC?

jonesMUFCforever

No it is the price you pay for having money offshore.

noh

The collector is the Isle of Man tax authority. It is they who keep the 25% of the tax retained.
see section 5 of http://www.gov.im/lib/docs/iomfinance/brochures/guidetotheeuropeansavingstaxdirectiv.pdf


From the 1st of July 2011 IOM will move to automatic exchange of information.
So there will no longer be a retention tax but full details of your account will be passed to your home tax authority if in the EU.
http://mygov.im/lib/news/investiniom/isleofmanannounc.xml

LinLin

No it is the price you pay for having money offshore.

Good grief -- I cannot believe that the bank never bothered to mention this. IoM takes 25% of any gain, and then UK tax to pay on top of that?

From the 1st of July 2011 IOM will move to automatic exchange of information.
So there will no longer be a retention tax but full details of your account will be passed to your home tax authority if in the EU.

Does this mean IoM will no longer gets their 25% cut of gains? Seems hard to believe they would willingly give up such easy takings.

noh

LinLin wrote: »

Good grief -- I cannot believe that the bank never bothered to mention this. IoM takes 25% of any gain, and then UK tax to pay on top of that?

Does this mean IoM will no longer gets their 25% cut of gains? Seems hard to believe they would willingly give up such easy takings.

Of course they mentioned it.
Read the T+Cs of the account.
No they dont take 25% of the gain. They keep 25% of the witholding tax.
There is currently no UK tax paid on top of the 20% deducted.
If you are a higher rate tax payer interest received should be declared on your tax return.
Currently the IOM tax authority collect 20% tax on interest and pass 75% of that as a bulk payment (ie yours and every other UK residents) to the UK tax authority without disclosing your details.

Next year that rate will rise to 35% in accordance with the EU directive. That directive gives the option of applying a witholding tax or full disclosure.

The IOM government have decided, as I mentioned above, to go for full disclosure from next year. They will pay interest gross and pass on full detals to the tax authority in your own country.

Cook_County

Lin-Lin - take urgent paid professional advice on how to complete your UK tax return.

rickbonar

The retention tax is going and you'll have to put your money in banks outside the EU jurisdiction. Mr Tax and inflation can F awefh.

What's good enough for Roman is good enough for the rest of us.