Should this person be a non tax payer?

martin57

Hi,

I am asking this on behalf of a family member who lives in the Republic of Ireland. He has started receiving an occupational pension from UK just a small amout of under £600 a year, about £50 a mth but HMRC are taxing him at £10 a mth.

I am almost certain that he should be paying no tax atall as thsi is his only income from the UK, he has filled in the forms and wrote covering letters to HMRC in Newcastle explaining his Irish Republic residentcy, but has today received a BR coding for years 12/13.

I have told him to be patient that it is very probable that this coding is not in response to his letters to HMRC and knowing the turmoil in their systems it could well take maybe up to a year to get his proper tax code sorted out.

Am I right in thinking though that since this yearly amount of £600 is his only income from UK that it should not be taxable?

Thanks
Martin57

Andy_WSM

Hi martin57

I strongly disagree with that, for someone who is on such a small income should defo not be paying tax, tax is at 20% on everything so prices there have gone way up and now adays £10 is rather alot, I think you should get back on there case and explain that he can only just afford to live on £50 pm and would find it impossible to live on £40. You need to stick it to them hard, sometimes you have to be harsh to be fair.

dzug1

The income arises in the UK and is therefore taxable in the UK.

What I am not sure about is whether an Irish resident is entitled to a UK tax allowance (thereby effectively making the income untaxed) or not. I think he is, but am not 100% sure.

The income may well be taxable in Ireland though - in which case the UK tax might well be allowed as a credit towards the Irish tax

Cook_County

Under most treaties most pensions are taxable in the country of residence. Have you read the Double Tax Agreement (DTA)?

AirlieBird

UK/Ireland has a double taxation treaty. You can complete this form - http://www.hmrc.gov.uk/cnr/form_irl.htm - to claim relief at source on UK pensions but the income will need to be declared in Ireland.

RetiredInThailand

"If you are an individual not resident in the UK, you may claim tax allowances if:
you are a national of any European Economic Area (EEA) state, that is:

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, United Kingdom"

http://www.hmrc.gov.uk/cnr/allow_nonres.htm

Basically you put in a claim on form R43 for your normal personal allowance and the tax paid will be paid back. You still have to declare it in the country of residence, where it will be taxed accordingly.

dzug1

Cook_County wrote: »

Under most treaties most pensions are taxable in the country of residence. Have you read the Double Tax Agreement (DTA)?

I've looked at it and decided I don't want to read it;)