Social charges on this years tax bill

[Chocfish]

So I am back once again to try and understand this year's tax bill... we have some UK income from rental properties and dividends, all of which is declared in the UK and which is well below our personal allowance in the UK (though I am coming to understand that this is irrelevant as we are tax residents in France).

The main change this year seems to be that the tax credit applied when calculating the social charges has been reduced considerably.

Last year the tax credit was around 98%, thus reducing the social charges to very little. This year, the tax credit that has been applied is closer to 70%. Does this sound right?

Also, according to the 'avis primitif' we've got to pay the entire tax bill in full before the 15 September... last year we were able to pay in three instalments. Possibly this is a tactic to push us towards agreeing to monthly payments?

Cheers for any feedback.

[NormanH]

Weren't the installments due in  Jan/Feb ; May; and  September, making the bill paid in fact by September 15th ?

I can see that if the bill is much higher than expected you might not have paid enough in the first two installments.

L'acompte provisionnel 2017, ou « tiers

provisionnel 2017 », permet de payer son impôt sur les revenus de

l'année 2016 en trois fois : un acompte en février, un second en mai,

puis le solde en septembre. Ainsi, lorsque le contribuable recevra son avis d'imposition

par courrier en août 2017, il aura déjà payé une grande partie de son

impôt via le versement des deux premiers tiers provisionnel versés en

février et en mai.

Ce paiement par tiers provisionnel concerne les contribuables n'ayant pas opté pour le prélèvement mensuel.

Source : http://droit-finances.commentcamarche.net/faq/21969-acompte-2017-d-impot-sur-le-revenu

Usually the tax people are pretty understanding in you go in and see them..

[Chocfish]

Ahhhhhhh.. still learning! Basically, in France, we pay tax in advance throughout the year then balance it out in September? I had it totally back to front - thinking that the payment plan for the year was based on the declaration submitted the year before.

We hadn't realised that the Jan and May payments were nothing more than a guess-timate based on last year's payments, and indeed we have a large amount still to pay in September. Which leads me to another question... on our 2016 Avis d'Impot in the top LHS is says "Vous bénéficiez de la baisse de l'impôt sur le revenu votée dans la loi de finances pour 2016.

Votre impôt est de *** €. Sans cette baisse, il aurait été de * *** €."

This reduction, which doesn't seem to be available this year (?) reduced last year's tax by half: the guesstimate was based on this reduced figure, so our first two payments are piddly compared to this years total. Ho hum.

Any ideas on the change from 98% to 70% tax credit on the social charges?

[NormanH]

It  isn't really in advance, since it tax on last year's (2016) income.

2016 you have X income

2017 February you pay a third of the estimated bill based on the tax paid in  September 2016 on your 2015 income.

2017 May similarly, and you declare the actual income for 2016 which by then should be clear.

 2017 August you get the Avis for the total liability, two thirds of which theoretically has already been paid

2017 September you pay the balance....

I don't know anything about a reduction being removed.

The forms were slightly different this year. Did you declare in different way (putting sums in different boxes on the form for example) ?

[Daft Doctor]

There has been no change to the policy on how the reduction is social charges is calculated for UK property income, it should be a straight 100%. Check your avis carefully, as a few years ago they did initially try to charge me in full, until I pointed out their mistake. I do pay social charges on my private pension income, as I am an early retiree, could you have some of this sort of income which has been take into account perhaps?

[Chocfish]

So it should be 100% tax credit for the social charges on the UK rental income? The only other UK income we have is some dividends, but that was the same last year and they applied nearly a 100% credit that year. Our situation changes very little each year so I completed the form in exactly the same way (I think!) - it's the Impots way of dealing with it that seems to vary each year...

I think we'll head to the tax office when we get back home and follow it up.

Re. the 'baisse d'impot'... as far as I can make it, each year the govt passes a new 'loi de finances' which often includes some kind of tax reduction for specific groups such as lower income families. I guess in 2016 we must have been included in whichever lucky group received a rebate, and this year we aren't.

[pomme]

Is the UK income from rental properties and dividends the only income you have? No UK or French pension, no French interest, etc?

[Daft Doctor]

Social charges on UK property income should be itemised on the avis but then added back 100% so become a paper transaction only.

Tax is treated differently. The tax credit applied in respect of UK property income should equal the proportion of your total income tax charge that equates to the proportion that your UK property income forms of the total income assessed. For instance, if you had 20k euros of UK property income and 20k euros of other French taxable income, tax would be calculated on an income of 40k euros, but a credit of 50% would then be applied. It will not be the same result as would be if the UK property income was excluded from the calculations altogether, since adding the UK property income in before calculating the total tax due often pushes you into a higher tax bracket. Then again, the tax credit applied will likely be more than the actual UK tax you will pay on that income, especially considering the personal tax allowance applicable in the UK.

[Chocfish]

We have:

French salary (my husband works here)

French bank accounts

UK rental income

UK dividend income

UK bank account interest

And that's it.

[parsnips]

Hi,

   The tax calculation is not quite as simple as that;

   Tax is assessed on the total income then a credit is calculated as follows -

Notional tax on total  income  X    Exempt income (in this case rents)/ divided by total income, the result of this is the credit which is then deducted from the total" notional" tax, to get the tax payable.  It is not as simple as a straight percentage reduction as it takes into account abattements and tax bands.