Claiming back tax paid on UK bank interest?

[Daft Doctor]

Sorry to bore everyone again, but it seems HMRC can't instruct UK banks not to deduct tax at source, so they say not to put such interest bearing accounts on Part C of the France Individual form. Am I right in thinking that you can however reclaim what tax has already been paid on UK bank interest via Part D of the form? If not, then how on earth (other than deducting it as a credit against any other UK tax payable through self-assessment) can you claim it back? Advice/insight much valued.

[Hereford]

We claim our UK tax on bank interest back every year by the simple expedient of self assessment forms. The interest and some rent we have in the UK are the only items we have to put on UK form (we do put a note to say that all other income and these two items are on a French return). Rent covered by personal allowances so tax deducted automatically repaid.

We do ours online ignoring bit that says you can't do it unless living in the UK. All it needs to let you carry on is a UK postcode - we put the one for our property but any valid postcode will do.**  We did the returns this year on Monday 8th April and repayments were in our bank account by the Friday.  Easy peasy.

If you have income that produces tax in the UK then this would not work so can only advise that you ask tax office.

You are quite right that the banks refuse to accept the IR form which would enable them to pay the interest gross, the banks will only pay gross to people who can say they are non-taxpayers.  The IR do have a form (or did) but they cannot force the banks to operate it.  I was told one day in a building society in the UK that they (B Soc) did not deduct the tax "the inland revenue do it".  I gave up at that point and we just reclaim it every year now.

** Inland revenue staff have actually suggested this to some people.

[Daft Doctor]

Thanks Hereford.  That does make sense, and I am in a similar position to you, I have UK property income but everything else is taxed in France.  I should be able to get the UK tax paid on my NHS pension refunded once I get my form France Individual signed off (hopefully tomorrow), but the tax on bank interest puzzled me a bit.  I will be over the personal allowance threshold sadly, so there will be something to pay. I can ask for this tax on bank intertest to be credited using the residence & remittance pages, which govern overseas residency, but they seem to ask for a certificate of overseas residency/tax liability.  Having said that a note to say that form FI has been submitted and already accepted may do for this (if they even look at the form that is).   

[Daft Doctor]

I think the problem might be with sorting Mrs DD out.  Her only income taxable in France is UK bank interest, but HMRC seem to be saying not reclaim this on a France Individual form.  If it has to be reclaimed through her UK tax return (which she fills in because of UK property income), she will still need to provide some form of certificate to HMRC to say she's liable for tax on this in France.  Any ideas?  I will of course ring HMRC when I can, but as I was going into the impots tomorrow with our French tax forms I was hoping to kill the 2 birds stone dead in one go.

[Mac]

Forgive me if this is wrong-but if you have a NHS pension don't you HAVE to pay tax on that in the UK and not in France as it is a government pension?

[Daft Doctor]

No, my NHS practitioner pension, like most NHS pensions, is paid by Xafinity Paymaster and although it is a public sector pension is definitely non-government for dual taxation purposes.  It is wholly taxable in France, unlike for instance teaching or civil service pensions.  

[Hereford]

Regarding Mrs DD. We found that having sent off the France Individual forms this was evidence for HMRC - they are stamped by the French Impots.

If you will still have to pay some tax in the Uk then the online SA form may not work and you will need to get repayment another way - i.e. by sending a repayment claim form to them by post. Enter tax paid on interest but write a note that it is not taxable in the Uk perhaps??  The Centre for non-residents helpline should know what to do if you telephone them. A pain to phone but may be the best way.

I doubt your local Impots will be any help on UK tax so I would not worry about them - just take the French return in and sort out HMRC yourself.

[Daft Doctor]

Hi Hereford, my confusion is that it seems that HMRC don't want you to put UK bank interest on the Form France Individual, even to reclaim via section D.  In their guidance notes they say they can't stop tax being taken off at source.  As such, there is nothing to reclaim for Mrs DD on a France Individual form, unless of course it can be signed simply as a certificate that you are now paying tax in France as a resident?  The rest of her income is either earned and taxed in France or, as in the case of UK property income, taxed in the UK. 

I think I'll have to seek advice on her specific circumstances from HMRC and then ask them what documentation is needed.  They may say to simply put the tax paid on UK bank interest on form FI for the first year then claim it back via self-assessment thereafter.  Can't ring HMRC today, makes a change the UK being on a public holiday and France not!  

[Hereford]

Sorry I was not clearer. You would claim the tax back on a yearly basis via a repayment claim form. The France Individual form is only sent once to establish that you or Mrs DD are now in the French system.  What I don't know is how this would work if in fact either of you have income that IS taxable in UK, and produces tax, putting in a SA form online will never really work as the software will get stressed if you put tax but no income in a heading!!!

We are both Chartered accountants so have managed to sort out our own tax as we know our way pretty well around the UK system but cannot see exactly how you can ge your tax back except with a repayment claim OR perhaps simply a paper SA form where you can write notes to explain the situation.  The downside is that it takes months for the paper forms to be processed whereas online it is days.

[Daft Doctor]

Hi Hereford. I've always done my own SA return, and use TaxCalc to do the forms and submit them to HMRC. The software allows you to attach any number of documents, to your return, so explanation is a little easier to achieve. I think you only have to do a paper return as a non-resident if you have to also send some sort of original signed certificate or other document otherwise I think it is still OK to do it online. I certainly did that in January this year, complete with my French address, I was just asked not to put my French postcode in the postcode box but just include it in the main address lines instead.

What I'm still not sure of is whether I can have a France Individual form signed for Mrs DD without her being in a position to claim relief from or reclaim tax paid on income taxable in France. The form would be blank apart from her personal details. I will ask HMRC tomorrow.

[Hereford]

We just use the HMRC software so that possibly makes a difference to the online return (it clearly states that it cannot be used unless in the UK - which is not true!).  We had specialist programs in the office but not now we are retired.

We do know of people who have sent back "blank" France Individual forms i.e. only name, and personal details as this establishes that you are in France.

[suein56]

[quote user="Hereford"]We do know of people who have sent back "blank" France Individual forms i.e. only name, and personal details as this establishes that you are in France. [/quote]

And the French fisc were happy to stamp these blank forms for return to the UK ?

I ask only because I have been helping someone who has just filled in her France Individual form (which took a while to establish all the details requested) and deposited it at her French tax office where it has been approved and stamped for her to return it to the UK.

Sue

[Daft Doctor]

Hi, I went down to the Impots today and it was very straightforward, a couple of quick questions and my forms France Individual were signed and stamped and the English version was given back to me to send to Cardiff.  I must say the helpful lady was only really interested in the first two pages, so I can see how a form not actually claiming tax exemption or repayment would be signed just the same. 

Will call Cardiff tomorrow and ask them what to do about Mrs DD, then wait for my tax repayment on my pension to come through!