Jump to content

Gross or net? I'm still confused.


Judith
 Share

Recommended Posts

Sorry to raise the old chestnut again, but I am happily taking my income from my bank accounts (as recommended by Cooperlola recently) adding together all my income from last year for the tax form, and it is of course net figures as tax has been taken in the UK.  As I wasn't paying any tax until I received all my pensions in October last year,  it isn't the largest of amounts, but of course, all my bank accounts are net figures.  But reading the Tax FAQ's it does say gross amounts.  Does it really matter?

And when it comes to interest received, I've been adding up the  interest actually received rather than the gross interest.

As I've already paid tax I cannot quite see why I cannot put down the net income - as the point is to declare income received. 

So now I am totally confused, and having spent the afternoon on totting up the figures I'm not particulary inclined to start again!

Link to comment
Share on other sites

It's the gross interest because you must claim that back from the UK tax man- yes I know it's a bit daft but again it's about who gets your tax.  Otherwise the UK has taken the tax on your interest, not France and that - in strict terms - is incorrect.

I don't know how your bank does it but mine always pays up in December and then sends me a statement a few months later - in time for my tax return to be done.  Net and gross figures are also on my bank statement.  I put the gross interest on my tax form (because it was paid in the previous calendar year) then claim the UK tax paid back from the UK govt.!  Much depends on how much is involved as to how careful you need to be.  In my case this year it's under a tenner so I can't imagine anybody would be very fussed.[:D]

Link to comment
Share on other sites

I, too, am incensed that I have to use gross figures, especially as it's such a faff getting that bit of taxed interest back from the UK.

Poor OH, only had some of the tax on his annuity returned after over 3 years here.  Claiming tax back from the UK is like extracting the proverbial blood out of a stone.

But, Judith, rules are rules and yes, you need to declare the gross figures and claim the 0.5% tax or whatever it is back from the UK.

And, don't forget, with inflation running at, what, over 3%, you are losing 2.5% of your capital compounded!

Sorry, to depress you but I myself have turned to the bottle![:-))]

Link to comment
Share on other sites

Hi,

Why is interest not properly declared "net" & no claim for refund made to the UK authorities - it saves a lot of time & angst. Most things sent to UK Revenue & Customs either disappear into a black hole or are wrongly calculated. The "computer" usually gets the blame! Conflicting "advice" appears in various forums & expat papers & the Annett consultancy, so why not do as the French form 2047 asks & declare the interest "montant net ..."?

UAGallois
Link to comment
Share on other sites

[quote user="Un autre Gallois"]... so why not do as the French form 2047 asks & declare the interest "montant net ..."? [/quote]

Because, if I remember correctly the French interpretation of 'net' is net of charges ie expenses, and not net of tax already deducted, as PAYE does not exist here yet in the way we know it.

Sue

Link to comment
Share on other sites

[quote user="suein56"]

[quote user="Un autre Gallois"]... so why not do as the French form 2047 asks & declare the interest "montant net ..."? [/quote]

Because, if I remember correctly the French interpretation of 'net' is net of charges ie expenses, and not net of tax already deducted, as PAYE does not exist here yet in the way we know it.

Sue

[/quote]Yes, I too think this is the source of the confusion, Sue.
Link to comment
Share on other sites

Gosh, I go away to eat.... and all those replies.

OK - I can manage the gross interest from the statements, but what about pensions?  That means I have to say I've got more than I have had, and I can see getting it back from the UK tax as very long winded.  I did send an R85 when I left the UK, and so far have had an acknowledgment and nothing else (over a year ago).    I'm with Nationwide, who will not take off the tax even though I've sent the forms.  In fact, next year, the interest problem will be solved, as there is very little left there now we are in the process of buying the [new] house.

Since I really had very little income last year, I thought to leave as is, and get it all right for 2010 declaration, by which time I hope to have got out of the UK system.  So is it really worth worrying too much??

Link to comment
Share on other sites

All the details are in the Tax FAQs but the P (not R) 85 only informs the authorities that you have left.  You need the FD5 to reclaim tax and you must submit that with your first French tax return, to be sent by your Impots office to Paris and thence to the UK.  You won't get any UK tax back until you do this.  You'll pay a lot less if you declare your tax as you should because both countries will give you the full allowance for what will be a partial tax year.

Believe me, it is a lot less of a bore once the transition year is over.  It is also well worth it financially (not to mention legally.)

Link to comment
Share on other sites

As you say, Judith, it's not worth very much now so just do as the rules say and then at least you know that your bit of it is done correctly.

It's the most dreadful experience dealing with the UK tax authorities when you live abroad and I view it as a sort of penance.

Link to comment
Share on other sites

Yes, Sweets, especially as they have changed my tax code this year as they think I didn't pay enough tax last year, so I would happily get out of the UK system.  Ah, well, try again tomorrow.

What you are saying is that instead of using my bank statements, I have to go back to what the gross pension amounts were, and give those, and then claim back what tax I've paid in the UK??

Link to comment
Share on other sites

Judith, the "declare what you received" method does indeed apply to those who have escaped the UK system and are fully in this.  The transition year is a bit complicated but the principal is similar in that you declare all you have received in the calendar year since you moved but yes - gross (in UK terms) not net.  When I outlined my method on your original thread, Judith, I was responding specifically to Pat who had already extracted herself from the UK system.  Once your FD5 has been received in the UK you will no longer pay tax there (unless you owe back tax) and then it will become much easier.

Honest.[:)]

Link to comment
Share on other sites

Thanks, CL.

Well for good or bad, this is what we are doing.  I got all my gross figures (not as bad as I expected) then hubby said, the form comes completed, (he gets all his pensions paid into his Fr bank account, paid in euros, but taxed in UK so all his income is written as taxed in UK) , and it is far too complicated to try to change that this year - so, this year I will fill in the net amounts, incl interest (which is more than my pensions as we invested from our house sale), but this has now all come to France to buy the new house so it will all have disappeared by next year!). but we have paid tax on it in the UK (can't get it gross, It's Nationwide) , copying what we did last year but with changed amounts, and also fill in the FD5 (I presume we both have to fill one out?), and then over the course of the year we can get out of the UK system, and then when we are getting gross amounts here (and there will be very little left in the UK accounts so not much if any tax) we can move on from there.

He seemed to be surprised that I needed to fill in anything on the blue form, but as I've had interest bearing accounts this year in France I do.

Honestly, I know it is not according to the rules, but it is not worth the hassle to do it - we've paid our tax, and so next year it will probably be much easier if we don't pay tax in the UK, and can do the French form properly.  I will send back the FD5's, but not bother to claim back the tax paid last year,  and it should sort

itself out .....  the interim year is just too complicated for this bear of little brain (when it comes to tax matters ...)

But I still maintain that the French form is far more complicated than the English one!!

Now to find the conversion rate, and then I can fill it all in.....

Link to comment
Share on other sites

There are some types of income which are always taxed in the UK, eg public sector pensions (such as teachers, civil service) and UK rental income. So those are entered gross on the french tax form, then deductions, then net.

If you have this, you will never be completely "in the french system."

Link to comment
Share on other sites

True enough, Pat.  However, it's still easier after the transition year because all that matters is that the amounts earned in the relevant tax years are correctly entered for each country.  The box you put the amounts in in France will ensure that the relevant tax authorites get your money!

Judith, yes, an FD5 each.

Link to comment
Share on other sites

PatF

Yes, I know!  We both get a small civil service pension (mine works out about £40 a month!), so I don't think I will be paying much tax on that. 

I have just finished having a battle with OH about the forms, somehow he doesn't want to understand them, and says he doesn't care where he pays tax (!), but won't let me have all the information from him to sort it out either!

Anyhow, I've done my bit, and he has to do his bit now - no idea what will come out of it!

Now I'm about to start on the FD5, which looks even more difficult since it is over year since I left the UK.  I did fill it in last year, but due to last year's similar arguments, I left it and said we'd do it this year.  I expect I'll get the same arguments (eg why do I have to bother with this - I don't care where I pay tax!), before it gets done.

And I was only trying to do it in good time......

And I still maintain that the French forms are MUCH harder than the UK ones!±

Link to comment
Share on other sites

Hi

I am more confused - not difficult!

I can't see the connection between the non existance of PAYE in France & the declaration of net or gross interest. Also, I am uncertain as to the "expenses" deductable in relation to this heading. To my simple mind "net" means what it says & as long as a claim is not also made to the UK revenue for a refund everything should be hunky dory. I have looked again at the relevant notes accompanying form 2047 & am more than ever convinced that this interest can be declared net. OK, so anyone doing this would probably be worse off financially, but as I said in my original post claims seem to end up in the black hole of HMrev & customs. See current & past notes of the Pelican (Annett) consultancy. Others on this forum disagree!!

UAG

Link to comment
Share on other sites

If you enter, on your French forms,  income "net" (i.e. of UK tax) then you risk paying tax on it again in France !!  Net does not mean the same in France (as I think someone has already said). Put figures for Interest in Gross and claim back tax from the UK. Not at all difficult, even if sometimes slow the first year. Thereafter it should be quite easy.

Mrs H

Link to comment
Share on other sites

Hi,

      The point to bear in mind is that you DO NOT HAVE A CHOICE as to where you are taxed.  With the sole exception of government (as opposed to state retirement) pensions, and rent from UK real estate , ALL your worldwide income is taxable in France once you become french fiscal resident.  If you are paying tax (wrongly) in the UK on ,say, bank interest ,then you have to declare it in France gross (AS IF IT HAD NOT BEEN TAXED IN THE UK);it is then for you to obtain repayment of any UK tax paid.

Link to comment
Share on other sites

[quote user="parsnips"] ;it is then for you to obtain repayment of any UK tax paid.

[/quote]

You would not believe the amount of paper this has generated - but I've been a good girl and done as I was told!!

Link to comment
Share on other sites

[quote user="Judith"]You would not believe the amount of paper this has generated - but I've been a good girl and done as I was told!![/quote]

I would as I remember the occasion well. If I had been thinking coherently I would have taken photos of the spread of 'certificate of tax deducted' that covered our floor. 2 x FD5 - for OH and me - dominated my life for quite a while whilst I gathered all the info together.

Gone, but not forgotten.

Sue

Link to comment
Share on other sites

Sue,

How kind!  It was not quite floor fodder, but it felt like it, especially as hubby was all for leaving all as is, as he had done for the 3 years whilst I was not here!!  In truth, it would have been much better to do it all last year, when there was very little to claim back, but as it turned out, I was busy getting back tot eh UK and never got the time to fix it.

Now we will wait in anticipation of a cheque (or two) but won't hold our breath!!

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...