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Tax paid in UK


bixy

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A horrible thought has just occurred to me. We pay tax in the UK on 'government' pensions, ie. teachers. I realise this is taken into account by the French tax system under the double taxation treaty. Nevertheless, if we were taxed wholly in France we would pay less tax. I've always thought that this was a situation that we could do nothing about but now it occurs to me, having read through the tax FAQs, that perhaps we can avoid having this 'government' pension taxed in the UK. This is the relevant section:

Q         But I'm still paying tax on my

UK pension - what do I do about that?

A         You need to notify HMRC that you

are now living and being taxed abroad so they can adjust your UK tax

code to zero and refund you any tax paid since the date of your arrival

in France.  You just ask them for a form FD5 which you complete and hand

in to your French tax office with your first tax declaration.  They

will stamp it to certify you are now a French taxpayer and send it back

to the UK.

Does that only apply to non 'government' pensions or does it include them?

Patrick

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Ooops. I have a feeling that I might have written this bit and I admit that it could be mis-interpreted so I'll talk to Cat about altering it a bit.  Sadly you have no choice but to pay tax on government pensions in the UK:

Pensions

 

Q          I receive a UK pension, do I need to declare it in France?

A          If you live in France, you are taxed in France, unless your pension is a public sector one (Police, Civil Service, Forces, Local Authority etc) in which case you are taxed in the UK.  No matter what, if you live here, you must complete a French tax return even if you have already paid the tax on your pension in the UK. 

 

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Just to make things absolutely clear, if you qualify as French fiscal resident (regardless of where else you might be considered tax resident) you declare all worldwide income in France - including income (such as government pensions or salaries) on which you have already been taxed. Income that has been taxed elsewhere should be entered into the appropriate part of the French tax form to avoid being taxed twice. You may have extra tax to pay in France if your worldwide income added to your French income puts you into a higher tax band.

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Actually, this is my third declaration and I had previously assumed the position was as has been made clear above. It was just as I was going through the FAQs which I printed off some time ago [and many thanks to the wonderful people who put them together] that a small (hopeful) doubt crept into my mind. Now all is crystal clear and thanks once again to those who answered my query.

I would just like to say that I greatly appreciate the trouble people go to, to help others on this forum - people who they do not know and who, in all probability they will never meet. It restores your faith in human nature (a bit).

Patrick

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This thread prompts me to ask "Can anybody explain why?"

I understand completely that if you were a public sector employee in the UK, the rules are that you're taxable there etc, etc. I also know that its an EU ruling (or something like that).  But ................. why? 

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[quote user="Will"]This gives a bit more information http://www.hmrc.gov.uk/CNR/uk_gov_pensions.htm

But it still doesn't really explain why. All I know is that it is determined by the double taxation agreements that the UK has with various countries, but why government pensions are treated differently from other pensions, including the state pension, is not clear.

[/quote]

Hi,

       I think this dates back long before the EU, and is simply because governments feel that as they have the expense of paying (often generous ) pensions to ex- employees, they should at least have the benefit of clawing back some of their outlay in tax.

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My experience with HMRC on turning 65 last year has not been good. I had to re-apply to receive income from sources other than govt teachers pension free of UK tax. The fact that they knew that I lived in France and had already had the evidence from the French tax people meant nothing and we had to go through the whole performance again. They adjusted my tax code for the teachers pension and sent me a letter saying that as I was now 65 my tax code would be higher and that they were assuming I had a total income in excess of £28930, I wish! I pointed out that my teachers pension was very small compared with this and after several phone calls and months of delay they decided that my personal allowance was to be greater than my pension so they gave back the tax I paid last year and instructed teachers pensions to use code NT which they now say was wrong but I still will not pay tax on the TP.

The point is that had I not stirred things up in the first place I would probably still be paying too much tax in the UK on the TP. You need to check that you are getting the right tax code, don't rely on them to get it right for you. They are slow to respond to email type communications through their web site. They blame errors on the new computer which does not know about you and that you live abroad for some strange reason. You ring them and spend ages waiting to get through and when you do it is all too difficult for the person you are speaking to and the lad that knows about these things is unavailable so they will write to you, maybe, so you have to keep chipping away at them to get any sensible solution if you are lucky! It is over a year since I turned 65 and according to them they still have not got it right!.................................JR

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[quote user="EmilyA"]What does "wholly funded by the state" mean exactly? I seem to remember paying a pretty hefty contribution every month....[/quote]

Maybe so but as a public sector employee every single penny of income comes from the from the public purse. Private sector employees are net contributors to that, public sector employees are net drains.

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