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Tax and social charges on UK investment income


Rob G

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Hi,

I've just spent the last half hour trawling through the forum and, though I have found various bits of useful information, I haven't specifically found what I'm looking for (that reminds me of a song...). So here goes.

We plan to invest a small amount (a few thousand) in UK managed funds. Not sure yet whether these will be unit trusts or investment trusts. We are resident in France. My questions are these:

1. Do French tax/social charges differ for UK unit trust gains vs. UK investment trust gains?

2. I've read about a €15k allowance for selling shares, and a 40% "abattement". Do either/both of these apply to gains made on UK unit trusts/investment trusts?

3. Assuming these gains are taxable, what tax rate is applied?

4. Are these gains subject to any sort of social charges? If so, which ones and at what rate?

I realise there's a lot here but I'm hoping someone will read this who has already made this kind of investment and therefore has already had to answer these questions.

Thanks in advance,

Rob

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I've been trying to fathom a similar thing. I want to know what French taxes would apply to a lump sum in a UK bank if I were resident in France.

I think like your Unit Trusts 11% Social Charges would apply because it is "unearned" income.

What I don't understand is how much tax would be to pay. I have read somewhere that you can apply for the UK interest to be paid gross and then French tax deducts a fixed rate of 16% - but is there an upper limit to that at which income tax kicks in?

How are health charges calculated on bank interest?

 

 

 

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I don't think health and retirement contributions are charged on this type of income, I think it's just certain other items like the CSG and CRDS - but I'm not sure and I don't know what percentage these things add up to - this is precisely why I asked the question. Fingers crossed that a wise and experienced person will stumble across this post and enlighten us!

Rob
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There was a long and very complicated thread about this some months ago.  After several trips round in circles, I think I gleaned the following :

Income from shares is added to any other income you have and income tax is payable at the resultant rate.  It is also subject to the social charges (not social security or health payments but the tax which goes towards paying off the French national debt.)  Your income tax return throws up your "Revenue Fiscale de Reference" (the French equivalent of your tax code) - which isbased upon all your income, including that from shares/rental property/pension etc, etc.  It is your RFR which is used to calculate your health care contributions.  But then again, there was much discussion on this subject and not a little disagreement, so  I could have got it wrong.  For myself, I would consider employing a French accountant for your first return, just to get you kicked off.  You may pay a little in fees but you will have peace of mind as a result.

The estimable Sunday Driver posted a link to the French income tax calculator which you can use to do your sums in advance.  I will try to find it.

EDIT : Voila

http://www3.finances.gouv.fr/calcul_impot/2007/

As to what happens when you sell shares, I don't know at all but somebody will.

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[quote user="cooperlola"]The estimable Sunday Driver posted a link to the French income tax calculator which you can use to do your sums in advance.  I will try to find it.

EDIT : Voila

http://www3.finances.gouv.fr/calcul_impot/2007/[/quote]Before you get too excited: unless it has been updated very recently, the calculator won't do the sums if you have revenus exonérés, i.e. income not directly taxable in France but nevertheless taken into account in determining your French tax rate.

Unfortunately it lets you work your way through everything else before it tells you this.

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Thank you cooperlola. As usual it appears there is no straight answer but you've provided some useful references.

Don't suppose you have a link to the previous posts you mentioned? I spent ages searching through the forums and didn't get very far. (The less than brilliant search function doesn't help...)

Thanks,

Rob

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[quote user="Rob G"]Thank you cooperlola. As usual it appears there is no straight answer but you've provided some useful references.

Don't suppose you have a link to the previous posts you mentioned? I spent ages searching through the forums and didn't get very far. (The less than brilliant search function doesn't help...)

Thanks,

Rob
[/quote]For a kick off look at

http://www.completefrance.com/cs/forums/3/946782/ShowPost.aspx#946782

http://www.completefrance.com/cs/forums/939966/ShowPost.aspx

http://www.completefrance.com/cs/forums/874018/ShowPost.aspx

I agree, the search function can be less than helpful, particularly with such a big subject!  Better to look back in this (Finance) section, to the posts during March and April, when tax returns are being filled in and most of the discussions on this subject tend to take place!

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Re interest paid GROSS from UK. After many months of trying to get the correct forms from UK i.Rev. We found that if you get the correct form for UK Non-residents fill in the appropriate items take it to your local Hotel des Impots [presuming of course that you are registered for tax here ] get them to stamp it and send it back to UK dept for Non-residents. Don't let the French tax office send it or you may have to do it all over again as UK will say they haven't received it.

I applied for the return of last 20%tax deducted in UK at the end of the tax year,joint account with my wife so we have to send in seperate claims. Both sent together, my refund  9 weeks ago, after 3 phone calls my wife was informed that whoever dealt with our forms,still together, hadn't dealt with hers.? It will be dealt with within 3 weeksStill waiting.

Hopefully I will never have to deal with them again.

Regards

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Many UK Financial institutions will not pay interest gross to account holders abroad, so in these cases you have to reclaim the tax back each year.  The easiest way is to do a UK tax return if your total UK income is below the tax threshold.  If not you have to go through the double taxation form route,  Despite what Gastines has found the only way to get these form processed is via your French tax office, without their stamp, Paris and Nottingham will not process them.  The stamp of your local office is to show that you are tax resident in France and that the amount that you are back claiming in the UK is the same as you declared in France, if they are diferent they will not be processed and you will wait for your tax refund.
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Thanks to all - these are useful comments and things I need to be aware of.

Clearly I need to check with the investment firm we're planning on using how they treat non UK residents. I was under the impression that tax only tends to be deducted at source for standard bank and building society accounts, and that for Unit Trusts and the like everything is paid gross and it's up to you to declare what you need to on your tax return. Certainly it would be a lot easier for us if we can just have everything gross and declare it in France - I'd rather pay all my tax in France if possible rather than getting into the complexities of paying different bits in different countries.

Feel free to shed any further light on this if you have it....

Thanks,

Rob

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Ron. I did say get it stamped at your local tax office BUT post it back to Long Benton yourself. Having had 2 forms LOST in the post at one end or the other.

Any advice/suggestions given are only from personal experience and may not be construed as being definitive or legally binding..

Regards.

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Ron. I did say get it stamped at your local tax office BUT post it back to Long Benton yourself. Having had 2 forms LOST in the post at one end or the other.

Any advice/suggestions given are only from personal experience and may not be construed as being definitive or legally binding..

Regards.

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Where is Long Benton?  The Centre for non residents is Fitz Roy House PO box 46 Nottingham NG2 1BD maybe that is why your stuff is going astray!![:$]

However, you can't post it back to the UK yourself, it has to go the French equivelant of the centre for non-residents in Paris, they also register it and send it on to Nottingham, who then advise Bootle (which becomes your tax office in the UK) when all the boxes have been ticked.  For the benefit of others, do not assume that it is the French end that holds it up, it can be your "old" tax office not forwarding your records to Bootle that can cause problems. If you hand your form to your French tax office they normally give you a copy and make sure you complete both the English and French versions.

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The only reliable information I can contribute on this topic is that Long Benton is in Newcastle upon Tyne, and is usually written as one word.  It is the home (or possibly one of the homes) of something which at different times has been known as Department of Social Security, the Department of Health and Social Security, and the Pension Service.

On checking the most recent letter I received from them, I see that it is no longer long; they now just call it Benton.

This information may not help you, but - as Ron says - it may not be the right place to send your forms.

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I stand corrected. Sorry about that.Whilst looking at the immense pile of letters from 8 different depts ,I read the wrong heading.Fitz Roy House for form R43, so Ron was correct.It was the Charity,Assets & Residency title that threw me.Even the headings are bad enough to follow. I just pulled 5 out of the file now and got Inland Revenue Bootle, HM Revenue & Customs Fitzroy house,Centre for Non-Residents Benton Park View,Ni Contributions Longbenton.The Pension Service Tyneview Park, So basically it's my own fault.

Regards. Confused,Bognor Regis.

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