Tax again I'm afraid!

[ali-cat]

Alicat's other half here (again).

We have been resident in France since the end of July 06 and its now time to make our first tax return.  I've trawled through information on this forum,  the Blevins Franks and Daid Hampshire publications etc and,  while I don't think our calculations will be too difficult,  I still have a few uncertainties because of our specific situation and at all costs want to avoid under/misdeclaring.

Alicat and I are both medically retired in our 40s and receive UK govt retirement pensions.  These are taxed at source and as I understand it do not need to be declared and do not count against the French tax allowances.

We both also receive UK Incapacity Benefit,  again taxed at source, and again I believe not required to be declared and not counted against allowances.

Our only other source of income is interest on savings from accounts where we have opted for tax not to be deducted.

Although interest on these accounts is calculated daily,  interest is paid annually in mid April.  Given that the French tax return will cover July 2006 (when we became resident) to 31st December 2006 I'm not sure if this interest should be declared in arrears for 2006 (when accumulating) or 2007 when paid into our account.  If the latter,  does this infer that we don't need to make a return for 2006?  One of the accounts is also a Sterling account and would need to be converted to Euros - but at what date for the exhange rate?

Finally, as we are both medically retired,  do we count as 1 part each or 1.5 parts each. I understand that the authorities use the definition 80% disabled but who assesses this? 

 Apologies for the length of post and host of questions but I'd like to start of on the right footing and any advice is much appreciated.

 

 

 

[Benjamin]

Hi ali-cat's OH

I can help on a couple of parts of your query.

I had a similar situation regarding gross interest and I apportioned the amount I received for the time I was resident in France. In your case this would mean July to December 2006.

You're in a slightly different situation to us in that at the time we made our return we had only been paid interest up to November of the previous year. I apportioned this from when we had become tax resident in France until the interest had been paid i e November. On visiting our local office I explained what I'd done and they seemed perfectly happy with that. Of course this year I'll be declaring a full year's interest.

Even though you may be classed as disabled in the UK this counts for nothing in France. To qualify for the additional half part allowance you must be issued with a carte d'invalidité in France. The steps to undertake to get this have been covered in depth on here but the starting point will by your French GP.

As regards the exchange rate simply use the average rate that you have received when you've exchanged money or transferred funds over. That's asun#ming that you didn't arrive with a van load of folding readies and you haven't need to cash any yet. [:D]

Just remember that everyone's first year return is liable to look distorted as you're only declaring a partial years income. The tax offices naturally take this into account.

If you can't find the links for the disabled bit and I or someone else will go through it in more detail.

[Bob T]

I am in the same situation with a government pension which is taxed in the UK and it DOES need to be declared on your French tax form. The gross amount needs to be put into the pensions bit on the front page of form 2047K and you need to supply proof that UK tax was paid.

[Tony F Dordogne]

Our accountant has just completed our tax return for us and he certainly HAS declared all our UK pensions, government or not.  Remember to fill in your joint tax declaration form as well.

[ali-cat]

Thanks for the helpful replies folks.  With this information and other threads,  I feel I've enough to complete the form (s).  Hopefully nothing will get lost in translation when we forward it to the tax authorities.

Cheers.