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How Can I Avoid UK Income Tax

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Jovial_John


Joined: 31/01/2009
Posts: 1024

Message Posted:
08/05/2009 08:42

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Message 1 of 16 in Discussion

I am receiving a private pension from a UK source and income tax is being deducted. It's not a lot and I didn't mind because I wrongly thought that being a UK tax payer would maintain my entitlement to use the NHS. I now discover that I am barred from the NHS because I am no longer a UK resident whether or not I am paying tax.

I contacted Inland Revenue and they said I must pay income tax unless I can get a 'Certificate Of Tax Residency' from the country in which I now live.

Can anybody help ...

a) where can I get such a certificate in TRNC ?

b) would the UK recognise it anyway ?

c) is there another way to avoid UK income tax ?



rod28


Joined: 02/02/2009
Posts: 39

Message Posted:
08/05/2009 08:53

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Message 2 of 16 in Discussion

I think any revenue generated/originating from the UK then you are liable. You can avoid income tax if you are non resident. However it really is a minefeild and i would recommend seeing an accountant, sorry i cannot help more.



zcacmxi


Joined: 30/11/2008
Posts: 388

Message Posted:
08/05/2009 09:11

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Message 3 of 16 in Discussion

See: http://www.thisismoney.co.uk/mortgages/homesabroad/article.html?in_article_id=423182&in_page_id=505



If Income Tax is deducted at source, you may be able to claim some of it back due to Personal Allowance. The first 6475 of your income should be tax free in 2009/2010. This may be used up by your state pension if you receive that.



mikemans


Joined: 12/04/2009
Posts: 103

Message Posted:
08/05/2009 09:19

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Message 4 of 16 in Discussion

You may care to note that as a non resident your state benefit pension will not increase in the future as you are now non resident. If you have purchased an annuity you are stuffed, however if your fund is still intact, you can apply to have the whole fund moved away from the UK tax regime, however be careful it is a minefield that needs expert tax advice on, check out the receiving country tax laws related to pensions. Some allow 100% tax free cash for the whole fund such as Hong Kong others operate on a similar line to UK pension and tax legislation. Your pension is taxed as earned income and this can be afected by investment income that can be calculated as earned income (depends on the source).



See a good FSA approved financial adviser or an expert on UK taxation/pension law



Kind regards.



Michael (independent financial adviser)



TRNCVaughan


Joined: 27/04/2008
Posts: 4578

Message Posted:
08/05/2009 09:57

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Message 5 of 16 in Discussion

Hi mikemans,



I understood that the "frozen" state pension only applied to people who emmigrated to certain countries. Was/is this not case?



dozza67


Joined: 11/07/2008
Posts: 607

Message Posted:
08/05/2009 10:17

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Message 6 of 16 in Discussion

We have been here 5 years now and our state pension has gone up every year as has any private pensions that we opted to have increased when we purchased them. We have been totally up front with the UK government and their tax department and they know where we are. Plenty of other people we know also get their increases. Sorry Mikemans but you have been misinformed.



waddo


Joined: 29/11/2008
Posts: 1966

Message Posted:
08/05/2009 11:04

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Message 7 of 16 in Discussion

Quite simply put - you can't! You will get your first 6475.00 earnings tax free due to your PA and after that you pay tax on anything you "earn" from the UK. I have been down every road I can find and at the end I always find the taxman with his 20% hand out waiting for his cut.



Not sure about the frozen state pensions bit yes as you do live in "Cyprus" and that is one of the countries where the increases take effect. We are also non-resident and suffer the same fate as yourself, we end up paying for everything we could have if we lived in the UK but can't have because we were honest enough to tell the UK that we no longer lived there.



You can not claim to live in Turkey (address Mersin 10) and claim the double taxation agreement that exists between them and UK nor can you claim it for Cyprus as you don't live there - difficult? Bottom line is that the tax man sees you in TRNC but will not admit that TRNC is here - so you pay tax. Hope for settlement!!!



waddo


Joined: 29/11/2008
Posts: 1966

Message Posted:
08/05/2009 11:07

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Message 8 of 16 in Discussion

I have even approaced the tax people in the RoC and they were as helpful as they could be but again the bottom line is that although you live in the EU (the whole Island is in the EU) you also live in a part of the Island that is illegal and therefore they can not/will not help you. They even smile when they tell you.



We are on Civil Service/MoD pensions and get all the increases so suspect that will be the same when we hit the state pension as well - but you won't get your heating allowance because you are not living in the UK, unless of course you have not told the UK the whole truth!!



Put up with the 20% reduction and if/when there is a settlement you will be in for a pay rise like the rest of us - by the way, even if you have your pension paid into an overseas account, the tax man will still catch you because you have been honest enough at the very start!



Good luck



Mick



zcacmxi


Joined: 30/11/2008
Posts: 388

Message Posted:
08/05/2009 13:30

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Message 9 of 16 in Discussion

When does a holiday become comsidered as having moved out of the UK?



E.g. If you spend 6 months in UK & 6 months in TRNC, are you still classified as a UK resident and entitled to NHS, etc? How long can a holiday be? Is 6 months seen as a long holiday?



jessy


Joined: 04/12/2007
Posts: 289

Message Posted:
08/05/2009 14:01

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Message 10 of 16 in Discussion

I understand from the revenue that certain countries have and agreement with britain. south cyprus is one of then but obviously north cyprus isnt. If you have an address in the south you can have your pension deduction there which is considerably lower than england.



dozza67


Joined: 11/07/2008
Posts: 607

Message Posted:
08/05/2009 14:24

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Message 11 of 16 in Discussion

We also get our heating allowance and have done every year. We have told the UK Government the whole truth as well as the tax man. They have our address here and send us our tax codes via our PK number.



astonhilbilly


Joined: 05/05/2009
Posts: 162

Message Posted:
08/05/2009 14:31

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Message 12 of 16 in Discussion

Correct me if I'm wrong but I seem to remember 3 months being quoted somewhere.



If correct, does this mean you can only be out of the UK 3 months at a time? Fly back for a week, keep doing this and still retain all your entitlements or must you spend a certain number of months in the UK?



Does anybody know?



keithr


Joined: 20/08/2008
Posts: 720

Message Posted:
08/05/2009 14:39

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Message 13 of 16 in Discussion

You must not spend more than 91 days average over 5 years in the uk to be non resident. This an average,so you may want 182 days in one year,but then the other 4 have to aggregate out to 91 or less days as per the above formula. Your pension will be taxed if drawn in the uk,as will other incomes. Best to get as much out as possible and leave only the bare minimum of an active bank account and a UK address for mail etc....



There's no point trying to con the swines,they'll come after you,make no mistake.



Woodspeckie


Joined: 25/01/2009
Posts: 2263

Message Posted:
08/05/2009 22:56

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Message 14 of 16 in Discussion

dozza67. Aged 42 and getting pension?

The reason for getting the heating allowance is because it is paid to anyone over 60 receiving a government pension.



tommy13


Joined: 29/04/2009
Posts: 979

Message Posted:
08/05/2009 23:23

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Message 15 of 16 in Discussion

we have an offshore bank in trnc , it may be of use to tax dodgers .. or if its really big money , i can consult ! for a fee , its my feild of expertise



newlad



Joined: 02/03/2008
Posts: 7819

Message Posted:
09/05/2009 00:42

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Message 16 of 16 in Discussion

A good tip would be to stay away from Ken Dodd and Lester Pigott,lol



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