How about paying income tax?

Ossie


Joined: 19/01/2008
Posts: 311

Message Posted:
29/12/2009 23:33

Interesting comments about being paid your pension when you live in the TRNC. I would like to know if you pay income tax on your state/private pensions and if not, how do you go about not paying tax?

satranc


Joined: 04/04/2009
Posts: 92

Message Posted:
29/12/2009 23:47

Yes, currently a pension is taxed under the PAYE scheme in the UK if living in TRNC because there is no double taxation treaty with the TRNC as there is with RoC.

scruff


Joined: 15/07/2008
Posts: 1070

Message Posted:
29/12/2009 23:51

Yes you do pay UK. tax on both Private/State Pension if they exceed your Personal allowance. Sorry to say there is no such thing as a free lunch where Income Tax is concerned. If you are over 65 & only in receipt of State Pension, then the pension is unlikely to exceed the approx £9500 Personal Allowance.

If your Total pensions exceed personal allowances, then your tax code is adjusted to collect the tax due on State Pension via your Private Pension.

cyprusishome


Joined: 31/03/2007
Posts: 2381

Message Posted:
29/12/2009 23:56

Yes Ossie we pay our taxes.



I have no alternative in that my work pension is paid to me in the UK with deductions. When it comes to wife and to state pensions the same will apply.



In addition all bank interest is taxed at source here so I can complain about bureaucratic systems in both countries with impunity.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
30/12/2009 00:28

Ossie



Take a look at the link below:-



http://www.hmrc.gov.uk/cnr/hmrc6.pdf



This gives you the info you need

Ossie


Joined: 19/01/2008
Posts: 311

Message Posted:
30/12/2009 02:15

Thanks one and all for concise and prompt replies. Had hoped the answer to my question was going to be NO you don't have to pay tax.

Jovial_John


Joined: 31/01/2009
Posts: 1024

Message Posted:
30/12/2009 08:06

Message 2.



"Yes, currently a pension is taxed under the PAYE scheme in the UK if living in TRNC because there is no double taxation treaty with the TRNC as there is with RoC."



That's an interesting concept - so the UK effectively recognises TRNC as a valid government. If they followed the EU line then the ROC is recognised as the government of the whole island and the double taxation treaty should apply to all. Logically the ROC should be lobbying for your equal treatment (ha ha).



Maybe it would be better to maintain an address in the South rather than the UK because the ROC tax on pensions is only 5% (after allowances). Or offer to pay tax in ROC - I am sure ROC would accept that and issue you with a 'tax paid' certificate (again ha ha).

tonykyte


Joined: 19/04/2008
Posts: 270

Message Posted:
30/12/2009 09:33

Nothing you can do about State Pensions, but if you have a private pension there are possibilities. I had my pension moved into a QORPS (Qualified Oversesa Retirement Pension Scheme ), offshore, thereby no tax deducted. It also gives me far more flexibility of what I can do with the money and I was not tied into a annuity. Not to say in years to come the Tax laws will not change, but at present it suits me fine, NO TAX.

satranc


Joined: 04/04/2009
Posts: 92

Message Posted:
30/12/2009 10:39

Hi Jovial John, I'm not sure I follow you. Double taxation treaties exist between countries to avoid the recipient being taxed twice, where they are for example, living permanently overseas. ie their purpose is to prevent the payee from paying both UK income tax and also income tax in the country where they live.



If one lives in the RoC (or other EU member states and a handful of other non EU territories), then such a treaty exists and a double taxation on income can be avoided after appropriate paperwork is submitted to the UK tax authorities by the RoC tax authorities. However, currently, there is no such treaty in existence with the North and therefore UK tax is payable even if one doesn't live in the UK.

Jovial_John


Joined: 31/01/2009
Posts: 1024

Message Posted:
30/12/2009 11:18

Yes I understand how it works. My points, somewhat facetious, were twofold.

Firstly, by taxing people who live here the UK government, it might be argued, are de facto recognising the TRNC as a separate country from ROC. The world, except Turkey, views the ROC government as the legitimate government of the whole of Cyprus so any treaty with them should apply to the whole of Cyprus no matter where you live. If ROC cannot/do not try to collect tax from you then that should be their problem not the UK's. In fact it is not your address that matters, you must present the UK with a certificate of 'tax residency' or 'tax paid'. Therefore....

Secondly, it would be preferable to pay tax at ROC rather than UK rates. I was 'wondering aloud' whether the ROC would accept tax payments from somebody living here and therefore you would escape UK taxation. It would certainly be an interesting conundrum for them if somebody from North Cyprus offered to pay ROC income tax. But I am not volunteering.

kaiserphil


Joined: 14/12/2008
Posts: 1096

Message Posted:
30/12/2009 11:28

The state retirement pension itself is not taxed, but the amount of that pension is deducted from your tax-free allowance.

As a pensioner my tax code is the lowest it has ever been.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
30/12/2009 11:43

kaiserphil



The UK state pension is deemed to be taxable income, at present it is simply paid to you gross without any deduction of income tax

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
30/12/2009 11:55

Take a look at the link below it gives you the EXACT position for for non UK residents.



Ignore what you are told in the bars or coofee shops



http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Brinsley


Joined: 04/04/2009
Posts: 6858

Message Posted:
30/12/2009 11:59

Ossie

I'm having serious problems here, please explain 'income tax', an expression I've never come across!



Richard

Ossie


Joined: 19/01/2008
Posts: 311

Message Posted:
30/12/2009 16:56

Brinsley, I don't know why you have not heard the expression 'income tax' but its a tax you pay after the allowances the government allows you.The allowance is deducted from your income and you pay tax on the difference. Me thinks you may well be taking the mickey!

harita


Joined: 14/08/2008
Posts: 1343

Message Posted:
30/12/2009 18:38

If our entitlements are stopped .. I'm going to opt out .. Don't tell Coachie anyone