Monday 30 September 2013

Transferable allowance of £1,000 for certain married couples/civil partners


The Government has announced that a new tax break will be introduced in April 2015 for married couples where one spouse is a basic rate taxpayer whilst the other earns less than their personal allowance and, thus, is unable to utilise all their personal allowance.  In these circumstances one spouse can transfer £1,000 of their unused personal allowances; this would usually only happen because one spouse is not working or working only part-time, earning less than the personal allowance, which will be just over £10,000 in 2015/16.  

This announcement does not mean the couple get an extra £1,000 of allowances – it merely avoids £1,000 of personal allowance of one spouse being “wasted”, which is what happens under current legislation.

The devil will be in the detail when the legislation is presented to Parliament and nothing has been said yet about the availability of this transferable allowance for non-resident taxpayers.

Landlords beware!


HMRC has announced the latest in their ever- lengthening list of initiatives to get non-compliant taxpayers to confess to their sins!

HMRC estimate that, currently, they are missing out on £500 million of tax, as a result of some 1.5 million landlords failing to declare the income from letting activities.

As in all previous initiatives, there is a “softly-softly” approach for those landlords who come forward and declare tax owed from earlier years.  Tax and interest will still be payable, together with penalties – but less severe penalties than if HMRC get to you before you report to them!  

The message is clear – HMRC believe there is a lot of unreported income from lettings and they are using their intelligence software "Connect"to find the landlords who are failing to report their income. 

If you are a resident of the UK, then all of your rental income, even that arising on foreign holiday properties, must be declared and HMRC have found many a non-compliant landlord merely by trawling the holiday property listings on the internet!

If you are in the position of having unreported letting income (UK or overseas) then contact us to discuss your situation at:                  ppeterson@petersonsims.com             gsims@petersonsims.com

Tuesday 24 September 2013

Deadline to register for Self-Assessment if liable to Child Benefit tax charge


Since 7 January 2013, if you or your partner/spouse are in receipt of Child Benefit and either of you have total income of more than £50,000 you will be liable to the new High Income Child Benefit charge.

If this applies to you and you are not already registered for Self-Assessment with HMRC, perhaps because your income is already taxed under PAYE, then you are obliged to register by 5 October 2013.

For assistance, please contact ppeterson@petersonsims.com   or gsims@petersonsims.com

Monday 23 September 2013

Increased numbers of Americans are renouncing their US citizenship


US citizens and Greencard holders residing abroad are, nevertheless, still required to file US tax returns and pay taxes in the US, as well as in their country of residence and the US is one of only two countries in the world that subjects its residents (and Greencard holders) to such tax treatment.  In addition to the taxation implications,  the compliance costs– estimated to average $2000 each year- are placing an increasing burden on overseas filers.

Many US citizens have been contemplating relinquishing their citizenship in an effort to cut tax and compliance costs.   According to Bloomberg, in Q2 2012 just  189 renounced their citizenship but in Q2 2013, that figure had jumped to 1,131.  There has been a similar increase for those who have held Greencards and who no longer envisage the need to retain their Greencards and so are relinquishing them. 

The US FATC (Foreign Account Tax Compliance Act) is also being cited as one of the reasons for the sharp increase.  Americans are finding that foreign financial institutions are reluctant to get entangled with the compliance demands of FATCA and, for many, that is the final straw.

“Delinquent filers” – the IRS term for those citizens and Greencard holders who have not been complying with the requirement to file US tax returns - are facing tougher penalties so if you are in this category, then contact us for assistance.

Thursday 19 September 2013

‘Tis the season of mists, mellow fruitfulness and 2013 Avis………


As the 2013 Avis have been dropping through the letterboxes of France, there has emerged a trend of higher income tax and prélévements sociaux liabilities being charged on income declared for 2012. 

Firstly, many of the Tax Offices have been applying the treaty exemptions on Government Service pensions and UK rental income incorrectly or, in some cases, not at all, charging income tax and CSG/CRDS, when in fact none is due on these sources of income.

Secondly, whilst the correct income tax treaty exemptions may have been implemented, the Tax Office has charged the prélévement sociaux (CSG/CRDS) in error.

Thirdly, it seems many Tax Offices from Brittany to Cote d’Azur, for 2013 have changed the way in which they calculate the French income tax due on non-treaty exempt income eg the National Insurance retirement pension, other employer pensions and investment income.   Many expats have received a 2013 tax bill which is far in excess of previous years’ tax bills – sometimes as much as 50-60% higher.  This type of increase has come about because it was realised by the tax authorities that the treaty exempt income, whilst not actually bearing any French tax payable by the individual taxpayer, nevertheless should be taken into account in determining the marginal rate of tax on the rest of the taxpayer’s income.  This means the French tax actually levied on all their other income is pushed up into the next tax band.  The calculations for 2013 now take the treaty exempt amounts of income into account, resulting in more tax payable by the individual taxpayer.

If your Avis shows a much higher liability than last year, it could be due to any (or all!) of the above factors.   If you require us to review your Avis, then please contact us on email at ppeterson@petersonsims.com  or  gsims@petersonsims.com   We offer a fixed fee service and will provide a written quote for tax services.
Tel: 05.33.52.09.33