Wednesday 26 March 2014

US Treasury Form TD F 90-22.1 replaced for 2013 declarations


For those US citizens or greencard holders with foreign financial accounts there are new FBAR reporting requirements for 2013 declarations. 

There is now a new online filing system and  a new FinCEN form 114 which can be accessed at:  http://www.fincen.gov/forms/bsa_forms/   

The filing deadline remains at June 30 following the calendar year-end being reported.  There are no exceptions to this deadline, regardless of extensions granted to file a tax return.

Severe penalties will be imposed for failure to file. 
 
Note: some taxpayers may also be required to file form 8938 with their tax return.

Wednesday 19 March 2014

Personal Allowances for UK Non-Residents At Risk!


Buried amongst the Budget Day announcements is a potential nasty shock for British expatriates - the Government intends to begin a consultation process on whether and how the Personal Allowance could be restricted to UK resident taxpayers and to those living overseas “with strong economic connections” in the UK.

This move is designed to bring the UK in line with most other EU countries where non-residents get no tax benefits when determining income which  is taxable.  Typically, the types of income on which UK non-residents actually pay UK tax are limited under the various Double Tax Agreements to income such as UK rental income or UK Government Service pensions.

It begs the question, what exactly are “strong economic connections” and we are sure this is going to be vigorously debated during the consultation process.  It is to be hoped that the retained ownership by British citizens of their former family home, now let out to produce an income, and UK public sector pensions will be within the definition of “strong economic connections”! 

Add this to the move announced in the Autumn Statement whereby it is intended to introduce a UK capital gains liability from April 2015 for non-residents disposing of UK sited residential property and it is understandable why British expatriates are beginning to feel the sand shifting under their feet.  

Dual contracts for non-UK domiciled individuals under attack


The 2014 Finance Bill will address the perceived abuse by high-earning non-domiciled individuals  manipulating duties of a single employment between offshore and UK duties by the use of dual contracts.

Where tax is not payable on the overseas contract at a rate broadly equivalent to the individual’s UK tax rate, then the overseas employment income will be taxed on the arising basis in the UK. However the legislation has been revised to prevent a tax charge arising on dual contracts which are not motivated by tax avoidance.

 No income tax charge will arise on income from employment duties performed in tax years up to 2014/15.  Furthermore, no charge will arise on directors with less than a 5% shareholding in the employing company or on employments held for legal or regulatory reasons.

These changes will take effect from 6 April 2014.

Retired savers benefit the most from the 2014 Budget


In his Budget today, the Chancellor gave a much needed boost to pensioners’ savings income in a raft of measures that were broadly welcomed.

·         Pensioner Bonds are to be introduced in January 2015 offering very attractive (in relation to bank saver rates over the last few years) interest rates of 2.8% and 4%.

·         Pensioners are to be given far more freedom in relation to their Defined Contribution Pension Plans and will no longer be forced to take an annuity but will be able to take any amount out of their pension pot and, instead of the penal rate of 55%, they will now pay at their individual marginal rate of tax on any withdrawal.  The 25% tax free lump sum facility is retained.

·         The 10% band of tax which applies, in certain circumstances, on the first £2,880 tranche of savings income in 2014/15, has been chopped and now effectively becomes a nil ie 0% rate band.

·         Furthermore the tranche at 0% has jumped to £5,000 in 2015/16.

·         ISA limits for everyone have been increased and there will no longer be the distinction between cash ISAs and Stock & Shares ISAs; the combined ISA will be known as a New ISA (NISA).  The new annual limit will be £15,000 and these NISAs will be available from I July 2014.

·         Transfers from existing ISAs can be made into a NISA and any combination of cash, stocks and shares can be invested, up to the £15,000 annual limit.