Personal allowances against UK tax for French residents

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martyn94
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Personal allowances against UK tax for French residents

Post by martyn94 »

A current consultation exercise on this topic was mentionned a while ago on Facebook. It may be worth adding a few comments here (I used to work for the tax policy people).

The document is here

https://www.gov.uk/government/consultat ... -allowance

It is written in the usual constipated style, but worth reading and responding to (by 9 October) if you think you might be affected.

The basic idea is that UK tax allowances should be withdrawn, subject to exceptions, from UK nationals (and others) who are tax-resident outside the UK. The arguments are basically (a) everyone else does it, and (b) any extra tax you pay will be compensated by tax credit relief in your country of residence.

The latter argument will be more-or-less true for many people. But it is conspicuously not true for people like me who get much of their income from UK "government service" pensions: these are taxable only in the UK, not in France, and so any extra UK tax would not be offset by French tax credit. Happily the document acknowledges this (at section 6.6), and is as clear as such documents ever are that PAs will be retained in our case. It is nevertheless well worth responding that you DO agree with the proposition at Q6.2.

The document also seems potentially a bit optimistic about the case where you retain significant rental income from the UK (section 6.5). It is not my case, so I have not tried to do any sums, but the basis of reckoning for rental income in the French system can be generous. I can imagine that the French liability could be too low (especially if you do well out of the quotient familial) to "mop up" any extra UK charge. That said, I am not sure what you should ask HMG to do about it, unless UK rents are the major part of your total income, in which case read and ponder sections 5.1 and 5.2.

If you retain active business income from the UK, the consequences go beyond my power to generalise, but it may be worth doing some sums, and getting advice if the amounts seem to matter.

All very tedious: but it is the rentrée after all.
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russell
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Post by russell »

Am I missing something?

I thought that if you are "tax-resident outside the UK" you are taxed in your country of residence so you have no need of a UK tax allowance in countries with a double taxation treaty? I've had no need of one since moving here.

Russell
martyn94
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Post by martyn94 »

russell wrote:Am I missing something?

I thought that if you are "tax-resident outside the UK" you are taxed in your country of residence so you have no need of a UK tax allowance in countries with a double taxation treaty? I've had no need of one since moving here.

Russell
It all depends what sort of income you have. A private-sector occupational pension or the state (aka National Insurance ) retirement pension are taxable only in France under the DTA, so you need no UK personal allowances, as you say. Some income is taxable in both countries, eg UK-source rental income : the UK gets first bite (though up to now with the benefit of UK personal allowances): the French authorities then you give you credit for the UK tax, within the limits of the tax due in France.

"Government service" pensions are at the other end of the spectrum: they are taxable only in the UK, not in France, so any extra tax due in the UK gets you no credit against your tax bill in France.

I thank my stars that I was only peripherally involved with double taxation issues in my working life: they offer a combination of insane complexity and crushing tedium. And hence, of course, the prospects of a very good living if you are that way inclined, and happy to take the mickey.
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