Here are some more sample questions submitted by members to the ICPA/Qdos telephone helpline
Q: Can a non-resident claim personal allowances and what UK income are they taxable on?
A: You can claim personal allowances if you’re a British citizen, a resident of the Isle of Man or the Channel Islands or a national of another member state of the European Economic Area, or come under the terms of a Double Taxation Agreement (DTA). There is a list of the EU countries and the countries that allow the allowance under a DTA on the notes to the Residence, remittance basis pages SA109 at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/505157/sa109-notes_2016.pdf
There are some circumstances where it is better not the claim the personal allowance. The highest amount of tax payable by a non-resident is the amount of the following:
- The tax, if any, subtracted from ‘disregarded income’ (interest, dividends, certain social security benefits, etc). There is a full list of disregarded income in HMRC’S Help Sheet (HS) 300 entitled ‘Non-residents and investment income’.
- Amounts treated as tax paid in respect of that income, i.e. 10% dividend tax credit.
- The tax on any other taxable income (income from UK property, UK trading income but not including disregarded income) worked out using personal allowances.
If personal allowances are claimed, all disregarded income is taken into account.
There is a calculation work sheet with HMRC’S HS300 but most commercial software is able to do the computation for you.
Before doing the computation it is advisable to see if any of the disregarded income is covered by a DTA. The DTA information can be found at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/538047/Digest_of_Double_Taxation_Treaties.pdf
Q: Can a previously widowed woman’s estate claim her deceased husband’s IHT nil rate band if she had remarried?
A: Where a surviving spouse or civil partner has been married more than once, or has been in more than one civil partnership and has survived both, or all of their spouses or civil partners that died before them, the amount of unused nil rate at each previous death can be carried forward to the later death under IHTA84/S8A(6)(b). This is limited to a maximum of 100% of the nil rate band at the death of the surviving spouse or civil partner under IHTA84/S8A(5).
Q: My client’s wife did not use her 2015/16 personal allowance. How do we transfer the amount allowed under the Marriage Allowance rules to her husband?
A: This was once only available by making an online claim but now it can be done over the telephone. At the date of writing this, the transferring spouse has to do this personally – it cannot be done by their agent. If an online claim is to be made, as well as each spouse’s National Insurance numbers being needed, they will also need a way to prove their identity. This can be done by providing one of the following:
- the last four digits of the account that your child benefit, tax credits or pension is paid into.
- the last four digits of an account that pays you interest.
- details from your P60.
- details from any of your three most recent pay slips.
- your passport number and expiry date.
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