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Where Taxpayers and Advisers Meet

Unremitted Income...or not?

RudolphtheRed
Posts:6
Joined:Tue Jan 10, 2017 5:59 pm
Unremitted Income...or not?

Postby RudolphtheRed » Wed Aug 23, 2017 12:41 pm

Can anyone help with this issue? A UK resident but non-dom individual claiming the remittance basis can lose the UK Personal Allowance if unremitted income is more than £2,000. What counts as unremitted income eg the UK/France Double Tax Treaty says that certain pensions (government service etc) are only taxable in France so not taxable in the UK whether remitted or not. If the pension is not remitted to the UK, does it still count as unremitted for UK Personal Allowance purposes?

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Unremitted Income...or not?

Postby darthblingbling » Wed Aug 23, 2017 1:24 pm

Is this the only foreign income?

RudolphtheRed
Posts:6
Joined:Tue Jan 10, 2017 5:59 pm

Re: Unremitted Income...or not?

Postby RudolphtheRed » Wed Aug 23, 2017 1:50 pm

Yes.

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Unremitted Income...or not?

Postby darthblingbling » Wed Aug 23, 2017 2:28 pm

Would it not be simpler to just use the arising basis and make the relevant treaty claim to make sure the pension is only taxable in France?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Unremitted Income...or not?

Postby maths » Wed Aug 23, 2017 2:46 pm

Foreign pension income falls within the definition of relevant foreign income (RFI) and thus under UK domestic law if it is not remitted (as defined very broadly in ITA 2007) it remains unremitted and thus counts towards the £2,000 limit.

I would suggest that the UK/France DTA in this regard is not relevant. The DTA is more complex than normal (eg Article 19(2) and (4)(a)) but even if it is the case that any French source pension income is not subject to UK tax under the DTA that does not mean it can be treated as remitted when within the UK domestic definition of "remittance" it does not fall to be treated as a remittance.

I would also add that unless Article 19(4)(a) applies to the pension, the French source pension is only taxable in France assuming it is in fact remitted to the UK (assuming the recipient is an English national and UK resident and not a French national).

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Unremitted Income...or not?

Postby maths » Wed Aug 23, 2017 2:48 pm

Replace

I would also add that unless Article 19(4)(a) applies to the pension, the French source pension is only taxable in France assuming it is in fact remitted to the UK (assuming the recipient is an English national and UK resident and not a French national).

with


I would also add that unless Article 19(4)(a) applies to the pension, the French source pension is only exempt in France assuming it is in fact remitted to the UK (assuming the recipient is an English national and UK resident and not a French national).

RudolphtheRed
Posts:6
Joined:Tue Jan 10, 2017 5:59 pm

Re: Unremitted Income...or not?

Postby RudolphtheRed » Wed Aug 23, 2017 3:37 pm

Thanks darthblingbling and maths. The individual is French so I'm fairly comfortable that Article 19.2 applies. So, given that it is the only foreign income, there is no point in claiming the remittance basis. Thanks again.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Unremitted Income...or not?

Postby maths » Wed Aug 23, 2017 6:01 pm

Have you considered Article 29(1) ?

RudolphtheRed
Posts:6
Joined:Tue Jan 10, 2017 5:59 pm

Re: Unremitted Income...or not?

Postby RudolphtheRed » Thu Aug 24, 2017 10:57 am

I hadn't but I don't think it changes anything because the full amount of the pension will be taxed in France so the full amount is eligible for relief in the UK.

Thanks again.


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