Sunday, August 31, 2014

Movement of British State Pensioners throughout the World

Movement of British State Pensioners to other EU  STATES and other countries of the world
The first Chart below shows the increase of  British State Pensioners who moved to other States of the EU between 1973 to 2014.

To view the graph larger click on the graph- to return press 'esc'
The table lower down gives figures for movements  in Europe and other parts of the world. Those countries with a * have State pensions increased each year - the others have the British State pensions frozen.

Some observations.
New Zealand
The largest number of retired British citizens emigrating during 2013/14 went to New ZealandIn N.Z the British State pension is frozen  - but......
New Zealand residents are entitled to receive NZ Super (the old age pension) if they satisfy all of the following conditions. They must:
  • have reached State pension age (currently age 65);
  • be a New Zealand citizen or permanent resident;
  • live in New Zealand;
  • have lived in New Zealand for at least 10 years since age 20; or
  • have lived in New Zealand for at least 5 years since age 50.
Residence in a country with which New Zealand has reciprocal social security arrangements (like Australia and the UK) counts as residence in New Zealand.
---------------  New Zealand is moreover the most ‘English’ of all destinations.

This is probably a significant reason why the influx of British State Pensioners is constantly rising in New Zealand.
 CANADA - SOUTH AFRICA - AUSTRALIA  In these countries the State Pension is frozen and their appears to be no adequate compensation scheme to offset this.  No doubt this is why the numbers are dropping.
PAKISTAN and JAMAICA and INDIA - Although Jamaica has non-frozen pensions, the numbers have dropped year on year.  Pakistan also shows a year on year decline.- possibly there is a cultural reason?
India (with frozen pensions) shows an increase - again is the reason cultural, but opposite to that of Pakistan and more akin to the reasons why so many native stock Britons retire abroad especially to culturally similar countries?
ITALY and USA In  MAY 2013 ( see the last column of figures) these countries achieved a higher figure and have since declined by tiny numbers.
NEW ZEALAND, IRELAND and FRANCE have received the greatest number of immigrant retired British citizens since MAY 2013 with 3480, 2140 and 1740 people respectively.
N.B. not all British State Pensioners are British Citizens, this is probably chiefly true of the Irish situation.
Remember that these figures include the death rate (which is fairly high amongst pensioners). so the changes in numbers reflect the fact that movements from the UK are a good deal higher than those shown.
The overall percentage of British pensioners abroad has risen gradually year on year and is now 9.49%.

Country of  Immigration % change 2002-2014 Number in 2002 Number in Feb 2013 Numbers in May 2013 Number in Feb 2014 % change 2013-2014 difference between May 2013 and Feb 2014
Jamaica* -39.0% 23420 17690 17560 16850 -5.0% -710
Pakistan -47.6% 5920 4120 4100 4010 -2.7% -90
Canada 4.9% 144830 154870 155040 152250 -1.7% -2790
South Africa 6.3% 34960 37670 37780 37330 -0.9% -450
Australia 10.4% 224210 250770 250990 250300 -0.2% -690
Italy* 21.1% 30080 38160 38170 38130 -0.1% -40
USA* 14.3% 120350 140270 140520 140410 0.1% -110
India 25.2% 3950 5190 5210 5280 1.7% 70
Spain* 55.1% 48000 106280 106850 106890 0.6% 40
Cyprus* 57.0% 7920 18270 18380 18440 0.9% 60
Ireland* 30.1% 92520 129320 130190 132330 2.3% 2140
Germany* 33.4% 27350 39990 40330 41070 2.6% 740
Israel* 27.2% 3640 4920 4950 5000 1.6% 50
Greece* 61.9% 2190 5600 5650 5750 2.6% 100
Portugal* 52.3% 4760 9680 9780 9980 3.0% 200
France* 68.2% 19770 59620 60350 62090 4.0% 1740
N.Z. 34.9% 38640 55990 55900 59380 5.7% 3480
Switzerland* 65.1% 3910 10700 10820 11190 4.4% 370
Netherlands* 47.9% 6240 11420 11600 11980 4.7% 380

Wednesday, August 13, 2014


British Banks are doing their best to get rid of customers who are UK citizens but resident overseas.  There are about 5 to 6 million who fit that category, of whom about 800,00 or so are believed to live elsewhere in the EU.   
Instance:- Santander Bank UK  summarily and without prior notice cancelled Debit Cards.  In a subsequent letter they maintained that they were not going to replace Debit Cards because of the high risk of interception and the likelihood of fraudulent use 'in your country'
People challenged this position by writing to the CEO of Santander UK who passed the issue to an Executive Complaints Department for adjudication.  In the event, the person doing the review came down on the side of the customers, and some have received replacement cards by courier with the promise of PIN numbers to follow.  The reviewer also commented that although the policy had been adopted thanks to some document or another that was circulated to all banks at the end of last year, the policy has now changed and (certainly in the case of Greece) the phrase 'your country' has been removed from the list.
In an interesting twist, however, when speaking to the reviewer he said that the bank had 'made a mistake' in allowing people overseas to continue operating their accounts and in the official letter following the review is the passage 'It is also stipulated in the general Terms and Conditions of your account, that we are a U.K. based bank and do not facilitate customers who live outside the U.K.' 
This last line is the crux of the matter.  As expats will know, it is difficult if not impossible for expats who don't have a UK address to open a UK bank account, change an existing account for a better one, get a credit card etc.  In some cases, private pension providers will only put money into a UK bank account. 

N.B. The EU has four basic 'freedoms' core to the existence and continuation of the
UNION. One is the freedom of movement of SERVICES and CAPITAL
But no constraints exist on banks to honour these principles!
The Competition and Marketing Authority in the UK is currently looking at the way in which banks operate Personal Current Accounts (their deadline for submissions is 17th September) so one must write to them at
AND register any concerns you have over your own personal situation.  The more people who complain, the more likely the matter will be taken seriously.  Hopefully, the CMA will remind banks of their obligations, as operators in the UK of the UK 's membership of the EU and the need to allow unfettered movement of money as well as people and goods throughout the EU at least! "
In all our interests please react, write as above and re-circulate.

As an additional note -I add the UK banks should pay interest gross and thus one can avoid UK tax - Santander has refused this on one occasion known to me. 
To obtain Form R105 to obtain interest without tax deducted at source. Helpful if one is not required to complete a UK tax return.
  I am grateful to a correspondent for the above information.
** Another reason why the expats should have the vote!
Unless this following petition FOR REPRESENTATION in Parliament gets another 7,000 signatures within the month till September 2014– it will fail!

Monday, August 11, 2014

The United Kingdom Taxation and the Expatriate.

Her Majesty’s Revenue and Customs [HMRC] have released a consultation document which would if implemented create financial hardship for quite a few British Citizens who live abroad.
It can be read at -
The thought behind this is to remove the tax-free personal allowances on income which arises in the United Kingdom paid to Citizens abroad.
It has two errors.
It assumes that  tax credits granted in any State of residency will completely offset the tax paid in the UK. It also seems to assume that the UK sourced income is not significant to the recipients.  How wrong they are.
The Double Taxation Conventions
Attention must be drawn  to the misleading wording in the paper .
Section  6.2  states : –
However most of these individuals would be able to claim relief overseas either in the form of a credit for tax paid in the UK or exemption from tax in their home state.# Therefore most individuals would not generally pay more tax overall than they do now***. However this will depend on the relative level of tax rates and allowances between the UK and their country of residence.
# if the taxpayer specifically claims under a double taxation treaty!
***This Statement is sending/implying false information-  Under the French/UK  Double Taxation Convention (and indeed most others) the tax relief on tax paid in the UK IS NOT the actual tax paid but the tax that would have been paid if the income had been taxed in France.  As it is, those who have their pensions taxed ‘only’ in the UK are quite clearly disadvantaged##.  Such disadvantage would be very greatly exaggerated for other recipients of private pensions, earned income, rents etc. from the UK  if the personal allowance were removed. It is extremely unlikely that the tax credit given against a French Tax demand on world-wide income, in respect of tax paid in the UK is ever equal to the tax paid in the UK.
Thereby any resident who pays tax which would fall under a Double Taxation Treaty would lose out, because of the different levels of tax regime. The removal of the Personal Allowances would exacerbate this.
##The elderly expatriate in France who receives all their income from the UK, the majority of which in taxed in the UK is currently disadvantaged because any tax credits achieved in France [e.g for home helps – charitable support] cannot be set against the taxes paid in the UK, but only against a minimal tax liability in France.  They therefore pay a bundle of tax to the UK , none to France, and overall far more than if they were only taxed in France on all the income.

The Nature of the Citizen Abroad and the importance of this income.
HMRC need awareness of the nature of the citizen abroad especially in the EU.
Many citizens who live in other States of the EU are ordinary folk.  They may have retired on little more than the State pension. Some (perhaps many) have retained a property in the UK and rented it out to get an income.  They retain the property just in case they need to return to the UK at a later stage in life.
This rent on their property is important to them.  It could well exceed 40% of their income Let us say that it brings in £10,000 a year.  If the tax-free personal allowance is removed the tax authority will take £2,000 and their income is reduced to £8,000.
These citizens are just ordinary folk who I fear do not understand the taxation system and its convolutions.  I am aware that many still have their State pensions taxed in the UK although they could get them ‘exported for tax purposes’.  The same is true of  Bank interest.  They could request the Bank to pay the interest gross so that it avoids UK tax.  Neither HMRC nor the Banks tell them how to do this.  Some Banks are reluctant or refuse to pay the interest gross.  The average taxpayer badly needs simplicity and guidance. It is already apparent that various non-residents have only a superficial grasp of where they should be paying tax and how to deal with the various tax forms from two State tax authorities.  The fact that HMRC says that 400,000 expatriate Citizens  ‘claim’ the  personal allowance on UK income reflects this confusion. Such insouciant citizens could well be in for a very great shock.  They are not evil people. They are just average people and not that aware of the financial complications  invented by the civil service.
Some private pensions have to be taxed in the UK.  These will also suffer from a greatly increased tax burden if these tax allowances are removed.  As said above  tax credits will not allay such taxation in the UK.

B Low Incomes  HMRC, I repeat, has not understood the varied lives of those British citizens resident in France who have low incomes emanating from the UK. 
There are those who earn income from the UK and are thereby taxed on that in the UK.  They may offer a service of some kind (e.g consultancy), or mark exam papers or sell goods which they make themselves. They may even ‘commute’ on occasions to perform some function.  There are those people  who ‘work from home’ and that home could easily be in France or elsewhere. They are non-UK-resident but otherwise are no different from a ‘home worker’ in the UK.
There are those who have some form of investments which pay interest in the UK.
A number with low incomes have been informed by HMRC that they are ‘non taxable’ because of their low incomes and need no longer complete a tax return.
Their income is taxable also in France but the French tax system is favourable  and  they lie below the tax thresholds in France also.
It may be difficult for tax officials to understand  but many people are already in a state of confusion where what income should be declared to their national State or their State of Residence.  The Tax departments lay down rules which are difficult for the average person, especially the elderly, to understand and this policy consultation document is compounding this confusion of bureaucracy. Remember further that large numbers of people, especially the elderly,  do not have computers nor access to the internet and have little understanding of how tax laws operate across the State borders in Europe. It would be far wiser for tax departments in collaboration across the EU to simplify the rules rather than complicate them.

Complications  -- The ratio of income  arising in the UK and abroad
A suggestion is made (see section 5.2) that the expatriate tax payer might declare how much income is raised abroad and how much arises within the UK.  The reference to  %  of income received from here and there, UK or elsewhere, and minimal income limits  is frankly onerous.  It is a step into new territory and a step too far.  Consider a retired couple who let out part of their property  for holiday rental in France.  Why should they tell the UK tax authorities what income they receive from that minor income?   This is getting towards an expectation that all British expatriate citizens should disclose their world-wide income to the British tax authority. 
And if the ratio should be £1 either side of the threshold ratio it would mean a cliff   face in the amount of tax demanded.  i.e a difference of  possibly £2,000 or more.
One can write to HMRC to comment and protest..
 ( before the 9th October 2014) to

A draft letter  along with a repeat of the material here  (EXPANDED) can be read at