The United Kingdom Taxation and the Expatriate.

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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 -  goo.gl/Jj5D2j

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 9^th October 2014) to

nonresidentspersonalallowanceconsultation@hmtreasury.gsi.gov.uk

A draft letter  along with a repeat of the material here  (EXPANDED) can be read at
www.lefourquet.net/90Cdraft.doc

The British Citizens the British Government ignores.

The British Minister for Europe [David Lidington]

Gave a speech in Berlin on 25 June 2014.

Mr. Lidington’s speech elaborates on the relationship between the National Governments and the EU Commission and the EU Parliament.

Below are five sentences from the speech which have significance for the democratic standing of British Citizens in the EU.

1.      We must recognise that it is national systems which enjoy greatest legitimacy with voters.

2.      We need to work within the grain of what people understand.

3.      And that is why we agree with those who are calling for a greater role for national governments in the Council and for national parliaments in the EU’s functioning. 

4.      National parliaments have significant expertise to bring to the legislative process, ensuring outcomes that are more relevant to communities by involving those who know them best – their representatives.

5.      National parliaments have a positive role to play, both sharing their expertise with EU institutions and helping citizens to feel connected with the EU.

Comment –
How can the British National Government claim to speak in the interest of all the British Citizens?

Concerning this 'positive' role national governments should play, the British Government  sets a very poor example in refusing its citizens full representation, including their national right to vote after they have lived 15 years in other EU member countries.

How is this helping such expatriate British citizens feel more connected with the EU, particularly if after 15 years they have no voice in any future referendum on UK membership?

A fuller quote including these five sentences and the full speech can be read via this link

What you should do – Send this to politicians in Westminster.

Addresses of politicians are found…

http://www.parliament.uk/mps-lords-and-offices/mps/

UKIP and the British Expatriate in the European Union.

To go to the index click here

Crisis for the Expatriate in Europe?

Why has UKIP been so successful?

Probably because in Britain, the public is disenchanted by their experiences with the traditional politicians.  [See also below **Nigel Farage**]

Expatriates haven’t had a chance to express an opinion. Many can’t vote! Most of the rest do not bother. Amongst them it would seem ‘apathy’ rules.  The Government’s Electoral Commission has made efforts to get to them to register to vote.  Petitions originating in Spain and France to awaken a political consciousness have become damp squibs.  As a leading example, a petition begun by  the editor of a French English language newspaper (the Connexion)  has attracted only just over 3400 signatures – It needs tens of thousands of signatures. Why do expats not claim the right to vote!  It is in their interest to do so.

http://epetitions.direct.gov.uk/petitions/55085. 

There are over 60,000 British pensioners living in France [106,000 in Spain; and another 140,000 throughout Europe excluding Ireland] -these groups have the most to lose if Farage’s UKIP  gains ascendancy in Britain.  Why have not these 300,000 signed these petitions? Is it that they are ignorant of the situation?  By doing so they could gain power to protect their pensions, investments, health care costs and other aspects of their lives.   But it seems they cannot be bothered; they are apathetic and ‘cannot see the point’ in voting for a politician in the UK.  Quite probably few also have bothered to vote for the MEP lists for the Euro-Parliament.

You can see a reason for this appalling apathy.  As things are, there is only a handful of British politicians who show the slightest interest at all in the welfare of Britons abroad. Those few of us who have written to MPs get answers saying ‘The government has decided this or that.’  They never show a willingness to debate, to listen.  It is surely necessary that they are forced to take an interest.

Turning attention to the younger generation of expatriates, remember also,– they can only live in the EU by agreement with the EU. For these reasons (and more), some representatives for expatriates are necessary at Westminster.

If the Farage bandwagon continues to its desired end the situation could be most uncomfortable for British people living in other Countries of the EU.  A referendum flying on the words of Nigel Farage could spell disaster for them

If the expatriates fail to have political protection, then they are not masters of their lives. If the EU fails for us, we have no defence.

The situation is dangerous.

**Farage and cultural change.**

Nigel Farage is undoubtedly exuberant and is quite a positive and likeable chap.  He seems to be listening to the mood of the people – in Britain.  That mood, partly arising from political disenchantment would appear also to arise from discomfort at cultural change in Britain brought about by immigration. But a similar argument can operate in reverse in France and parts of Spain.

In France, am I odd in feeling uncomfortable when one hears a large number of English voices  in a small town?  Is it possible that some French people could also be uncomfortable with this cultural change?  Is this also true in Spain? Cyprus?

The  danger for British Citizens in Farage’s desire to exit the EU?

British Citizens would cease to be European Citizens!  That is truly serious.

The Briton would no longer have the right to freely live and move in Europe.

Euro laws would no longer operate to preserve the right to ensure that British State pensions be paid in full in Europe.  All benefits would cease to be protected,

Health care support would cease.

The French (or Spanish, Cypriots etc.) could impose restrictions on foreigners in almost any manner. This would impinge of the lives of both older and younger generations.  Emigration from the UK to Europe would be seriously affected.

All Euro States would become as foreign to the British State as any other country in the world.

In brief it is most urgent that Britons abroad in Europe  are heard and listened to in the British parliament.

All who value the present situation and their ability to live in the European Union should sign this petition of the Editor of the Connexion.

http://epetitions.direct.gov.uk/petitions/55085.

And also this one  --- www.europeancitizensabroad.eu

If you entitled to  register to vote in the UK elections – do so here

https://www.aboutmyvote.co.uk/    [Go to ‘overseas voters’]

It is desirable that people contact MPs – even the Prime Minister- in Britain.   Get an address from this link -

http://www.parliament.uk/mps-lords-and-offices/mps/

You could forward this item… But the low number of signatures on the petitions simply affirms in their minds that the matter is of no importance to us. 

If  Farage has his way in some future referendum,  our world could be become greatly changed, and we will have no say at all.  Remember that.

(Brian Cave – lefourquet@gmail.com)

View more than 640  comments from expatriates who want the vote here. http://polldaddy.com/poll/5099387/?view=results

CROSS BORDER TAXATION in THE EUROPEAN UNION - DOUBLE TAXATION

To go to the INDEX click here

Introduction.  If income is coming from one European State when one is resident in another State The various rules relating to Double Taxation can be far from benign.  The Double Taxation rules can actually increase the amount of tax paid by an individual.

If you are British and a retired from Teaching - Military service, Police, Fire service, Local or National Government work, and some positions in the Health Service, then this  consultation concerns you. 

 Taxation and reinforcing the single market for EU citizens

The European Commission (EC) has launched three initiatives to gather ideas to remove tax obstacles that hinder the ability of individuals to move within the single market of the EU. There are two consultations. One covering the tax issues citizens encounter when they actively move between member states, the other covering Inheritance Tax (IHT) issues. Additionally on expert group is being set up with the aim of gathering ideas to deal with taxation obstacles that get in the way of cross border activity. The feedback will then allow the EC to look at solutions to any problems that are highlighted

Some of the matters intended to be covered by the expert group include:

• Taxation obstacles to free movement.
• Personal  income tax and IHT, but the group may look at other areas such as vehicle  taxation and  e-commerce where this impacts on the individual.
• Tax declarations in more than one State.
• Double Taxation Treaties.
  
• Working in other countries in the EU,
• Investing in other member states.

The links to the relevant websites are provided below. These all originate with the EU Commission.

1.  Call for applications to participate in the expert group:

http://ec.europa.eu/taxation_customs/taxation/individuals/expert_group/index_en.htm

2.  Public consultation on tax obstacles:

http://ec.europa.eu/taxation_customs/common/consultations/tax/2014-04_cross_borders_en.htm

3  Public consultation on inheritance taxation:

http://ec.europa.eu/taxation_customs/common/consultations/tax/2014-04_inheritance_tax_en.htm

4. A website has been set up to provide helpful information to individuals affected by cross border taxation –

http://ec.europa.eu/taxation_customs/taxation/individuals/index_en.htm

WHAT YOU CAN DO –

1.   Private Citizens can respond to items 2 and 3.  If you have factual important detail to impart please do so.

2.  Those of you who use accountants or other professional advisors.   You will probably find it helpful to forward this mail to him/her.

 NOTE WELL – The consultations  finish on 3^rd July 2014

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The web site link below has various references to the problems affecting taxation of expatriates in France and Europe. Go to the Index....

http://pensionersdebout.blogspot.co.uk/2010/02/index-to-major-postings-on-this-blog.html

scroll down to the heading TAXATION and DOUBLE TAXATION.

                                                                                                                    

The European (MEP) elections.

To go to the start and Index click here

EU regulations state that Euro-Citizens living in a Euro State other than their national State should be able to choose to vote either for an MEP standing in their National State or for one standing in their Resident State.

Huge numbers of British Citizens resident outside the UK will have no choice.  They can only choose an MEP candidate standing within the State where they live. This is because of the 15 year limit rule on voting  imposed by the UK Government,  In other words  the British Government is preventing the British citizens exercising their democrat right to choose the candidate they desire as their representative member in the Euro Parliament.

This is wrong! 

Stuck with this situation the British Citizen must choose MEPs from the local lists. (Some countries only elect on a list system).

Few will know who is who and what list is what. What are their policies?

To help the decision the following link will reveal the names of candidates and lists country by country. You click on the appropriate flag when the first page appears.

http://www.eutwentyfourteen.com/mep-candidates/

For the candidates in France (for les députés du Parlement européen) the subsequent link is as follows.  Other countries can be selected as above.

http://www.eutwentyfourteen.com/france

To learn more about the publicity coming from each candidate/list it is helpful to sign up to ‘yatterbox’, and to select ‘alerts’
- then one needs to think of a subject for the 'alert' - not easy! Try 'MEP' or 'European Parliament elections'.

http://yatterbox.com/yatter/   

Undoubtedly it will be very difficult to know which candidate  to choose on May 22^nd.
Most British Citizens beyond the UK will be quite at a loss with almost zero information at hand to help.

THE EU Presidency

There will be some televised debates concerning the election from the ‘lists’ of a President of the EU, notably on 15 May. This should be broadcast by the BBC and it is expected that most speakers will speak in English. There will a previous one on May 9^th.. The chairman will be English (Tony Barber of the Financial Times) but it is not clear how much is in English.

The following link helps to explain the above -http://en.wikipedia.org/wiki/European_Parliament_election,_2014

Action you can take.... Copy the material above with a covering note of introduction to the Minister responsible for Parliamentary Reform [I would value a copy - to lefourquet@gmail.com ]
Greg Clark MP -- publiccorrespondence@cabinet-office.gsi.gov.uk
or to the Policy Support Officer  at the Cabinet Office (a civil servant who will forward your message)  --- Donna.Smith1@cabinet-office.gsi.gov.uk