JUERGEN BAUER

Thank you for your swift reply. However, I do not understand why other queries here receive support with tax issues based on the information given being trusted and I do not. I have already explained the conditions under which the payment was made. The information I have given is correct, but obviously I am not trusted for unknown reasons. Please kindly explain those reasons. All other people here are being trusted to give the correct information. I am instead asked to provide documentary evidence of my situation and write to HMRC, others are not asked to do so. Is this a form of discrimination? From my experience tax queries in writing take up to 10 months to receive a reply which is too long. Normally, in this forum everyone is trusted to give correct information. Obviously, I am not trusted for some strange reason. This is extremely unfair. I am hereby asking you once more to reply to my query. In case you continue to refuse answering my tax query, could you please kindly explain your com plaints procedure to me? Many thanks in advance. Yours faithfully, J.B.

Dear Madams / Sirs, A few days ago I received a lump sum settlement of £265,000 from my permanent health insurance (PHI). As a condition of receiving the lump sum I had to give up all my future rights to payments. I agreed to that condition. The lump sum offer was a discretionary offer by the insurance and not a condition of the PHI policy. The insurance have stated in writing that this lump sum payment is not an advance of benefit due and it is not made up of accumulated benefits that are annual payments. The figure represents the claim’s present value and has been discounted to reflect any future possible changes in my medical, work or financial circumstances. My PHI insurance policy was originally taken out by my previous employer and my employer paid the insurance premiums. My employment ceased in 2018 by voluntary redundancy. This permanent health insurance (PHI) is a group insurance policy which was taken out and premiums were paid for by my previous employer where I was employed as an accounts clerk. My employment ended on 31 May 2018 by voluntary redundancy. Since 2018 when my employment ended, the monthly PHI benefit was paid to me directly by the PHI insurance, no longer by my employer. This was based on an agreement made between my previous employer and my PHI insurance. In the past the PHI insurance had paid monthly PHI benefit in connection with my work incapacity. My incapacity began approx. 25 years ago and is ongoing. I did pay income tax on the monthly PHI benefit payments. HMRC guidance IPTM 6140 states the following: *** BEGINNING OF QUOTE *** IPTM6140 - Sickness disability and unemployment insurance: lump sums to give up future rights to payments. Sometimes an insurer will offer a person a lump sum to give up all future rights to payments from the policy. Lump sums will be chargeable to tax in the hands of the recipient where they are made up of accumulated benefits that are annual payments and which do not qualify for exemption. They will be taxable as business income if the receipt is a trade receipt for the recipient – see BIM40750. Alternatively they may be taxable as employment or pension income – see EIM00670 and EIM75400. Most lump sums however will be capital, and not chargeable to income tax as savings or investment income or capital gains tax, whether or not the benefits were exempt – see CG69040 onwards. Lump sums may be payable by instalments, which would not change their character. However, if the total of the instalments is greater than the lump sum payable, it is likely that the excess represents interest and so may be subject to income tax. *** END OF QUOTE *** In accordance with HMRC guidance IPTM 6140 (as quoted) the lump sum should be tax-free. My received lump sum is absolutely not employment nor pension income. EIM00670 and EIM75400 do not apply to my situation. It is not business income either since I am not running a business, I am a private individual. BIM40750 does also not apply to my situation. According to IPTM 6140 guidance my lump sum – like most lump sums – is capital and therefore not chargeable to tax, whether or not the monthly benefit payments were tax-exempt or not. I would be grateful to receive your views regarding my tax position as explained above. In case that my assumption (the lump sum is not chargeable to tax) is wrong I would be most obliged if a detailed explanation could be given. Many thanks in advance.

Dear Team at HMRC, I am a UK resident and pay UK tax on the arising basis. I plan to sell a buy-to-let property in Germany in May 2024. There will be a gain which will definitely be subject to tax in Germany. The 2010 UK/Germany Double Taxation Convention states in Article 6 and Article 13 Germany (that other state) may tax this gain. The German tax authorities will charge “Einkommensteuer” (English: income tax) on this property gain. I will declare this in my German tax return for 2024 and will pay the German tax due. I understand in the UK I am taxed on my worldwide income and have to report this as a property capital gain in my 2024/25 self assessment (SA106 and SA108). The chargeable gain is re-calculated under UK tax law. My research shows that I can claim FTCR (foreign tax credit relief) in this situation, even though the tax paid in Germany is income tax and the tax payable in the UK is capital gains tax. The German income tax collected and paid on this property gain should generate FTCR for my UK capital gains tax liability. This FTCR should effectively reduce or eliminate my UK Capital Gains Tax liability. I would be much obliged if you could kindly confirm this. In case you cannot confirm this, maybe you could help me understand by giving an explanation. Many thanks in advance.

Dear Team at HMRC, I am a UK resident since 1991 and pay UK tax on the arising basis. From HMRC's reply to a post I can see that the determining factor for the tax year in which a property gain has to be reported is the tax year into which the date of exchange of contracts falls (UK property). There is no exchange of contracts in Germany. Instead vendor and buyer both sign the contract at an appointment with a notary public. I assume into whichever tax year the day of the appointment with the notary public falls will be the reporting tax year for the gain. I have sold a buy-to-let property in Germany with a notary appointment (contract signing) on 2 March 2023 (in UK tax year 2022/23). The sale proceeds were received on 27 April 2023, keys handed over on 2 May 2023 (in tax year 2023/24). According to my research I will need to report the property gain in my self assessment for tax year 2022/23. Any help regarding the tax year when this foreign property gain needs to be reported gratefully received. Thank you in advance.