I wonder if people are talking at cross-purposes here.
If I read the question correctly lhlh is asking whether their parents will be able to pay Class 3 NIC when they arrive in the UK to build entitlement to a UK state pension.
As I understand it, it is not possible to pay voluntarily NIC for years that pre-date residence and allocation of a NI number. And as both parents are already 65, presumably reaching state pension age at 66 in 2023, then even if they would be eligible to pay voluntary NIC after taking up UK residence, are they not already past the age at which one stops paying NIC voluntarily, i.e. at the end of the tax year one reaches state pension age (as part year voluntary NIC will not add to pension entitlement)?
Or am I missing the point too?
Looking at HMRC guidance on reporting CGT for residential property it is clear that the CGT rate is 18% if taxable income plus net gain is less than £37,700. However, what I cannot find is how one calculates taxable income mid-year given that the gain has to be reported within 60 days. This is because some types of income like interest will not be known until the end of the tax year in question.
Pension income known for the tax year in question, say £30,000
Rental profit to completion of sale in July £? but can be calculated within the 60 days, say £3,000
Non-ISA Interest income £? - no idea what it will be for the year but known to July completion date, say £2,000
Other variable income sources like dividends etc - same issues as interest (ignore for now)
Net taxable gain £16,000
At completion, known taxable income is £35,000. Personal Allowance and Personal Savings Allowance total £13,570. This means a Gain of £16,000 would be fully taxable at 18% but if, by the end of the year, the variable taxable income (interest and other) is, say, £6,000, some of the gain would be chargeable at 28%.
How does one proceed when reporting the gain?
Surely tax credit relief is not in point. The UK/Italy DTA says in Article 23 (1) that the pension is taxable ONLY in the UK. that would suggest that nexiv92 is correct when they say that their father cannot claim FTCR and must claim relief in Italy.
Thank you - I thought that was the case but wanted to check.
My son is in the process of moving home to a newbuild, the completion of which has been delayed for months because of Covid, among other excuses. In the meantime the buyer of his existing home has withdrawn. He has arranged bridging finance for the new purchase and will of course suffer the extra SDLT, which he can reclaim within the relevant time limits. But my question is about CGT when he finally sells his old home.
The expectation is that he will sell his old main residence within a few months (offer recently accepted but will not be in a position to complete before he has to complete on the new home) and that he will get full PRR. If that is the case, such that no CGT is payable, does he need to report the sale to HMRC for GCT purposes? I have searched your guidance and think the answer is "no" but am not 100% certain. Can you please point me at the relevant guidance?
Just to add that it is likely that the EU rules on the coordination of social security systems will continue to apply to a person in these circumstances as they would presumably be protected under the EU Withdrawal Agreement. If so, their UK contribution years would be taken into account in the other EEA country when it calculates their state pension entitlement in due course, meaning they could more easily reach any minimum years requirement, or receive a higher pro-rata pension, depending on how the rules work in the other country. If they already have more than 10 UK years then the EU rules would make no difference to the UK state pension...
I would have that conversation with DWP Future Pensions. They can tell you, well, your wife (or you if she gives permission to talk with you), the "starting amount" for the new state pension and whether it includes any amount of "additional pension". When I asked in relation to my wife's pension, they were most accommodating.
If there is any additional pension because she was not contracted out of SERPS/S2P then they can tell you the make-up of the starting amount, i.e. how much is basic pension and how much is additional pension. You can then check that the basic pension element is correct and/or challenge the number as it is simply (in 2022/23 terms the relevant number of thirtieths of £141.85. I think you will have to accept the number for additional pension as the maths is so complex that the DWP officer cannot explain it either!
If she had more than 30 full years at 5 April 2016, then the basic pension element would be the max £141.85, if that makes sense, as only 30 years are counted.
Hope this helps.
HMRC will correct me if I am wrong, but as I understand it, while occupational pensions are dealt with in Article 18, state pensions are not considered to be "in consideration of past employment" and therefore are not within Article 18. Instead, they are dealt with as Other Income in Article 22. That said, in the case of Italy, UK has the taxing rights over Other Income, so the answer is something of a lemon...
Daft question perhaps but have you checked the double taxation agreement with the country paying the pension to check that it is even taxable in the UK? For instance, a German state pension is taxable only in Germany when the recipient is resident in the UK. Each country and type of pension may result in a different outcome...
I am not sure of the process for claiming a pension from Switzerland but from what the Swiss say, it appears similar to that for claiming a pension from an EU country, i.e. you claim through the UK International Pensions Team on 0191 21 87777.
For EU pensions they will send you a form CFN901 and looking at that form it suggests the same process applies for Switzerland, i.e. that country is also subject to the EU regulations on the Coordination of Social Security System and the same form needs to be completed.
It is not possible to download that form (yet), so, a call to the number above will hopefully get the process started for you.