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Cyprus UK Pension Tax Relief

 

Sun, sea and tax breaks?! Why Cyprus is popular with British expats

 

Are you planning to enjoy your retirement in Cyprus? Have you already escaped British weather and are living there now? Sun-soaked, superb quality of life and sole taxing rights treaty – who wouldn’t want the Cypriot retirement dream?

Although Cyprus is in the E.U. and the Eurozone, it is one of the best tax systems in Europe for the British expatriate. Spend 183 consecutive days in Cyprus and you are counted as a ‘tax resident’. This means that you must pay tax on your world wide income but a tax treaty between Britain and Cyprus means that you should never pay tax on the same thing in both countries.

This means you can stop paying UK tax on your UK pension income and start paying tax on it in Cyprus. The difference in percentage terms is huge – read on…

 

Avoid UK income tax on your pension Income

On your UK pension income, you can choose to follow the income tax scale below or pay 5% on the entire amount  (If it is currently over 3,420 euros).

Handy facts!

  • You can claim back your UK for the last four years, so if you having been living in Cyprus for more than one tax year it’s worth considering claiming back for as many years as you can
  • You can claim the tax you have paid on both private and government pensions. With many expats receiving a government pension for example from the MOD this is important to remember

 

What are the income tax rates in Cyprus?

What rate of income tax will I pay in Cyprus?

The usual Cypriot income tax scale, in Euros, is:

  • 0-19,500 pay 0%
  • 19,501-28,000 pay 20%
  • 28,001-36,000 pay 25%
  • 36,001 and over pay 30%

 

What other financial positives are there about being an expat in Cyprus?

 

Other income

All worldwide income is taxable in Cyprus, so offshore savings and investments must be declared. BUT if you have property rental or other income in the UK on which you have paid UK tax then, thanks to the Cyprus-Britain treaty, it will not be taxed again by the Cypriot government. You could even move investments offshore and avoid the British tax entirely!

 

Capital gains

Capital gains on qualified funds and securities are not taxed in Cyprus.

 

Dividend income

Dividend income is tax exempt, but you do still pay the 20% Defence Contribution on that money.

 

Avoid 40% UK Inheritance Tax

If you are staying in Cyprus forever then it may be worth becoming ‘domiciled’ there. This means that your family could avoid the massive 40% Inheritance tax charges on your UK assets. You are not liable to pay Inheritance tax on worldwide wealth and you can by domiciled in Cyprus and still own property in the UK. This could make an enormous difference to the value of the estate you leave your family. For example, there is a personal allowance of £325,000 which can be left before the 40% levy is applied. For example, imagine a couple, who are domiciled in Cyprus, leave £800,000 in UK property to their children. Between them they have personal allowances of £650,000. The Inheritance Tax of 40% would only be applied to the difference between the two amounts – £800,000 – £650,000 = £150,000. So the loss to the family in tax is about £40,000 in this instance. If the couple had remained in the UK the family would lose out on 40% of the whole £800,000. A substantial difference!

 

Any downsides?

ISAs and PEPs.

In Britain, the advantage to these savings schemes is that they are tax free. Unfortunately they are all considered for tax purposes in Cyprus and each case is looked at individually.

 

How we can help you

If your just moving to Cyprus or you’ve been there for a few years we can help you reduce the amount of tax you pay in the UK legitimately.

We can reclaim what you have missed out on for the last four tax years and complete any tax returns that are needed on your behalf.

The UK tax system is complex and each person’s tax affairs are individual to them. We invite you to get in touch to let our experts review your UK tax position.

Call us today on +44 (0)1228 520477

Email us at support@taxrebateservices.co.uk

Fill in a contact form here

Tony Shanks

HMRC Apologies For P800 Errors

HMRC apologises to taxpayers for their massive tax statement mistakes.

Since mid-September, HMRC has been sending inaccurate tax statements and tax rebate cheques to taxpayers. They have finally apologised for these errors and officially state that only a small number of the P800 tax statements have been incorrect. Although this does contradict the internal department note to stakeholders which said that they didn’t know the exact figure and that it could be many thousands of employees.

The official statement given reads, “HMRC is urgently investigating this matter to resolve the issue. In the meantime, customers who think their 2013/14 P800 may be wrong should contact our helplines for further advice before making repayments or cashing cheques. We are sorry for any worry or inconvenience caused.”

Not just important to the individual tax payer

This situation has provoked serious responses from those working in the financial sector. For example, a KPMG tax director said urgent investment in HMRC systems was needed and the ATT demanded an ‘urgent review’ of the Real Time Information system.

Problems may have been avoided, if only HMRC had listened.

It was also reported that the ATT’s president Natalie Miller said that this huge system error demonstrates how important it is for all those with a stake in the success of RTI to work together. “We have been drawing HMRC’s attention to the quirks and complexities of RTI in meetings and correspondence from its inception. We have also highlighted the significant burdens it places on employers and agents. What we are seeing now are real and serious practical problems for possibly many thousands of employees at a time when building confidence in the system is crucial. Some of those difficulties might have been avoided if HMRC had heeded advice from ATT and similar bodies at an early stage.

What MUST be done now?

The president of the ATT calls for an immediate review of the Real Time Information system “to ensure that it is fit for purpose”. Not only should we be able to trust the system which processes our tax payments, but it is also a major part of the new Universal Credit system which will take over delivering state benefits. Miller suggests that a review includes understanding why employers had not sent in final payment statements for 2013-14 (as stated by HMRC) and why HMRC acted on incomplete information. Are employers struggling to understand the system? Can the system “identify when important information is missing”? If they did know, why did HMRC issue tax statements based on only partial information? These are fundamental questions which HMRC must answer in a timely fashion in order to restore taxpayers’ faith in the department.

Steve Wade, tax director at KPMG, gives us his take on what needs to be done. He said HMRC systems were “not designed to deal with all the complexities of PAYE” and so “there are some fairly major issues with the IT and HMRC systems and fixing them requires significant investment be the tax authorities”. He says that there needs to be “urgent investment” in the “processing and back end software….which collect and process data to generate the operational efficiencies when the whole RTI initiative was conceived”. Wade said that “more and quicker feedback” to employers’ agents and software developers about any issues that come up would also improve the system.

HMRC needs to restore faith of British taxpayers

This entire mess has led to greater frustration with the Tax Office and their seeming inability to process accurate tax statements for ordinary tax-paying workers. As Jason Piper, technical manager at ACCA, said, “Yet again, we are seeing errors in the operation of PAYE, and HMRC must learn the lessons from earlier problems and be transparent and accountable this time round.” If only…!

Tony Shanks

HMRC Sending Incorrect Tax Refunds

Have you received a P800 form from HMRC saying your due a tax rebate or owe them money?

If yes you could be one of thousands of UK tax payers who HMRC have sent ‘corrected’ tax statements to – which have now been found to be incorrect!

This means tax refunds are being banked and spent which HMRC will want back in the coming months. On the other side some have got the worry of being told they actually owe tax when they don’t.

The public are again questioning the competence of HMRC to administer the UK’s tax system as thousands of taxpayer’s receive incorrect revised tax statements. This also leaves us doubting the wisdom behind proposals to give HMRC the authority to directly access taxpayers’ bank accounts as part of their already considerable powers.

As it stands, our PAYE system of tax collection involves over 5 million workers paying too much or too little tax every year. There are many reasons for the miscalculation such as having a second income or moving jobs. Every individual must then be contacted by HMRC with a new tax statement which tells them how much they are owed by HMRC due to over payment, or how much they owe to HMRC due to underpayment recouped through a change of tax code.

A recently leaked email reveals that it has sent incorrect tax statements to thousands of British taxpayers during the 2013-14 tax year. This massive mistake has only been realised by HMRC as workers queried their worrying letters. This email was sent to staff and accountants and admits, “We currently do not know the scale of the issue but some large employers are involved, so several thousands of employees may be affected.” They advised to pass on guidance “not to pay any underpayment” or to cash any cheques from HMRC for an overpayment until the situation was resolved. It also expresses that they are “very sorry” and were “urgently investigating these cases”.

An HMRC spokesperson passed the blame to employers saying, “The majority of errors have happened because an employer failed to make a final payment statement for 2013-14 tax year, meaning our records were incomplete despite reminders that these submissions had to be made.” They also said that although they did not have an exact figure, less than 100,000 people were affected and new tax statements should arrive in 6-8 weeks.

This finger pointing gives an interesting reference to the HMRC’s ‘all singing all dancing’, new, £270 million Real Time Information System – which was designed to eliminate mistakes of this sort! It changed the system to make employers report its staff payments more frequently than before. Moving to weekly and monthly figures going to HMRC, which should mean any changes to the employees’ circumstances were more quickly picked up by the system. But experts are citing this most recent debacle as evidence that the system is still not fully operational because there has been neither adequate planning nor time for its successful implementation.

Jason Piper of the Association of Chartered Certified Accountants comments, “Yet again we are seeing errors in the operation of PAYE. Public patience is wearing thin with government IT failures and one like this, which hits so close to home for taxpayers, is bad news for a department trying to extend the reach of its powers into every aspect of our collective financial lives based on the power of its computer systems.”

Here Mr Piper is referring to the latest proposals from the government to reduce tax avoidance. These include a rather Sherriff of Nottingham style recommendation to let HMRC have direct access to the bank or building society accounts of people who owe tax without seeking court approval. This is unassumingly named ‘direct recovery of debt’ and would mean that the taxman could get his hands on money belonging to people who owe at least £1,000 and have been contacted at least 4 times for the payment. Thankfully, they are obliged to leave people with at least £5,000 in their accounts.

There is legitimate, heightened concern when this idea is combined with HMRC’s enormous failings using their currently available powers. As Stuart Philips, Chief Executive of The Private Office, summarises, “This is bad timing for HMRC. They should only be given more powers if they can prove they can confidently deliver accurate information. This clearly calls into question their ability to do so and their faith in the Real Time System.”

Tony Shanks

 

 

GMB Members Tax Relief

We help a lot of members of the General Municipal Boilermakers or GMB to claim tax back and often get asked if tax relief can be claimed on their membership fee to the GMB. The answer unfortunately is no, there is no current agreement between the GMB and HMRC to allow for tax relief to be claimed back on GMB union fees.

Will this change?

This may be surprising to some especially when so many other major unions like UNISON and professional bodies have secured agreements with HMRC to give tax relief on their membership fees.

You never know this may change in the future, and would be a welcome tax break for countless GMB members who don’t have much money spare each month.

The good news

The GMB is huge with over 617,000 members from a whole host of industries including teachers, Nurses and healthcare workers. This means we can still help many GMB members get a tax refund for other costs they have because of their jobs.

Who can claim?

It doesn’t matter what your job is, if you have expenses because of your job which are allowable for tax relief you can claim back a tax rebate.

We’ve helped Nurses claim for NMC fees and washing their protective clothing, Teachers claim back relief on fees into the NUT and workers from almost every other industry claim a uniform rebate for work uniforms or protective clothing.

It doesn’t stop there, a tax rebate can be claimed for work travel, tools bought for work and working from home.

How to check and make a claim

Our service can help you review what you are entitled to claim back for the last four tax years. With an average tax refund secured for our clients of over £900 can you afford not to find out?

Tony Shanks

Uniform Tax Rebate Expenses EIM32476

What uniform expenses can I claim?

When talking about what uniform expenses you can claim you need to understand HMRC legislation and in particular EIM 32476.

EIM 32476 basically explains that anything bearing a company name or logo is considered a uniform. If an employee has to buy these items themselves, a deduction on the cost is permitted. Other required clothing without a company name is not considered in the same way and therefore these items are not deductible.

A good example of a legitimate uniform tax rebate claim is:

cabin crew member who wears a uniform of blue jacket, skirt or trousers and a scarf all with the airline name sewn on them would be classed as uniform. The other uniform requirements to wear a generic white shirt or blouse, blue socks or dark tights and black shoes would not have an allowed uniform deductible amount.

Knowing what is and isn’t allowed before you make a claim can save you the time and effort. It’s also important to remember that your tax code may already include the uniform allowance without you actually knowing.

We offer a comprehensive Tax Rebate Service which can claim back tax relief on your uniform and other work related costs. We’ll check your tax code and make sure you claim back everything you’re entitled to.

Tony Shanks

 

 

Find Out How Much Tax Refund You Can Claim

If you’ve ever wondered how much tax you could be owed you can use our tax refund calculator to find out – for free!

Many people think they might have overpaid income tax but don’t do anything about it. It’s vital to act sooner rather than later because there are time limits on how long you have to make a claim.

The tax refund calculator let’s you enter your total gross pay, tax paid and expense figures to work out what you can claim back in each of the last four tax years.

It’s worth remembering that a tax refund claim can be back dated for the last four tax years. Checking each tax year is worth it to make sure you don’t miss out on tax you are owed.

Tony Shanks

Teacher Tax Relief Working From Home

As a teacher you can claim a tax rebate for lot’s of your work related costs. One of them is called working from home tax relief. We’ve been helping teachers and other other education professionals for many years, and are often successful in claiming back tax relief on expenses where others have failed.

The current regulations generally state that teachers are not entitled to claim for any costs incurred whilst working at home because it is a choice, rather than a requirement of the job. It’s stated that teachers have access to the school facilities at either end of the official school day so are simply making a personal decision to do this work at home.

While this is true, teachers usually use this time in school to do things like display work, resource preparation and meetings with other staff which requires access to the premises. The bulk of other paperwork and research cannot be completed during the hours the school building is open and therefore has to be done at home.

There are several points which dispute the idea that ‘individual choice’ is the only reason for home working.

Before and After School Clubs

Increasing numbers of teachers are asked to allow their classrooms to be used for breakfast or after school clubs to meet targets of ‘wrap-around’ care. This means they are no longer a quiet space in which to concentrate.

Week-end working

Most teachers complete their weekly planning and assessment paperwork at the week-end when there is no access to school premises.

Holiday Access

School buildings are often not open to staff during school holiday periods due to big cleaning jobs, the site manager being on holiday, updates to computer servers or building works being done. Often this means staff can be in the school buildings but have reduced facilities. Such as no computer access, no water (which means no toilet!) or no heating. Therefore it becomes necessary to work at home. Teachers have to use ‘holiday’ periods to do subject co-ordinator work, write reports or physically put their classrooms back together cleaning or construction work so they are ready for the children.

Restricted Heating

Many schools have heating systems that are centrally controlled. This means that they are timed to come on and off to heat the building when the children are present. If heating goes off at 4.00pm in the middle of winter, Victorian buildings or the ‘temporary for 30 years’ classrooms become very cold very quickly. It is quite difficult to type efficiently wearing gloves, so most staff choose to go home and use their own resources.

Tony Shanks

 

HMRC Mileage Tax Refund Legislation

Claiming a mileage tax refund can be a tricky business. The rules surrounding what can and cannot be claimed for are sometimes hard to understand. In basic terms if you have to travel to one place of employment for 24 months or less you can potentially claim mileage tax relief. But there are lot’s of variables which can mean you aren’t entitled to claim.

 

History of Temporary Workplace Legislation

Income tax was first introduced in the UK in 1799 and has been enforced since then, apart from a period of suspension between 1815 and 1842. This has included the premis that if an employee has had to spend money on anything that is “wholly, exclusively and necessarily” for their work, then in should be tax deductible. Initially this did include such expenditure as keeping and maintaining a horse! In 1998 the rules were updated to include the modern methods of travel to and from work for employees that are continuously employed. We claim travel expenses under sections 336-339 of the Income Tax (Earnings and Pensions) Act of 2003.

 

Reliable Service

All of our advisors are based in the U.K. and have in depth knowledge of current legislation. We are proud of our commitment to honesty and integrity when dealing with each individual’s tax claim. We know exactly what you are entitled to and never submit a claim for anything you are not allowed. If you have given us accurate information then we make a legitimate claim and you never have to worry about HMRC asking for their money back.

 

Cutting through the jargon

Everyone wants to pay enough, but not too much, tax. You can fill in your self assessment tax returns yourself. But they cost time to decipher the forms and money if you make particular mistakes. Even a judge recently described the rules around commuting to permanent or temporary workplaces a “labyrinth”! We can remove the time and stress cost to you by submitting your forms on your behalf. We already understand the regulations so you can relax in the knowledge that you will be submitting an accurate claim that encompasses all of your entitlements. The average 4 year tax refund for a PAYE client is over £2,500.

We have the reputation of providing a totally professional service with customer service that is second to none. We have been working with HMRC for many years and know that every detail matters when working within their regulations. We understand the rules so you don’t have to!

What are you waiting for? Start your claim today.

Tony Shanks

Tax Rebate for Teachers’ and Lecturers’ Book Expenses

As a leading teacher tax rebate service we are often asked if tax relief can be claimed back on the cost of books bought for work.

If you teach at GCE A level and above, you can make a rebate claim for the full cost of any books you have bought to use at work. HMRC calls this, “for use in the performance of the duties of employment”. They consider that below this level any books are usually supplied by the school or college.

However, if you look further into HMRC’s definition of “duties of employment”, it is possible for other teachers to submit a legitimate claim. This definition is specified as 3 things;

 

  1. Books that pupils can use.
  2. Books used by the teacher during lessons.
  3. Books used by the teacher in the preparation of lessons.

 

Warning note: Item number 3 is the most difficult to prove as it clashes with another of HMRC’s rules which states that “books used for general maintenance or improvement of the teacher’s knowledge” is NOT deductible.

Tip

It’s always a good idea to keep receipts or proof of purchase of what you have bought for any future tax rebate claims.

What else can I claim for?

At the same time of claiming for books you can include other costs like professional fees into the NUT or NASUWT, and specialist clothing for example sports kit used to take pupils for PE lessons.

Tax Rebate Services has been helping Teachers, Lecturers and other Education professionals claim tax rebates for many years. Our service can help you claim back the maximum rebate possible meaning you don’t miss out and only claim back legitimate expenses.

Tony Shanks

HMRC Can Take Up To £17,000

In proposed changes HMRC have been given increased powers to take back the tax money they are owed – directly from your salary.

Currently the limit that can be reclaimed is £3000 per tax year but this is set to change next April to £17,000. The amount they can take back will depend on your salary and will increase the more you earn. The £3,000 limit will remain for those earning less than £30,000, but will rise to the new £17,000 ceiling for tax payers earning £90,000 or more.

This is an additional power to the earlier announced right to take tax owed from your bank or building society account, joint accounts and even ISA’s.

The payments will be normally spread over a 12 months period and not taken back all at once.

Yesterday Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said: ‘This is another creeping of HMRC’s powers, which are skewed in favour of themselves and away from the taxpayers. HMRC is becoming a more confrontational and all-powerful organisation.’

An HMRC spokesman said: ‘Taxpayers welcome the option to have tax debt collected by instalments. This is a long-standing feature of the payroll system and the increase in the threshold will allow more tax debts to be paid in this way.’

HMRC will be targeting people who owe £1000 or more and who they have contacted at least four times.

Tony Shanks

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