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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4720
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am 73 years old and moved from Australia to live in the UK

Customer Question

I am 73 years old and moved from Australia to live in the UK part way through the tax year, arriving on 20 October 2012. I bought a house here and moved in on 24 Dec 2012. My intention is to reside in the UK for 2-3 years before returning to Australia. I have already submitted an an Australian Tax return to the Australian Tax Office for 2012-2013 (the Australian tax year runs from July 1 2012 to June 30 2013). Most of my income comes from Australian bank interest, Australian share dividends, and the the largest element being the Australian State Pension. I have been informed by HMRC that I am classed as a UK resident and must make a UK tax return for the tax year April 6 2012 to April 5 2013 which indicates that I may have to pay tax on the same income in both countries. 1) Is this the case? 2) Is my Australian State Pension taxable here in the UK 3) How does the Double Taxation Treaty affect these issues Many thanks Keith XXXXXX

Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.

Hello and welcome to the site.
Keith, thank you for your question.

As a general rule If you become UK resident in a particular tax year, by law you are resident for the whole of that tax year. But, if you come to the UK part way through a tax year, the year may by concession be split (Extra-Statutory Concession A11).


This means that the UK Income Tax you should pay because you are resident here is calculated on the basis of the period you are living here rather than the whole of that tax year. This has the effect of splitting the tax year into resident and not resident periods for the purposes of calculating the tax due. You will be regarded as UK resident from 20 Oct 2012 for tax year 2012-13.

[Your question]
I have been informed by HMRC that I am classed as a UK resident and must make a UK tax return for the tax year April 6 2012 to April 5 2013 which indicates that I may have to pay tax on the same income in both countries.

1) Is this the case?

You don't pay tax on the same income in both countries under double taxation agreement - DTAs are designed to protect against the risk of an individual or a corporate entity being taxed twice where the same income is taxable in two countries
(Sec 9 of HMRC6 Page 50)
http://www.hmrc.gov.uk/cnr/hmrc6.pdf

2) Is my Australian State Pension taxable here in the UK
You should complete supplementary pages SA106 - Foreign and show pension received from Australia and claim foreign tax credit relief for tax suffered in Australia on that pension. You can deduct 10% of the value of overseas pension (more information on this can be found on SA106 notes - page FN10 .. link is here
http://www.hmrc.gov.uk/worksheets/sa106-notes.pdf

3) How does the Double Taxation Treaty affect these issues
As covered in question 1 .. DTAs are designed to protect against the risk of an individual or a corporate entity being taxed twice where the same income is taxable in two countries. You claim foreign tax credit relief for any tax suffered in Australia

I hope this is helpful and answers your question.

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