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bigduckontax
bigduckontax, Accountant
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Can you tell me if personal allowances are claimed in Uk if

Customer Question

Can you tell me if personal allowances are claimed in Uk if all income wherewver recieved has to be declared on UK Self Assessment Return. If the person lives in MAlta but is a Uk citizen with a personal pension and a OAP and teachers pension plus Uk rental income. I am aware that Malta only charges tax on that which is remmitted. Is it correct that if Personal Allowances are not claim then only income not remitted and taxed in Malta has be declared?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
You have not explained the person's actual tax residence. However, some incomes are taxable in the UK irrespective of the UK Citizen's location and that includes State and teacher's occupational pension together with UK rental income. All those aggregated have the Personal Allowance, currently 10K, but may be slightly more depending upon age, deducted to find the tax due. Normally one would expect the teacher's pension provider to be operating PAYE which, if the correct tax code is used, should make the payer tax neutral at each tax year's end. All this income should be declared on the person's annual UK self assessment tax return if the person is required to make one. For example my tax office has discontinued these for me although if I received some income upon which I have not bee taxed I would have to start declaring again. I should be so lucky!
You are essentially correct in your interpretation of Maltese income tax law which for ex pats only taxes moneys remitted. Also there exists a Double Taxation Treaty between the UK and Malta which in basic terms does not allow income taxed in one state to be taxed again in the other. This being an essentially a UK based tax advice site I cannot comment on Malta's internal arrangements regarding returns of remitted moneys.
I do hope I have helped you with your question.
Customer: replied 2 years ago.

Thanks for that. Are you saying that Even if the OAP and the personal pension is remitted and taxed in Malta they still have to go on the UK self assessment return and be taxed . Tax residence is in Malta but have a house in uk recieving rental income

Expert:  bigduckontax replied 2 years ago.
Here is the HMRC guidance:
'How much tax will you pay on your pension income?
How much tax - if any - you will pay on your pension income depends on the overall amount of taxable income you have.
Your taxable income may include:
State Pension
Income from a retirement annuity, personal, stakeholder and/or workplace pension
Any taxable State Benefits you may qualify for
Savings or investments
Income from a job if you work after State Pension age
If your taxable income is greater than your tax allowances you'll pay tax on some or all of your pension income. If your taxable income is equal to or less than your allowances you won't pay any tax on your pension income.'
Now as regards ***** ***** one lives overseas:
'Your UK pensions and State Pension will still be taxable in the UK unless there's a 'double taxation agreement' (covering pensions) with the country where you decide to live. If there is an agreement, you'll usually pay tax in that country.
If you get a pension for public service - such as a teacher's, nurse's, civil service or forces pension -it'll normally be taxable in the UK.
You'll have to fill in a Self Assessment tax return to claim your personal tax-free allowances.'
There is a Double Taxation Treaty between the UK and Malta to prevent incomes being taxed twice. Please remember that the State Pension (SP) is a taxable emolument, but is paid gross whilst the teacher's pension almost certainly is paid under PAYE with the correct tax code applied will ensure that the SP is taxed also. If that is the case HMRC may not require a self assessment return to be made, but if they do then these must be declared as they are taxable in the UK irrespective of the person's location. As they will have borne tax then presumably Malta will not tax again as under the treaty they have already been taxed. Unfortunately this taxation will be at the UK basic rate of 20% whilst I believe Malta's equivalent is only 15%.
I am sorry, but the person concerned is a victim of Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.
bigduckontax, Accountant
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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