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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15708
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Good afternoon, ****** and I am retired and

Customer Question

Good afternoon,
My name is Keith ****** and I am retired and have two final salary pensions and a government pension, all paid into my UK bank account. I also have some investments (fixed income and UK equity products) which pay out distributions, monthly and quarterly.
My question is, that to enable my wife to claim her New Zealand pension, we may have to move back to New Zealand for two years, so that she is in residence for the required period before her 65 birthday. We married in the UK, May 2014. Jane is British but has lived in New Zealand for some 30 years and has duel passports. I would have to apply for a NZ residence VISA.
My intention is to continue to have all my pensions paid into my UK bank accounts and to set up a foreign exchange service for monthly transfers. At some stage we would return to the UK.
Obviously, I would have to let HMRC know that I would be out of the country for a period of time, but how does this affect the tax paid on pensions and investment income. I would have a permanent address in England. I am quite happy to let things as they are, but perhaps you would be able to confirm one way or another if this is different to my way of thinking.
Kind regards
Keith
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. You might refer to the UK/New Zealand double tax treaty here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/446864/1983_New_Zealand_UK_as_amended_in_2007.pdf I'm assuming by "government pension" that you are referring to the UK state pension. Under the terms of Article 19 of tax treaty, all your pensions will be taxable where you are resident for tax purposes. That is normal. Residency status is covered by Article 4 of the tax treaty. You can read about New Zealand tax residency here: http://www.ird.govt.nz/international/residency/personal/personal-tax-residency-index.html Assuming you will be tax resident in NZ, then you should inform HMRC by completing a P85 and they will issue NT (No Tax) tax codings to each of your final salary pension payers. The state pension is paid gross so there is nothing to do as far as that is concerned. Articles 10 and 11 of the tax treaty deal with interest and dividends. You will get credit for the notional tax credit attached to UK dividends against any liability on that income in NZ. Any tax you pay on interest will also be offset againts any tax liability you have on that income in NZ. You may be able to apply for exemption from UK tax on the basis that it will be covered by your UK personal allowance. An R105 should be completed for each bank you have interest bearing accounts with but not all banks will act on this form. Alternatively, complete an R43 annually. I hope this helps but let em know if you have any further questions.
Customer: replied 11 months ago.
Hello
Many thanks for your reply, much appreciated.
Initially, it is not my intention to be a tax resident in New Zealand. I assume therefore under that scenario and paying tax in the UK, I would not have to let HMRC know and just leave it as it is?Thanks
Keith
Customer: replied 11 months ago.
Hi Tony,
Also from next April, when there will be a £1000 allowance before deposit and income interest is charged, does this mean that any income paid is Gross, or still paid Net and then up to the individual to claim back in the tax return?
Expert:  TonyTax replied 11 months ago.
To be honest, I'm not sure of the mechanics of it and they may not have been worked out yet.
The problem I see is that there will be people with accounts with more then one deposit taker who will be people try to pull a fast one and get more tax free interest than they are due. I suspect the deposit takers will get people to sign a form to say that they qualify and then the first £1,000 of interest will be paid gross.
There are some notes on the plans here:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf

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