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bigduckontax, Accountant
Category: Tax
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I will retire August 2015. I have been living and working in

Customer Question

I will retire August 2015. I have been living and working in Belgium since 1973. I intend to retire back to the UK. I assume I will be liable for taxes from 1 September. Also my retirement pension is a private one as I have been employed at NATO. NATO contributes 50% to the taxes but the
50% contribution will be added to my pension and therefore taxed. As I am receiving a pension from abroad do I receive a 10% reduction for taxes on that foreign income? One other question I have is that I will berenting property in the UK until my property is sold in Belgium am I liable for capital gains tax in theUK?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
Right, let us dispose of Capital Gains Tax (CGT) first. If your Belgian property is your sole or min domestic residence you are entitled to Private Residence Relief (PRR) at 100% of the gain. Once you move back to the UK and out of your Belgian property you have 18 months to sell during which PRR is extended. Many people do not realize that whenever they make a gain from the sale of landed property they are liable to CGT as for the vast majority PRR applies.
When you left the UK to work for NATO you should have submitted a form P85 to your UK tax office. If you did not then you should do so now, fortunately there is no time limit and the form is available and can be sent on line. On your return to the UK you should advise your tax office of your date your date of return. In each notification HMRC will split your years of leaving and arrival into two portions, one resident and one non resident.
Your retirement pension will be taxed at normal UK rates, but you will receive the Personal Allowance appropriate to your age. Contributions to private pension plans, including any employer's element, may not exceed 100% of emoluments. Additionally, there is a limit of 40K in 14/15, 560K in 13/14 and unlimited in earlier tax years. Only 90% of your foreign pension is chargeable to UK Income Tax, see HMRC Notice EIM74500. Furthermore, any tax deducted by the Belgian Authorities, and Belgium is the most heavily taxing state in the EU, is allowable as a tax credit against any UK Income Tax liability under the Double Taxation Treaty between Belgium and the UK which is designed to prevent the same income stream being taxed in both jurisdictions.
I do hope I have shed some light on your situation.
Expert:  bigduckontax replied 3 years ago.
Slight keying error!
Paragraph 4 line 2; delete '560K,' insert '50K.'