Chartered Accountants of Poynton, Cheshire

Pension Payments

There have been considerable changes to the pension contribution rules over the last couple of years.

In summary, these are as follows:

• Any individual can make payments of £3600 per annum gross of tax, whether they have an income or not.

• If an employer makes a contribution on behalf of an employee, this will be tax deductible in that employer's accounts as long as the payment is made 'wholly and exclusively1 for the purposes of the trade.

• The maximum any individual can pay in any pension payment period (which is usually the same as the tax year) is normally £21,5000 and any contributions over this will be subject to income tax of 40%. There are some exceptions to this rule.

• There is no longer a provision which allows excessive personal pension contributions to be carried back to the prior year. Some special rules remain in place for retirement annuity contributions.

Edward Appleton: "You can make huge tax savings which can transform your life, when you know how."

Ralph Ellerton: "Appletons live and breathe the paperwork so you don't have to!"

Tax Returns
If you submit your tax details to us, we can advise you of your exact tax liability.

Working or Living Overseas?

If you leave the UK permanently, you might be deemed to be no longer resident or ordinarily resident in the UK. This means you will only be taxed on the income arising in the UK such as bank interest or rental income from a UK property. Any earnings from the foreign country where you now live would not be taxed in the UK if you do not perform any work duties in the UK.

To gain this status, you should follow Revenue & Custom's non-statutory guidance, which means the absence from the UK must:

• cover one complete tax year i.e. from 6 April to 5 April;
• be such that you spend less than 183 days in the UK in any tax year; and
• make sure that you spend, on average, 91 days or less in any tax year in the UK over a four-year period.

When you leave the UK, you should notify Revenue & Customs on form P85.

Foreign tax

Although your income might not be subject to UK tax, it will probably be subject to tax in the country where you are now working. If some of the income was subsequently subject to UK tax, double tax treaties exist to prevent it being taxed in both countries.

UK property and bank interest

During your absence from the UK, you might rent out your UK residence.

Any rental income derived, less allowable costs, will be taxable in the UK. In such cases, you will still normally need to complete a self-assessment tax return.

If you are not resident in the UK for tax purposes, you can apply for the bank interest to be paid gross i.e. without the deduction of tax. You need to submit form R105, available from www.hmrc.gov.uk, to your bank or building society.

Useful leaflets

HM Revenue & Customs produce leaflets covering:

• Living or retiring abroad - IR138
• Help sheet for Non-residents and Investment income - IR300
• Residents and non-residents - IR20

If you are retiring abroad, you need to check the tax treatment of any pensions you might be entitled to receive.

If you are thinking or working overseas or employing foreign nationals, Appletons Accountants will be pleased to advise you on the tax implications.

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