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Image from PixabaySo Long, and Thanks for All the Fish

Douglas Adams – Book title

Pace the promise at the end of my last post (the final part of a trilogy on my tax transition from the UK to Canada over the last year) this unexpected fourth part details the delightful process of completing a reasonably complex UK tax return. The gentle reader will be relieved to know that I am going to skip all of the obvious bits and just concentrate on that which is out of the ordinary.

Completion of this particular return was complicated by the fact that – having been resident in the UK for 104 days from April 6th to July 19th 2015 – I was considered by HMRC to have been a UK resident for tax purposes for the whole tax year. To avoid being taxed in both countries for the period from July 19th 2015 (our date of landing) to April 5th 2016 (and having already paid my Canadian taxes up to December 31st) I needed to meet the criteria for a ‘split year treatment‘ for 2015/16, under which I would pay taxes in whichever country I was resident at any given point.

There are eight sets of circumstances under which one is deemed to have met the criteria for ‘split year treatment‘. The only one that applied in my circumstances was Case 3 – ‘Ceasing to have a home in the UK’. The HMRC’s ‘Tax Return Notes’ give a fair bit of information on the criteria as a whole but cheerfully send one off in search of document RDR3 – ‘Guidance Note: Statutory Residence Test (SRT)’ for further detail on each specific case. Herewith the relevant sections for Case 3:

Case 3:  Ceasing to have a home in the UK

5.22  In this instance, you may receive split year treatment for a tax year if you leave the UK to live abroad and you cease to have a UK home.

You must:

– be UK resident in the tax year
– be UK resident for the previous tax year (whether or not it was a split year)
– be non-UK resident for the following tax year
– have one or more homes in the UK at the start of the tax year and at some point in the year cease to have any home in the UK for the rest of the tax year.

5.23  From the point you cease to have a home in the UK you must:

– spend fewer than 16 days in the UK
– in relation to a particular country, either:

– be present in that country at the end of each day for 6 months, or
– have your only home, or all your homes if you have more than 1, in that country within 6 months

Hmmm! That is all as clear as mud…

The other portion of the return that I had not previously encountered was that concerning Capital Gains Tax – for which the sale of our UK property made us potentially liable. The basic rules regarding Capital Gains Tax on property sales at the time that we sold the apartment were thus:

  • Capital Gains Tax could be subject to Private Residence Relief (PRR)
  • PRR was 100% if the property was one’s prime residence and was lived in for the whole time that it was owned
  • PRR might be reduced if the property was let for more than three years
  • no tax was payable in any case for the final 18 months of ownership

Our apartment in Buckinghamshire (which I had owned for more than fourteen years) had been let for more than three years at the point at which we sold it. We thus had to work out the level of PRR for which we might still be eligible. This was calculated by determining the profit made on the sale (the agreed selling price less the original purchase price) and by determining the percentage of months for which PRR might be applied. I had owned the property for 176 months, I/we had lived in it for 130 months and it had been let for 41 months. Given the exemption for the final 18 months of ownership this meant that I could apply for PRR to cover 84% of the capital gain.

That would yet have left a chunk of tax owing, but there were – fortunately – a couple of other reliefs that could be applied:

  • Selling costs (estate agent and legal fees) could be set against the profit
  • We could apply for Letting Relief for the period that the apartment was actually tenanted
  • There was a general Capital Gains Tax allowance of £11,000

A tortuous calculation led us to the conclusion that all of the potential taxes and reliefs fundamentally cancelled each other out – leaving us after all nothing to pay on the sale of our home. The tax return was duly completed and sent to the United Kingdom at the start of June this year. Shortly before I started writing this series of posts I was finally in receipt of a further rebate from HMRC, though they also sent a note which somewhat unkindly suggested that this refund had been based on my calculations – which they claim not to have checked! I suspect that this is just to give them some wiggle-room should they find any way that they can claw back some of what they paid me.

We shall see…

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Photo by Andy Dawson Reid“Tax is not a four-letter word; rather, it’s the price we pay for the country we want.”

Alex Himelfarb

My last post went some way towards explaining the vexatious complexity of our tax affairs upon leaving the UK last year and heading across the pond to Canada. I promised – for those who simply could not sleep without knowing how the issues had been resolved – to reveal all. As I am (mostly) a man of my word…

I had, naturally, taken the trouble to consult Her Majesty’s Revenue and Customs (HMRC) well in advance of our departure from the UK to discover exactly what steps would need to be taken to ensure that I ceased paying tax in the UK on our departure and started so doing in Canada. A most Helpful Young Chap had given me chapter and verse… though as it turned out not all of the chapters and rather less verse than he might have!

He did advise that I should acquire – from the HMRC website – “Form Canada-Individual” (for those seeking this document it should be noted that it does not – unlike most other HMRC forms – have a form number!). At the bottom of the first page of this document there is a box labelled “For use by Canada Revenue Agency” and the guidance notes helpfully state that once completed the form should be sent to the “Tax Services Office of the Canada Revenue Agency for the area in which you reside“, for them to stamp and to sign. The HYC from the HMRC was unable to elaborate further on this instruction so I figured I would have to wait until we got to Canada and to ask questions there.

A few days subsequent to our arrival I paid a visit to the Revenue Canada building in Victoria, thinking that this would be the best way to find out whom I should approach. The Canada Revenue office may well be open for business but the building itself certain isn’t – not to the public at any rate. There is no open foyer or reception desk – just tight security and locked doors. I was forced to resort to the InterWebNet instead and – taking what seemed the best bet – sent my “Form Canada – Individual” to the Revenue Canada office in Vancouver.

Nothing at all happened for two months but eventually a reply limped into our mailbox. According to Revenue Canada Vancouver my application could not be processed because I had not provided them with my Social Insurance Number (SIN). This was – of course – because I had not been able to ascertain from anyone what the correct procedure was. I duly added the requested information and resubmitted the whole application – as directed by Vancouver – to Ottawa.

This time a mere month elapsed before Revenue Canada once more returned my application. Apparently they did not have the required information to determine that I truly was now a Canadian Resident for tax purposes. I would needs complete and return Form NR74 – “Determination of Residency Status (Entering Canada)” along with my resubmitted application before they could proceed.

Manfully resisting the temptation to enquire as to why Revenue Canada could not have sent me this form the first time they returned my application, I duly completed it. I could not help but notice that the information requested was mysteriously similar to that already submitted on “Form Canada – Individual” – but thought it best not to point this out either.

Another hiatus ensued.

Eventually – some six months after setting the whole process in motion – I finally received from Revenue Canada the duly stamped and signed copy of “Form Canada – Individual“, which I promptly sent back to HMRC in the UK. I was now registered as a tax payer in Canada – effective from the date that we landed.

Now – the Kickass Canada Girl has a long-standing relationship with a tax accountant in Victoria, who agreed to handle my tax affairs as well as the Girl’s. She was most helpful to us both in completing our tax returns following the end of the 2015 tax year on December 31st. Our attention was drawn to some highly beneficial rebates of which we would not otherwise have been aware and – as a result – my tax bill was considerably less scary than it might have been.

All that remained was for me to persuade HMRC to stop taxing me a second time (or first – if you see what I mean) in the UK and to return any excess tax that they might already have deducted.

The tale of how that went must – however – wait for next time.

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zero“Generally speaking, we get the joke. We know that the free market is nonsense. We know that the whole point is to game the system, to beat the market or at least find someone who will pay you a lot of money, ’cause they’re convinced that there is a free lunch.”

Ron Bloom

We all know this to be a truism – that there is no free lunch and that always, always, the little guy ends up paying – and through the nose at that!

Except – perhaps – when it comes to that totally wonderful organisation – Freecycle!

You may be familiar with their mission statement:

“Welcome! The Freecycle Network™ is made up of 5,238 groups with 8,743,027 members around the world. It’s a grassroots and entirely nonprofit movement of people who are giving (and getting) stuff for free in their own towns. It’s all about reuse and keeping good stuff out of landfills. Each local group is moderated by local volunteers (them’s good people). Membership is free. To sign up, find your community by entering it into the search box above or by clicking on ‘Browse Groups’ above the search box. Have fun!”

Not for the first time we find ourselves massively grateful that such an organisation exists. We have in just a few days found a good home for my treasured piano, for a surplus double bed and for some old bookcases that had been in use in the garage (‘shop’ to our Canadian friends) to house the usual tool-shed detritus.

If one were to ask for advice in this day and age regarding the disposal of an old upright piano the received wisdom would be that “you couldn’t give it away”. Except that it turns out that you can! Selling a piano may indeed be a near impossibility (given that most of us do not have the space for such a beast even should we actually want a real one rather than an electronic substitute) but Freecycle has enabled us to locate a good home for the instrument with someone who will appreciate it and use it but who couldn’t possibly have justified the cost of purchasing one.

Likewise the bed – really nothing special though in good condition – went to someone who was so grateful to have it that it hurt… and the bookcases – which I was all for taking to the dump (as we call landfills here in the UK) – have found a home with someone who ‘distresses’ furniture. Not that they will need to do too much in this case!

Each of these items came into our possession in a different way. They have all served us well and owe us nothing. We are delighted that we can now freely pass them on to others for whom they will have their own uses and meanings.

How satisfying is that?

 

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Image from PixabayIn a previous posting – released into the wild in the earliest days of this unruly month and somewhat cheekily entitled “Much ado” – I offered the determined reader a ‘shopping list’ of things that must be done to progress our emigration, now that we have handed in our notices to our respective (and understandably heartbroken) employers.

It ran thus:

In the immediate future we must:

  • set in motion our remaining pension plans
  • ensure that everything required for the smooth transition of our tax arrangements has been done
  • check that the necessary finances are in place
  • book our one-way flights to BC
  • arrange surveys and obtain quotes from a number of international moving companies
  • push through the refurbishments necessary at our Buckinghamshire apartment
  • agree a notice period with our tenant

The gentle reader is doubtless eager to know how things are progressing. Herewith my end-of-month report:

  • My remaining pension provider (the School) has been alerted to the upcoming transition and I await the necessary paperwork.
  • Much research has been done on the means to effect the necessary tax changes. I have a feeling that some professional advice may yet be required if all is to progress seamlessly.
  • As far as is possible at this point the required finances have been marshaled into the appropriate positions.
  • Our one-way flights to Victoria have been booked – taking full advantage of the Air miles accrued during the Kickass Canada Girl’s sojourn in beautiful British Columbia in 2012.
  • We have been surveyed to the utmost degree by our panel of international movers and have on this very day confirmed a booking with our chosen tranter.
  • We have effected the necessary repairs and redecorations at our Buckinghamshire apartment.
  • Our tenant has agreed to vacate the apartment at the very start of May.

Thus far – so good… I will naturally report further on the next steps to be taken as they become apparent.

Full steam ahead!

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Image from PixabayThere is – it would seem – suddenly much to be done…

Having handed in our respective notices to our respective employers the Kickass Canada Girl and I are now rapidly becoming aware of just how much has to be studied, planned, decided, arranged, booked and confirmed… and how little time – quite regardless of the fact that our proposed transatlantic transition is still more than four months away – there is to accomplish everything.

In the immediate future we must:

  • set in motion our remaining pension plans
  • ensure that everything required for the smooth transition of our tax arrangements has been done
  • check that the necessary finances are in place
  • book our one-way flights to BC
  • arrange surveys and obtain quotes from a number of international moving companies
  • push through the refurbishments necessary at our Buckinghamshire apartment
  • agree a notice period with our tenant

There is – naturally – much more to be done, but that will do to get us started. I will – of course – report further as things progress.

Heads down – full speed ahead!

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Baby_feetBob:    I can’t do that. It’s too big!
Dr. Leo:    Baby steps Bob. Baby steps.

From the movie: “What about Bob?”
Written by Tom Shulman
Directed by Frank Oz

The illation of this post from January of this year – wherein I pondered the next steps in our glacially slow progress towards a new life in British Columbia – was that all depended on our being able to sell our property in Buckinghamshire… which objective would – in consequence – be our main focus over the coming months. The first landmark along this route was to be the date in March on which the tenants currently occupying our apartment could be given notice to quit –  after which we could move to bring the property once again to market.

On Wednesday this week such notice was duly served.

We are currently in discussion with several local estate agents with a view to establishing a fair and reasonable price for the property – subsequent to which we will stiffen the sinews, summon up the blood, take a deep breath and return to the affray! Fingers – and much else – firmly crossed…

Now – because selling a property in the UK is such a big, grown-up, scary prospect we have decided – instead of taking the risk of biting off more than we can reasonably chew – to sell the apartment bit by bit!

Well – no… of course we haven’t really – though just at the moment that might appear to be the case!

I’m being cryptic! I will stop at once…

We are in the final stages of selling a brick built bin store that is located behind the main house. There are four such stores – assigned to four of the seven apartments into which the original residence was divided – in a row abutting the rear wall of the estate. The roofs of these stores had – of late – fallen into such a state of disrepair that urgent remedial works were required. Naturally the Kickass Canada Girl and I were reluctant to invest further monies into a feature of the property that adds little or no financial value to the apartment as a whole, so a deal was done with one of our neighbours. She will pay the costs of the roof repairs in return for the transfer into her name of the store itself. She can use the space – we can do without the expense!

It would – of course – be really good if the rest of the sale were to proceed as expeditiously and smoothly as this. Let us be optimistic and assume that this will indeed be so.

 

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Photo by Andy Dawson ReidThere is a defined gulf
Between credit and character
If you doubt this, ask any banker;
He will advise that character is nice
But it is not collateral.

Evan Rhys, Poems from the Ledge

I am mindful of the fact that I promised a brief note on the… challenge – shall we say… of recovering monies from Canada to the UK once thence transferred. I am aware that in the normal run of things this would not pose any particular difficulty. Our case – as you might expect – does not entirely fall within that disposition.

Last year – whilst the Kickass Canada Girl was living in Victoria – we evolved a stratagem in service of which we would transfer to Canada such of our savings as could be spared, preparatory to the purchase at the appropriate point of a property there. To this end we opened a joint bank account and transferred funds to it using an online currency exchange – both of which operations were accomplished with encouraging ease.

When the situation deteriorated and the Girl was forced – immediately before Christmas – to return to the UK we agreed that – since our long term plans remained essentially unchanged – we would leave our funds in BC. Shortly thereafter – however – it became apparent that we would need to recover a small percentage of the monies to the UK to cover immediate expenses. At this point things became messy.

A little research indicated that we would need to initiate the funds transfer from our bank in Canada. A call to their telephone banking line was not particularly helpful. I learned that – whereas small transfers could easily be made – anything above a few hundred dollars would rapidly fall foul of the limits imposed on daily, weekly and monthly total transfers. The telephone banking operative suggested that I should speak directly to the branch in Saanichton.

The call to the branch was not much more help. I was told that I could certainly transfer the funds required – by making an ‘arrangement’ so to do. Unfortunately this could only be done by visiting the branch in person. We had not made any such arrangement before leaving – of course – because we didn’t know at the time that we were going to need so to do.

Given that a personal visit was clearly not possible I was advised instead to consult my bank in the UK, the implication being that they might be able to effect something by themselves calling Canada in my presence. I duly paid a visit, queued for an advisor and was told in no uncertain terms that they could do nothing to assist and that the onus was on the Canadian end to instigate the transfer.

I called the branch in Saanichton again – this time speaking to the lady in charge of our account. She was sympathetic – but ultimately unhelpful.

At this point – rapidly losing patience with a system seemingly designed to render impossible that which should have been a relatively simple operation – I called Canada again, this time to the bank’s customer service line. I finally encountered someone helpful – an eager and charming young lady. Why – she said brightly – did I not simply write myself a cheque?!

I pointed out that I didn’t actually have a chequebook for this account.

No problem. I could order one online…

It is – apparently – quite impossible to arrange for funds to be transferred from Canada to the UK – either online or by telephone – unless one is actually in Canada at the time or has had the prescience to make the necessary arrangement. It is – however – a trivial matter to order a chequebook online – have it delivered to a Canadian address (our dear friends in Saanichton, who forwarded it on to the UK) – and then to write myself a cheque for any amount that I please.

My attempt to pay in this cheque-to-myself at my bank in the UK caused only momentary confusion for the front of house assistant, the resolution of which involved my being whisked peremptorily to the front of a long and somewhat irritable queue of other customers to obtain the necessary advice. I beat a hasty retreat before the murmuring behind me turned nasty – content that I had finally been able to get my hands on my own money!

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Image by Rama on WikimediaIt is half a year now since the Kickass Canada Girl’s (purportedly) splendid job in Victoria went – to appropriate the vernacular – ‘tits-up’. She was – as a result – obliged to leave our dear friends in Saanichton and to return – jobless – to the UK, just in time for Christmas and for us to wave an un-fond farewell to the tenant in our Buckinghamshire apartment (and, of course, to his rent cheque!).

All in all, not the best of times!

In line with the seasons, however, that winter has finally turned to spring and all indicators are that summer will – as it ever does – eventually arrive.

The Girl’s new job in London was always really considered a positioning exercise with a view to a more appropriate opening rapidly becoming available in the organisation’s head office in Reading – a stone’s throw from our Berkshire home. Sure enough, she has duly been awarded a suitably interesting management post which she takes up today. Congratulations KACG! We celebrated appropriately last Sunday with a really rather splendid lunch at a beautiful hostelry in Oxfordshire.

I made reference at the top of the year to the Girl’s quest to source a ‘new’ car, to replace the sexy Civic that she so generously sold to my nephew before leaving for BC last year. This search has taken longer than anticipated for a number of reasons – not least of which are those related to the difficulty that we encountered (and which I will document in a future post) transferring monies back to the UK from Canada. No matter! She finally found what she wanted and parted with her principal.

The Girl’s choice of motor fully meets my approval. She has – on past occasions when in the market for ‘wheels’ – flirted with the idea of acquiring something ‘interesting’ – but has ultimately ignored my blandishments and settled for the ‘sensible’ option instead. This has always struck me as being slightly surprising since – in many ways – she’s not that kind of girl! Not so this time, anyway. She has finally bitten the bullet and invested her hard-earned moolah in… (drum roll!)… a convertible!!! Not – in her case – a Merc (we can barely afford to run one of those!) but instead the best ‘British’ sports car never made – the Mazda MX-5 Roadster.

Hoorah!

What with new tenants in our Bucks apartment and spring finally bursting out all over we are both feeling positively perky…

…and who knows where that might lead!

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Photo by Andy Dawson ReidExperiencing such a major upheaval to the accustomed flow of life has been a salutary and somewhat sobering experience. Having one’s long term plans disrupted is one thing, but undergoing such a dramatic change in circumstances is quite another.

The last three months have provided a tough lesson. From the position of having two salaries and the rental income from our Buckinghamshire apartment coming in to having to live on a single salary has required a considerable adjustment. That Christmas fell in the middle of the period concerned did not help. Fortunately the impact has been ameliorated somewhat by us having had some savings (for our eventual move to Canada) into which we could eat – by the knowledge that the situation would only be temporary – and by the fact that much of the rental income of late had in any case been disappearing into the black hole of repairs and maintenance for the apartment.

In these tough times, however, the experience has emphasized two facts all too clearly. First – we are extremely fortunate and should be very grateful that our situation will almost certainly allow us to ride out the storm without undue discomfort. Second – for all those who are not lucky enough to have the sort of buffer that circumstances have granted us, it is easy to see just how hard things can get – and how quickly they can do so – should the worst happen and a major source of income be taken away. Our heartfelt sympathies to anyone who finds themselves in this position.

The Kickass Canada Girl started her new job this week. Although this post will not really make full use of her experience and abilities it will certainly tide us over and there are signs that it may also lead reasonably quickly to something more suited – not to mention something closer to home! Were it not for the fact that her induction has – as decreed by Murphy’s Law – coincided with her inheritance of my hideous cold (see previous post!) she would doubtless be feeling pretty chipper right now. (Incidentally – I am delighted to discover that there is also an adage called Muphry’s Law – which states that “If you write anything criticizing editing or proofreading, there will be a fault of some kind in what you have written”).

After a fair bit of ‘argy-bargy’ it also looks as though we have found a tenant for our apartment (at one point we had two – then none and now one again!). Furthermore he seems willing to pay six months rent up front, which will certainly help to get us back on an even keel financially. As the contracts have yet to been signed and sealed I am still keeping fingers – and much else besides – firmly crossed.

Things do, however, seem at last to be looking up…

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Given that Kickass Canada Girl and I lead what, in the main, what can only be described as a charmed existance it would seem somewhat churlish – if that is a strong enough term for what I am about to do – for either of us to whinge or otherwise complain about it. Indeed some might find such behaviour reprehensible or even – given the manifold ills of the world as a whole – somewhat offensive. My nature is to be an optimist and to look on the bright side – but there are times when even I feel beaten down by things and am moved by the urge to unburden.

To cut to the chase – what I am saying is that if the very thought of my grumbling on about  our lives turns your stomach – look away now! Click through to another, more upbeat posting maybe.

<Grumble on>

The Girl has gone back to Victoria. Boo!! She and I will not see each other again until early in November – which sorry inevitability really is proving pretty tough to bear. As posited in a previous posting on Long Distance Relationships – and is definitely turning out to be the case for us – these repeated partings are becoming more difficult with repetition rather than easier.

The Girl – having been away from Victoria for some time on a combination of leave and foreign work trips – faces what she knows will be a tough period back in the office. She is well aware that things are difficult all over at the moment, but as she is still relatively new to this particular challenge she is finding it all rather daunting and would much rather that I were there to support her (as would I!) instead of being 5,500 miles away.

I have started my last full academic year at work. This should feel good but it has been a very tough and chaotic summer – not just for those of us in IT but across the School as a whole. There is going to be a mad scramble over the coming months to try to get everything working as it should, with the further threat of an inspection hanging over us throughout. There is clearly more to do than can reasonably be accomplished in the time available, and the very thought of heading into the winter – with my commute and long days of work – makes me feel almost resentful that I have to do this final year.

The housing market is flat. The various statistics available online for our area suggest that the average time on the market is in excess of two thirds of a year and that very little is selling. Our apartment in Buckinghamshire inevitably does not fall into the ‘average’ category – in terms of selling if no other. The longer it remains unsold – and with no indication that the market will pick up anytime soon – the more worried we become that a vital element of our plan will simply fail to materialise. There is also the ongoing expense of being the landlord of a rented property. There seems always to be something needing to be done!

I do not much like the autumn. I never have. Spring is my time of year – when new life is appearing and all is being born afresh. Yes – I know that the cycle of death and rebirth is natural and essential, but that doesn’t always help my mood.

Wonderful as it is for the Girl and I to meet each other whenever we can, the cost of flying around the world like this really is unconscionable – let alone being the slightest bit ‘green’. I can’t wait to be settled in one place and to put what monies we have left to some more fruitful purpose.

 

You know – I think that is quite enough of that. This is making even me a bit queesy – and if you have read thus far I am sure that you are feeling the same.

Deep breath – and…

<Grumble off>

 

Sorry about that. Normal service has been resumed…

 

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