GaryC

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About GaryC

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  • Location UK
  • Nationality British
  • Hometown Swindon
  • Gender Male
  • Year of birth 1959

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  1. German Pension Question

    If you are British and have a National Insurance record (starts from the tax year in which you turn 16) and as you were in Germany pre-Brexit you should be covered by the Withdrawal Agreement meaning the EU rules on the coordination of social security systems continue to apply to you.  You can therefore claim a pension from German when the time comes based broadly on your German contribution years and one from the UK based on your contributions there.  Each country applies the EU rule to aggregate years from all countries and to pay you a pro-rata pension based broadly on your qualifying years in their country.  There are loads of threads on here about that.   The DRV will probably suggest doing a Kontenklaerung and recording your UK years onto their records (this is separate from the EU rules).  This can be beneficial, even in connection with the EU rules applying when you come to claim.  But if your German years (German contributions plus any UK years accredited through the Kontenklaerung) are less than 5, the EU aggregation and pro-rata rules will get you over that line, assuming you have some contribution record in other EU countries or the UK.   In the UK, the aggregation can get you past the required 10 years for a new State Pension if you end up with less than 10 UK years.   
  2. V0100 & V0410 Forms ?

    My first question would be, "Why would you not complete the forms?"  The DRV is wanting to do a Kontenklaerung by the looks of things to update your records with them, probably from when your National Insurance record started in the tax year in which you turned 16.  This will mean that from a German pension perspective, rather than the EU regulations about pensions when you move around the EU, you will get the correct years recognised and the rules properly applied to those years.  There is, so far as I am aware, no downside, other than the time it takes...
  3. Rental income calculation

    Thank you - as always.  Hopefully clarifies things for all those, like us, who enjoy leasehold investment properties...
  4. Rental income calculation

    Can I resurrect the question in this thread of UK leasehold v freehold in connection with a deduction under German tax law for property depreciation when calculating UK rental profit?  One for @PandaMunich?   In the UK, there are two ways to acquire an interest in residential property. One is freehold, where you own the land and the buildings situated on it, and the other is leasehold, where you have a legal agreement (lease) with the freeholder, which allows you to live in the property for a specified (annually reducing) number of years.  You own neither the land, nor the buildings, and pay ground rent to the freeholder each year.  That can range from a "peppercorn", i.e. £0, to £ a lot.  When you "sell" your leasehold house, you assign (transfer) the remaining period of the lease to the purchaser - you are not transferring land and buildings as you do not own them but don't worry, Stamp Duty Land Tax is still payable to HM Government.  If the lease expires then the freeholder recovers full access to the property and you walk away with nothing.  This is why the issue of "short" leases, i.e. those with less than a normal lifetime left on them is such a hot potato in the UK and why the government (allegedly) plans to outlaw "selling" new-build properties on lease - not that the Government have followed though on that commitment afaik...     Turning to German tax (UK taxable income for the Progressionsvorbehalt), as I understand it, if you own the freehold in a UK property that you rent out, then you would deduct 2% (post 1924 buildings) of the building costs (as a proportion of your purchase price) in calculating your UK rental profit under German tax law.  Let's not get bogged down in how the land would be valued for a UK property.    But what is the situation if all you have is a leasehold interest in that UK rental property, i.e. you do not own land or buildings and have paid your £200,000 for a contract (the lease)?  Is there any depreciation to deduct under German tax law? 
  5. TerryJoness, You'll want to talk with DWP International Pensions Centre first so they can confirm which years will benefit your pension, then with HMRC to agree whether you qualify to pay Class 2, or have to pay Class 3, and to then agree amounts and timeframes.  None of this is problematic but if you go straight to HMRC they will send you to DWP anyway...
  6. I am not sure what your issues are with this.  Pensions are income and on first principles are taxable - it matters not in which country you live.    In Germany, prior to 2005, pension contributions were paid out of taxed income and the pension was broadly tax-free (I am not up to speed with the way those rules worked but that is my broad understanding).  Since 2005, pension contributions are increasingly tax deductible and pensions are increasingly taxed on receipt (nachgelagerte Besteurerung).  Once the pension contributions are fully tax deductible and the pensions fully taxed the transition will be complete.  Whether, in the meantime, the transitional rules avoid double taxation (within the German tax system) has been the subject of a constitutional challenge and the Government is making changes to the rules as a result to speed up the transition, among other things.   Economists and policy advisers use a 3-letter acronym to describe systems of this sort.  T = taxed and E=exempt.  The first T/E relates to payments into the system; the second to growth within the system and the last to payments out.  In general, pensions policy is that growth in the value of the pension, or pension pot, should be tax-free.  So, a system where payments in are paid from taxed income, while payments out (and growth) are tax-free, would be TEE.  Where payments in are tax deductible, growth tax-free and payments out taxed, you have EET.    If you had a system where payments in are tax deductible, growth tax-free and payments out tax-free, which is what you are suggesting when you say that it is unfair because first they tax your salary and then they tax the pension, you would have EEE and there would be no tax in the system at all.  While taxpayers may jump for joy (until they want a better police force, fire service or education system etc.), no Government would sanction that sort of system...   In terms of taxation, if you are resident in the UK, the UK has taxing rights over your worldwide income, including any German pensions.  Similarly, if you are resident in Germany, they have taxing rights over your worldwide income, including UK pensions.  The Double Tax Treaty then decides who get the taxing rights over income arising in the country of non-residence to ensure it is not doubly taxed.  In the UK/German tax treaty, Article 17 deals with pensions (Article 18 for Government service pensions) and awards taxing rights over the state pension to the paying country.   So, if you have a German state pension but live in the UK, Germany retains taxing rights but the pension is not taxable in the UK.  In this scenario Germany taxes only your German-source income (limited tax liability) but does not allow you to claim any allowances, so every Euro is taxed.  There is an exception to this where either, at least 90% of your taxable income arises in Germany OR your non-German income is less than the German personal allowance.  In such cases you can elect to be treated as though you are tax resident in Germany.  This is what is often called a tax fiction because you are still taxed only on your German-source income but you can claim the personal and other allowances as if you were tax resident.  The quid-pro-quo to this is that you must also apply the Progression rules, so must include your UK-source income in your tax return so that the rate at which you pay tax in Germany is based on your worldwide income.  But the choice is yours.   Also, as a UK resident, if you have a small to average German pension along with income taxable in the UK, you will probably still be better off having the pension taxed in Germany on a limited liability basis, as the starting rates of tax in Germany are below the basic 20% in the UK. Not much but "every little helps"...   The final point to note is that if you are already drawing your German state pension an element of it is tax-free given the transition to taxing pensions on the way out.  That amount is fixed as a percentage of your first full 12 months of pension, which means it does not increase annually with inflation and will explain to some extent why your tax bill increases each year by more than just the tax on the annual pension increase.    So, you have taxable income in retirement which is taxed in one country or the other but not both...
  7. Cost of living crisis

    Indeed.  I had about £10k floating around from memory but he literally took any cash advance he could, stuck it in the back and then moved that debt.  Similarly with his monthly shopping. Stuck it on the card, then put the money in the bank and moved the debt.  Took a year to get to his magic total.   Also in those days, Tesco would take any coupons from any shop as long as you had no more than £10 face value of any one coupon.  Some other supermarket was drowning its selves in various £1 coupons free to those with empty pockets.  Sort them into £10 bundles and off to Tesco it was.  It was like finding the pot of gold at the end of the rainbow.  He was a specialist in that one too, with a house full of non-perishable items.  I had fun too but did not have as much space as him, so had to be more selective, lol 
  8. Cost of living crisis

      I remember that too.  A former colleague of mine, now sadly deceased, had about £250,000 circulating on such cards and the same amount in the bank earning interest.  I think he had something like 50 cards and her reckoned it took him an hour a month to move all the funds.  With interest rates at the time he was earning something like £500 per month...    
  9. Cost of living crisis

      Based on my experience, I think you will probably find yourself in a significant minority.  Many people just turn off when numbers come into the discussion and if one even utters the word "spreadsheet", they are "out the door"...
  10. Cost of living crisis

    Welcome to what was pretty normal until the mid 1990s.  Hands up those who remember 16.5% mortgage interest rates in the UK - me, me, me!!!  
  11. When they do the zwischenstaatliche Berechnung they use your actual German Entgeltpunkte, create an average therefrom for your German years and apply that to the years they bring in from the UK.  All things being equal the answer would be a lemon but it is not always the case.    For me, the answer was a lemon, i.e. create an average points per year, apply that to the UK years and then pro-rate the answer back to the German years.  All I gained was the ability to claim at 63 as the UK and German Wartezeit added together exceeded 35 years.  But for my wife the answer was far from being a lemon and her pension comes out about 20% higher than using the German years alone.  I am not sure why but I think it is because my career was school - uni - employed in Germany - employed in UK - retire, whereas my wife had school - further education - employed in Germany - unemployed in Germany - re-training in UK - unemployed in UK - employed in UK - self-employed in UK - employed in UK - retire.  I think that more complex mix of employment/unemployment and re-training and the way Germany allocates points for non-working periods is what made the difference but who cares...   If you are interested in fathoming all of this, you could read the DRV training material "Studientext Nr. 30 - Über- und zwischenstaatliches Recht, Auslandsrenten"  https://www.deutsche-rentenversicherung.de/SharedDocs/Downloads/DE/Fachliteratur_Kommentare_Gesetzestexte/Studientexte/Knappschaftsrecht/30_ueber_und_zwischenstaatliches_recht.pdf?__blob=publicationFile&v=3.   Somewhere in there it covers that fact that although, on the face of it the inner and zwischenstaatliche Berecgnungen should come out the same, that is not a given.  Indeed, the difference can be substantial and staff should always perform both parts of the calculation.  I assume the computers just do it...   If you are even more interested, there is a whole series of these texts (40 in total) that will tell you all you never knew you didn't want to know about the DRV. They are listed at the end of Nr.30, above, but for my sins I got entwined in numbers 15, 16, and 18-22, oh dear.
  12.   The future is hard to predict but one must also be mindful of the time limits for paying UK voluntary NIC.  If there is a realistic probability of returning to the UK and having to pay mandatory NIC for sufficient years to get the max possible pension then I would agree that waiting is something to consider but for every year paid "late" the price increases to that of the year of payment and of course, as of next year, the normal "max 6 years in arrears" rule returns.   The key is to ensure one has the best mix of cost (overall), maxing out the UK position and maxing out on adding Wartezeit to the German system with those UK years and that of course is different for each person's circumstances, but to obtain the maximum benefits from each country's rules, I think overlaps are inevitable.   You have 50 (soon to be 51) years during which you are allowed to pay UK NIC or gain NIC credits, out of which you need (in simple terms) 35 full years to get the full state pension.  In Germany you need 35 years Wartezeit to claim the pension for long service at 63, reduced by 3.6% per year for taking it early.  You need 45 years to claim the exceptionally long service version 3 years early (in simple terms), without reduction.  Your UK years (that don't overlap) contribute to that and depending on how your life panned out, those UK years may also increase the German pension (a fortuitous happenchance in my opinion).  Time for a spreadsheet, calculator, to work out what is best for you, lol...
  13.   Thanks - I had landed on §10 but not on H10.5, so most helpful. I'll pass on the relevant links.
  14. Have a read of Booklet NI 38.  It explains who can pay Class 2.  I would then have a chat with DWP Future Pensions Centre to answer some of your questions.   The reason for wanting to know your starting amount is that for each year you pay (whether mandatory or voluntary contributions for 2016/17 onwards adds £5.29 to your starting amount, up to the max of £185.15 per week (subject of course to the point above about "protected payments").  When I asked DWP to explain my starting amount, how it was calculated and the link with the max I could get they were more than pleased to do so.
  15.   Someone resident in Germany asked me the other day whether Brexit had changed the position about claiming a deduction in Germany for NIC payments as people in some forum they were reading were most confused and couldn't seem to get an answer from the FA (perhaps the latter is normal as it is seen as giving tax advice?).  I said I didn't think Brexit had changed anything, not least because your posts on this post-date the end of transition but am not sure exactly where the eligibility criteria are set out.  Can you point me/us/them to the appropriate statutory provision?