GaryC

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Everything posted by GaryC

  1. 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 
  2. 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...    
  3. 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"...
  4. 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!!!  
  5. 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.
  6.   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...
  7.   Thanks - I had landed on §10 but not on H10.5, so most helpful. I'll pass on the relevant links.
  8. 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.
  9.   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?  
  10.   I am not sure I follow this post.  Overlapping periods are indeed ignored, i.e. if you have contributions in Germany and the UK for the same period then the UK contributions are ignored but I do not follow the point about series and parallel.  The Germans will do 2 calculations under the EU rules on the coordination of social security systems. 1. they calculate what you would receive based solely on your German contribution record (the innerstaatliche Berechnung) 2. they calculate what you would receive if all contribution periods had been made in Germany (this is where overlaps are ignored).  This is the "theoretical amount" and is then pro-rated based on the ration of your German years to the total number of years (the zwischenstaatlice Berechnung)   Your pension in Germany is the higher of those 2 calculations.  From personal experience, the second one can be significantly higher.  Also, if you have less than 35 or 45 years in Germany to claim the 35-year or 45-year version of their pension then the UK years used in 2. can get you to the magic 35 or 45 to qualify.   So, I do not understand why paying German contributions would mean one should hold off paying into the UK system - there is no detrimental link as far as I am aware.
  11. Is my UK pension taxable in Germany

    There is a lot to unpack in this question.   First doing a Kontenklärung with the DRV so that they include the UK years as appropriate in the innerstaatliche Berechnung of the German State pension may prove beneficial.  Second, assuming you fall under the Brexit Withdrawal Agreement, then Germany will perform a zwischenstaatlich Berechnng of its pension by assuming all your British and German years were undertaken in Germany and then pro-rating the pension that falls out to your actual German years.  That could increase the German pension.   Then there is the question of the UK state pension.  You should have a "Starting Amount" for the new State Pension at April 2016, following which you add 1/35 x max state pension for each full qualifying year you have paid or been credited after 5 April 2016.  You may still be able to buy years from 2006/7 onwards by paying either class 2 or class 3 voluntary NIC in the UK.  For each year you buy you add the same 1/35 x max weekly amount to your UK pension and those voluntary years also feed into the German calculations.  You have until 5 April 2023 to buy those very old years. After that you can only buy up to 6 tax years in arrears.  If you can pay class 2 then payback is about 8 months into claiming the state pension so something of a no-brainer is you have the £160 or so available for each year you want to buy.  If you have to pay class 3 then payback is about 3 years as each years costs about £825 but still a good investment if you can afford it and don't plan on pegging it within 3 years of reaching state pension age, gasp!   Your UK State Pension is taxable only in the UK but will feed into the Progressionsvorbehalt in Germany to set the rate at which you pay tax.  If the UK and German pensions together take you over the Grundfreibetrag then you would pay tax on some of your German pension.  If you are a UK or EEA citizen you can claim the UK personal tax allowance meaning you would not have to pay tax in the UK if your total UK taxable income is less than £12,570.   The NHS pension is considered to be a Government Service pension for double tax treaty purposes  INTM343040 - DT claims and applications - Types of income: Pensions and Annuities - HMRC internal manual - GOV.UK (www.gov.uk) - see Note 1 which sets out the special case for NHS pensions and the UK/German tax treaty. This means that it is taxable only in the UK unless you have German citizenship (even if that is by dual citizenship), in which case it is taxable in Germany.  If it is taxable in the UK, it too feeds into the Progressionsvoorbehalt.   If I were to hazard a guess then at 1,000€ plus about 590€ NHS pension plus ? UK state pension, say £50 per week (equivalent to only 10 or so UK qualifying years), so 59€ per week, or 256€ per month, the income feeding into progression would be about 22,150€ per annum, so above the married Grundfreibetrag meaning some tax would be payable on your German pension.  Using those figures your UK income would be below the personal allowance, so no tax would be due but if you had the max UK state pension of about £9,600 per year, then with £6,000 from the NHS you would have to pay tax on about £3,000, so £600...     I'll leave others to comment on ongoing German employment...
  12. Filing a tax return - help on how to file

    Looks interesting but does not, in my view, make the letting business a trading activity.  As I would see it, either the properties were part of the trading stock of his business and "sold" as a trade sale when complete, which I doubt you would wish to claim as "he" would then suffer Income Tax and NIC on the proceeds less costs - and probably still have the rental income under Part 3 as shown on HMRC's website - or he has used his expertise and ability to get good prices on materials to refurbish an investment property that will be subject to CGT on sale proceeds less costs, including the refurbishment costs, to the extent they are reflected in the property when sold.  Income will be rental income under Part 3.
  13. Filing a tax return - help on how to file

    WOW - don't you just love international tax!    What I take from all this is that the least worst outcome seems to be that tax relief may have been overclaimed on the pension contributions post 2007 or post 2012 or 2013 if the 5-year rule applies.    From the taxation of the pension perspective I would assume that the 15 years would still be met as the tax relief that would potentially be clawed back relates to years after the magic 15 - Article 17(3) refers to "the" tax relief being withdrawn, which I would refer back to the 15 years of tax relief required but whether the Competent Authorities in the UK and Germany would view it that way is a good question.     I have lost track of what income was received in each year since 2014 and am too lazy to scroll back up the thread but presumably, once the letter from the Pru is obtained, that would leave the German tax return position being to return the small amounts of UK interest, return the UK pensions as appropriate for the Progresionsvorbehalt and return any property disposals for Progression to the extent that they were owned for less than 10 years.  Not that a lot of tax would arise on that interest, even if the effective rate was 40%+.    Quite how HMRC will view the over-claimed tax relief (assuming the Pru has continued to claim it) and what impact that would have on the amount of pension payable will drop out as things develop...   What a mess.
  14. Filing a tax return - help on how to file

    This gets more and more complicated.    Whether you submit a UK tax return, or plough the profit back into property, are not, I think, in this context, determining factors.  As I read it, you must be a "relevant UK individual" and have "relevant UK earnings".  Earnings that would fall within that definition but which are not taxable in the UK by virtue of a DTA are not "relevant UK earnings". Rental income is not "relevant UK earnings".    I don't think the trading question you mention is relevant either.  Whether the activities of a person amount to a trade that includes the receipt of rental income is one that would turn on its own facts but let's just say the bar is high as income from property is, per se, not trading income, so you need something which makes that income subordinate to the income from the other activities.  And, if you are seen to be carrying on a trade then you would be liable for Class 2 & 4 NIC, which you may or may not have been paying (mandatorily in relation to your trade as opposed to paying voluntary NIC as a non-resident to boost your pension).    Whether you then have "relevant UK earnings" is not wholly clear (to me).  Earnings from a trade are "relevant UK earnings", so long as they are not exempted from UK tax by a DTA, if they are chargeable under Part 2 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).  Income from property is chargeable under Part 3 of that Act, so is not relevant earnings. Whether being treated as carrying on a trade means that the property income becomes taxable under Part 2 ITTOIA is a good question.  I think it might but that is one for another day, sigh...  That said, there is a boundary rule which gives priority to the charge under Part 3 over that under Part 2.  The example there is of a property developer who temporarily lets some property before its sale.  That rent is chargeable under Part 3, even though there is an argument that it could be trading income under Part 2...   If the activities amount to a trade as previously described it would presumably still not be "relevant UK earnings".  This comes back to what Panda Munich has said about taxation of your worldwide income as a tax resident of Germany.  If your property activities amount to you carrying on a trade, the DTA would presumably award taxing rights to Germany (because it is looking at trading profits, not profits from immovable property) and the income would therefore not be "relevant UK earnings".    So, from the pensions tax relief perspective, it would seem that the profits arising from your UK properties are not "relevant UK earnings" whichever way you cut it and you therefore appear to qualify for tax relief on your contributions only under the 5-year rule.  You will of course want to draw your own conclusions on all of this but be mindful of running into the combined might of HMRC and the Finanzamt from an income tax/tax return perspective, as well as HMRC and the Pru in terms of pensions tax relief at source.  I do not envy you and if I am wrong about all of this then my apologies for setting hares running!   As far as "having should have" held the property(ies) in a corporate envelope, you may have fallen foul of ATED - the Annual Tax on Enveloped Dwellings, though it is a long time since I broke my brain reading those provisions and as you didn't do it, I will refrain from entertaining myself that way now too, lol.   Good luck
  15. Filing a tax return - help on how to file

    Sorry to add to your woes but when you write to the Pru you may open another can of worms unless you told them in 2007 that you were moving abroad.    This is not my area of expertise, so you will need to do further research, but as I understand it you can only retain tax relief on your UK pension contributions for up to 5 years after you became non resident and only if you fall within the meaning of "relevant UK individual".  I think you fall into that category because you were resident in the UK at some time during the five tax years immediately before the tax year in question and you were also resident in the UK when you joined the pension scheme. However, relief is limited to net contributions of £2,800 (£3,600 when the reclaimed tax relief is added to your pension pot).  This means that from ? 2012/13 or 2013/14 ? at the latest the Pru should no longer have been reclaiming the 20% basic rate tax on your behalf.  And if you did fall within the meaning of "relevant UK individual" then the reclaimed tax should have been restricted to £800 max per year for the 5 years after leaving the UK.  As I understand it, rental income (unless it is from certain furnished holiday lettings) is not taken into account when considering whether UK tax relief on pension contributions is available.    This may be a good starting point for your further reading...  Tax relief on member contributions (pruadviser.co.uk) PTM044100 - Contributions: tax relief for members: conditions - HMRC internal manual - GOV.UK (www.gov.uk)   If the Pru has been incorrectly reclaiming tax relief at 20% for some or all years from 2007 to 2022, the impact on your pension would be significant.    Pension tax relief is complex, so I hope I am wrong but I fear the worms are itching to get out of the can. 
  16. Filing a tax return - help on how to file

    That is not quite the right position to assert.  Article 17(3) overrides 17(1) to switch taxing rights back to the UK if, and only if, all of the conditions in 17(3) are met.  17(3) says:   "Notwithstanding the provisions of paragraph 1, such a pension ... arising in [the UK] which is attributable in whole or in part to contributions which, for more than 15 years in [the UK], a) did not form part of the taxable income from employment, or b) were tax-deductible, or c) were tax-relieved in some other way   shall be taxable only in [the UK].  This paragraph shall not apply if [the UK] does not effectively tax the pension ..., or if the tax relief was clawed back for any reason, or if the 15 year condition is fulfilled in both Contracting States"   Given that you were were working for many years in Germany, without (I assume) taxable income in the UK against which the pension contributions were set, you may have a factual challenge in demonstrating that all conditions in 17(3) are met.  It matters not from which bank account the pension contributions were paid, or when you started drawing the pension...    You also mention that you have no capital income.  Is that correct remembering that bank interest falls under that heading?  
  17. I think this is related to the fact that the UK declined to remain part of the EU Passporting of Financial Products system as part of the Withdrawal Agreement negotiations.  This means they cannot operate in EU countries without obtaining Financial Regulator accreditation in each and every country in which they choose to operate. While they may do that for commercial operations, I doubt it is seen as cost effective for the few expats who want to keep a UK bank account.  But I may be wrong and there may be a different reason, hmm...  
  18. German Pension advice from Ausland?

    I think Apel is correct about Berlin.  Our pensions are also dealt with by DRV Bund in Berlin, though we were based in Braunschweig while working in Germany.   If you send her Rentenversicherungsnummer and questions to meinefrage@drv-bund.de they should forward it to the relevant department/section or whatever.  They are usually quite quick.  A friend of mine who had lost her Versicherungsnummer (indeed all paperwork relating to Germany - long story) found them very helpful and it took only a few months to gather the information they needed and for them to track down her number. She is now starting the application process with DWP...   As your friend worked in Germany before the end of the transition period she will almost certainly be covered by the Withdrawal Agreement (I cannot see why she would not be but am erring on the side of caution, ho hum) and the EU rules on social security coordination (i.e. state pensions) continue to apply.  As Apel says, she should therefore get 2 state pensions.  One from DWP in the UK and one from DRV in Germany.    The UK pension is of course taxable in the UK but the German pension is taxable only in Germany and her tax office will be Neubrandenburg Rente-im-Ausland.  They offer an Amtsveranlagungs service meaning she would not need to submit a German tax return.  As she does not qualify for the Grundfreibetrag or other deductions it makes life a lot easier.     Under the EU rules each country is required to undertake 2 calculations of the pension payable.  The first is the pension the person would receive based solely on their qualifying years/payments in that country.  The second is how much the person would received if all EU/UK years had been completed in that country.  This is the "theoretical amount" and is then pro-rated based on the years actually paid in that country.  That country then pays the higher of those two amounts as your pension.   For the UK the only time the pro-rata calculation is the higher is when a person does not have the minimum 10 UK years to get a UK pension but has enough years in Germany to get past 10 years in total.  The EU rules then provide a UK pension based on the actual number of UK years, say 3, or 7, or whatever. So 3/35 x weekly max,, or 7/35 x weekly max and so on.   If your friend has gaps in her UK National Insurance contribution record for years from (I think) 2006/7 onwards then these can still be filled.  If she is employed the cost is about £825 per year but that investment is repaid in full if you claim your pension for just over 3 years (which we all hope we will!). She should check her NI record via her Personal Tax Account on GOV UK, then speak to DWP Future Pensions to confirm that paying one or more years will benefit her pension.  Then she contacts HMRC to arrange payment.  The deadline for paying years more than 6 years ago is 5 April 2023, so still some time left to get this sorted.  After that you can only pay up to 6 years in arrears.    For Germany it is more complex and the EU calculation can be significantly higher than the German-only one.  For me they were the same but for my wife the EU calculation was 20% higher.  I think it all depends on your employment v unemployment, education etc years.  It would be worth your friend asking for a Kontenklärung and to provide all information about her post 16, pre-working-in-Germany years to them.  Also inform them that she moved back to the UK in whichever year so that Germany will know to contact the UK to get her UK NI record.  She should then get a Rentenauskunft showing her projected German pension.  This should include the German-only calculation (innerstaatliche Berechnung) and the EU-wide one (zwischenstaatliche Berechnung).   Paying voluntary contributions in Germany is, in my opinion, not worth it as payback is nearly 20 years!   When she comes to claim her German pension it is done through DWP International using a form 901, which they send to you.     Germany has 3 versions of its pension.  The basic pension at 66+ if you have at least 5 years (German plus EU/UK).  The pension for long service at 63 but reduced by 0.3% for each month you take it early if you have 35 years and the pension for exceptionally long service and 64+ not reduced if you have 45 years.     Your friend's circumstances sound similar to mine and I opted for the 35-year version, reduced by 11.4%.  I would need to live at least 8 years to make the 45-year version more cost effective and to about 85 or something to make it worth waiting until I am 66+.  Given that both my parents failed to make the 8 years, gulp, my choice was pretty clear but which one to claim is of course personal choice.   When she claims she will not get an innerstaatliche Berechnung if claiming a pension where the UK years help make up the minimum 5, 35 or 45 years as it would be zero.    Hope this helps her move forward with both DWP and DRV.
  19. Under EU rules you will be entitled to a pension from each country in which you have contributed to the social security pension (EC 883/2004 if you are interested in the legislation).   When you reach state pension age in each country they will each perform 2 calculations and award you the higher of those as a pension: The amount of pension looking only at their country's qualifying years/amounts etc a theoretical amount assuming all years had been concluded in their country and then pro-rating that amount to their countries qualifying years You will apply for your pensions in the country of residence at that time and they liaise with all other relevant countries.   In Germany they will be interested, from a German rules perspective, in your post-17 activity and that may provide a higher amount under calculation 1.  Doing a Kontenklärung in Germany would be useful from that regard, even though the years in question will also feature in calculation 2.  Such overlaps are not double-counted but because of the way the German rules work it may still lead to a higher pension.   I would therefore contact DRV using meinefrage@drv-bund.de using your Versicherungsnummer and they will pass it to Hessen or wherever your records will be held as an ex-pat and ask for a KontenKlärung taking into account your time in all other EU/UK countries.    Lithuania will perform the same calculations from their perspective but I know not how they treat post-17, non-working years, so I would contact them and ask for a similar process covering all countries.  They may not oblige (the UK just says wait and see) but worth asking.      
  20. Depositing foreign currency into a German account

    If you were in London, I would point you at a high-street foreign exchange firm that I used a lot (Thomas Exchange Foreign Currency London) when I worked in London.  Their rates are far better than the banks, though not quite as good as Wise etc but you can exchange cash for cash in large and very large amounts.  All legit and compliant with the relevant regulations.  Surely there must be something similar in Germany?
  21. Letter arrived today and looks as though it should be fine.  Shows personal details, amount paid, date paid, the year to which it relates and the number of weeks purchased.  It is relevant to German tax year 2022, so we'll see whether it does the job in about 12 months...
  22. Update on what proof you can get from HMRC that you paid voluntary NIC.    I just got off the phone to them having requested proof of payment for 2019/20.  They said they will send a letter confirming dates, amounts and year concerned.  I was expecting all sorts of "what's that for", "we don't normally do that" type comments but it was quick and easy, as if they get asked every day.
  23. Pension - Erklaeren meines Versicherungskonto

    No, not quite right.  Your UK years will count towards your German pension and your German years will count towards your UK pension.  You will get 2 pensions: 1 from Germany; 1 from the UK.  That is the case if you are covered by the Withdrawal Agreement.  If you are not then there are very similar rules but they may be reviewed I think after about 15 years.   In the UK the only impact of the German years is to help you get past the minimum 10 years required to qualify for a UK new State Pension.   In Germany the rules work slightly differently because the German system is earnings-related, whereas the UK system looks only at qualifying years.  The Germans therefore do the full EU comparison - the higher of what you would get looking only at the German years and what you would get by applying the German rules to all years and pro-rating a pension based on your German years - which can increase your pension.   You claim your pension in your country of residence and they liaise with the other country   
  24. That will be a general reference to Accounts Office Shipley or Cumbernauld depending on which one deals with your tax payments generally.
  25. Who knows.  It will probably just say "HMRC NICO", which we now stands for National Insurance Contributions Office" but the FA will just see a payment to HMRC.