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expat entitlement to PA

when resident in >1 overseas countries, is the PA pro-rated according to entitlement under each DTR

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H (British) & W (Japanese, no UK passport and has not naturalised) are living abroad for work, and are renting out their UK home while they are away. H is entitled to PA, no issues.  W does not meet the criteria in s56 ITA2007 and so must rely on the relevant tax treaty to claim allowance (if any). 

During the year, they moved from Singapore to Japan.  Under the Singapore DTR, there is no PA available to W because PA is restricted to Singapore nationals, and she is Japanese.  I read the Japan DTR as saying she is entitled to a UK PA when resident in Japan, because she is a Japanese national.

I cannot find any guidance on whether she will be entitled to the full UK PA for the year, even though she was only resident in Japan for part of the year.  

Does anyone know, can a PA be pro-rated or is it binary ie you either receive the PA in full or you don’t.

Where it is not clear, is it reasonable to interpret the entitlement in the way that is best for the tax payer (ie full allowance)

Lastly, does anyone know where I might find more information?  Am trying to read the OECD guidance but it makes HMRC look exciting!

Many thanks

Replies (9)

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By Tax Dragon
21st Feb 2018 21:13

Can you be more specific about which bit of the DTA you are reading?

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Replying to Tax Dragon:
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By Portia Nina Levin
22nd Feb 2018 14:51

The right to a personal allowance arises by virtue of article 24(1) of the UK/Japan double tax treaty.

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Replying to Portia Nina Levin:
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By Tax Dragon
22nd Feb 2018 23:14

I had read Article 24(1). My guess was that the OP had not.

I also read Article 24(2). "The provisions of this paragraph shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances..."

If "paragraph" means "Article" then your statement above is just plain wrong.

If the "paragraph" in question is 24(2) alone [which, I have to say, would be consistent with other uses of the word "paragraph" in the treaty - including in paragraph 24(3)!], then I am left wondering what kind of permanent establishment has personal allowances or family responsibilities.

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Replying to Sharyn80:
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By Tax Dragon
22nd Feb 2018 21:47

Oh, my guess was right.

I don't see how 4(5) helps.

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By Portia Nina Levin
22nd Feb 2018 15:05

Are you saying that she was tax resident in both Japan and Singapore throughout the UK tax year? Or was she resident in one for part of the UK tax year and resident in the other for the other part of the UK tax year.

In the former case, only one treaty is relevant. In the latter case, I'd say that entitlement by virtue of either treaty is entitlement to a whole personal allowance.

The personal allowance (where it is available) doesn't get pro-rated in any circumstances that I'm aware of.

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Replying to Portia Nina Levin:
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By Tax Dragon
22nd Feb 2018 21:47

Portia Nina Levin wrote:

The personal allowance (where it is available) doesn't get pro-rated in any circumstances that I'm aware of.


Sames.
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By Sharyn80
22nd Feb 2018 15:40

Just to (hopefully) clarify, they have lived abroad for a number of years. Last year, they moved from Singapore to Japan. They made their home in Singapore for the first part of the year and Japan for the second.

Thank you for the pointer to 24(1) on the Japan treaty.

For the Singapore treaty, the way I read Art 25 is that the PA is not available (plus W is not a Singapore national), do you agree?

(The reason I am asking is because for the previous they were resident in Singapore for 100% of the time.)
thanks again

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Replying to Sharyn80:
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By Portia Nina Levin
22nd Feb 2018 15:59

Both treaties say that non-discrimination, particularly with regard to matters affected by residence, applies to nationals. So for a Japanese national, only residence in Japan produces a UK personal allowance.

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