Non-UK Resident - 'Normal' vs S811 Computation

Question regarding the treatment of income in the two computations considered for a non-UK Resident

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Background:

The person in question is a Non-UK Resident and is a resident in Spain.

Recieves a state pension, which is not taxable in the UK under article 17 of the UK/Spain DTT.

Question:

I am struggling to follow the computations IRIS is preparing by default to compare the 'normal' computation to the 'maximum', S811 computation.

The Croner-i notes states: 'The first computation calculates the tax due as normal on all the non-resident’s taxable income in the UK, taking account of the personal allowance if the individual is entitled to this as a non-resident' and any other personal reliefs the individual may be entitled to as a non-resident.'

As such, when calculating the first, 'normal' calculation I was expecting for the state pension income to have been excluded as it is not taxable income in the UK, under the DTT.

However, IRIS does include the state pension income in the computation.

Is my understanding incorrect or is it IRIS?  

 

 

 

Replies (4)

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By taxdigital
19th Jun 2024 18:44

Since the pension income is treaty exempt, my view is that it’s not ‘income on which the taxpayer is charged to income tax for the tax year’(s.23 Step 1). So, it should be excluded from UK tax computations and, consequently, shouldn’t be keyed in to the software. A white space disclosure is always advisable.

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By Tax Dragon
20th Jun 2024 05:55

By way of agreement with taxdigital's answer, I would add:

Relief under the treaty is given effect in UK law by TIOPA. Relief under s6(2)(a) requires a claim (s6(6)); relief under the rest of ss2 does not.

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Caroline
By accountantccole
20th Jun 2024 09:47

We leave it off our comps for non residents, or Iris gave us the wrong answer

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Replying to accountantccole:
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By Shrek5
20th Jun 2024 11:52

Thank you for confirming, much appreciated.

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