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Old 20.10.2011, 17:19
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Wife and dependent children under 25 in UK

I work in Gva, have a B permit, earn under 120K, and have been taxed at source for past 2 years. My wife and children all live in the UK. My HR takes tax at the B0 "married rate, with no dependents." I send an annual claim to Gva in March, for two dependent children under 25 at a UK Uni, and include proof. By end Nov I get a tax refund, and my two dependents are taken into account, so I am taxed at the B2 level, "married with two dependents".
Recently I got a letter asking for all family income, whether in or out of CH, and my tax code has defaulted to A! I also have to pay back a hefty amount, with no mention of my children or wife. Has anything changed legally? Why does UK income now play a part? It was never asked about it previously.
Thanks
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Old 20.10.2011, 17:22
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Re: Wife and dependent children under 25 in UK

Welcome to the forums. I think you need to talk to an accountant.

btw- in some Cantons there is an allowance for maintaining a home in another country. 18K last time I looked.
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Old 20.10.2011, 17:32
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Re: Wife and dependent children under 25 in UK

Thanks for the info. Do CH tax authorities assume by default that if married, there are probably 2 incomes, even if spouse is not resident here? The tax claim form for adjustment of source tax only asks for CH income. I don't know if the recent UK-CH agreement has altered anything, probably not, as tax claims are a year in arrears.
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Old 20.10.2011, 18:10
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Re: Wife and dependent children under 25 in UK

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I work in Gva, have a B permit, earn under 120K, and have been taxed at source for past 2 years. My wife and children all live in the UK. My HR takes tax at the B0 "married rate, with no dependents." I send an annual claim to Gva in March, for two dependent children under 25 at a UK Uni, and include proof. By end Nov I get a tax refund, and my two dependents are taken into account, so I am taxed at the B2 level, "married with two dependents".
Recently I got a letter asking for all family income, whether in or out of CH, and my tax code has defaulted to A! I also have to pay back a hefty amount, with no mention of my children or wife. Has anything changed legally? Why does UK income now play a part? It was never asked about it previously.
Thanks
Hi Bradley, trying to read between the lines of what you have written, believe it may have been a mis-understanding if either your wife was working or you/she had some other income in UK. As I understand the system in Switzerland the allowance is on the understanding that your wife was either not working or perhaps you had no other income in the UK. We recently had a problem as although I was not working and had no income, I had to prove that I had not been working. Historically this was almost impossible to prove (I could write pages about it, but it too boring), however during the time we lived in the same Canton, but moved Towns. The second town accepted all the documents we provided along with a document completed by my husband's boss, but the first was insistant of another document that historically was impossible to produce, going forward have better idea what to do.
Have sent you a pm about something completely different & non-urgent.
all good wishes
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Old 20.10.2011, 18:17
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Re: Wife and dependent children under 25 in UK

Thanks. I have a gut feeling that you may be right! But I was never asked, or saw any questions on the tax adjustment form which asked for UK income. My wife does earn a UK salary, and most of my CH salary goes to the UK for mortgage, Uni fees and accommodation. I'm left with very little, and count on the annual tax refund to survive the rest of the year. Now I have to pay it back!
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Old 20.10.2011, 18:17
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Re: Wife and dependent children under 25 in UK

As a tax resident of CH you are liable to tax on your world wide income in CH.

As you have a wife & children in the UK there is a very good chance that the UK revenue will not accept you have 'left' the UK permanantly & settled abroad. You are probably Ordinarily Resident in the UK and liable to tax in the UK as well. Be aware UK taxes are self assesment, so it's up to you do declair any tax laibility you may have.
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Old 20.10.2011, 18:26
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Re: Wife and dependent children under 25 in UK

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Thanks. I have a gut feeling that you may be right! But I was never asked, or saw any questions on the tax adjustment form which asked for UK income. My wife does earn a UK salary, and most of my CH salary goes to the UK for mortgage, Uni fees and accommodation. I'm left with very little, and count on the annual tax refund to survive the rest of the year. Now I have to pay it back!
My sympathies as it must seem you have been working for nothing, on the plus side you still have your home in the UK, your children have been educated. Otherside of the UK it is very common for people to rent, rather than have ownership of their homes.

Switzerland, rather like EU Countries are trying to see ways how they can tighten their belts.
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Old 20.10.2011, 18:34
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Re: Wife and dependent children under 25 in UK

Do CH tax authorities count you as married, when one spouse is living in another country? I have a booklet of "baremes" - the default tax code at source is A for unmarried, B for married, then B1, 2 etc for dependent children under 25. Just wondering how I can go so quickly from B2 to A, with a repayment form. How many years back can this go?
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Old 20.10.2011, 18:53
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Re: Wife and dependent children under 25 in UK

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Do CH tax authorities count you as married, when one spouse is living in another country? I have a booklet of "baremes" - the default tax code at source is A for unmarried, B for married, then B1, 2 etc for dependent children under 25. Just wondering how I can go so quickly from B2 to A, with a repayment form. How many years back can this go?
Probably a very long time, FWIW in the UK the statute of limitations does not apply to tax 'issues'
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Old 20.10.2011, 21:26
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Have you ever had advice from an accountant? Our accountant told us that while I was living in the UK my husband would have to be taxed in Switzerland as a single man. When I moved here and had a child his tax code changed to married with dependants, however for this to apply in the year I moved we also had to include all of my UK income from earlier in the year in our Swiss tax return. We had the option of not including my UK income but then he would have been taxed as a single man again that year, which overall was less favourable. Now I have no income which is simpler if not exactly ideal :-)
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Old 20.10.2011, 21:34
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Re: Wife and dependent children under 25 in UK

OK, so as I see it you are either taxed singly (at a high rate), with spouse and dependents excluded, or if you want them to be taken into account then you have to declare all UK earnings as well and be taxed on the total. A bit of a lose-lose situation! If UK income is counted, what about UK outgoings such as mortgage, and in my case two lots of uni fees, student accomm and living expenses? The form I completed only asked for CH income, so I completed it honestly. It never mentioned income overseas, and there was no place to include it.
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Old 20.10.2011, 23:07
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Re: Wife and dependent children under 25 in UK

Bradley,

I am in a similar situation to you but live in Basel. The authorities here do not recognise my partner or children for tax purposes as they are not resident in Switzerland. Therefore I am taxed at B0. However, there are other things you can claim, these are Kinderzulage (child benefit - speak to your HR) and also the tax office here in Basel told me to submit what I send back to my family in the UK as maintenance on my tax return. The child benefit will depend on your partners position in the UK, if she is working there she would claim the UK benefit (using the UK rules) and you can claim the difference between what she receives in the UK and the Swiss rate which for most cantons is 200Chf's per child per month (250 per month if over 16 and still in education) (this is up to the age of 25 if they are in full time education and can be claimed back for up to 6 years). If she is not working then she shouldn't be claiming in the UK but you can claim the full Swiss allowance (this is under the EU priority payments articles). The tax issue will probably be down to the generosity of the individual tax office but it is worth asking the question, in Leistal they were really helpful and supportive.

As for some of the other things mentioned earlier in the thread. The 18k allowance is for contractors only I believe, if you have a permanent position and you are resident here then you can not claim it. In terms of residency, as long as you completed the P85 for the HMRC prior to leaving and you have been here for in excess of one tax year the UK will not see you as being intending to return to the UK, however some of the benefits managed through the HMRC and DWP (now the same group) will see it differently. If your wife is still entitled to Childrens tax credits she should be claiming as a single mother as you have been absent from the Uk for in excess of 8 weeks.

One thing I do not understand is why the Swiss want to include your wifes income, this would be against the double taxation treaty which is meant to ensure that you do not pay tax twice on the same amounts (they would be if they were taxing your wifes income here as it is already taxed in the UK). Have they as yet asked for disclosure of your property interests in the UK because they are able to do this under the wealth tax , although any amount due is normally quite small.

I would personally suggest you get an accountant as I have found it is near on impossible to manage it personally in the situation I am in. They will also know what else can be claimed against tax, ie. Mortgage and personal debt interest, maintenance payments, if your work place does not have a full canteen etc, the list is endless but unless you know where to look you will never find them

Looking at your original post my personal belief if that they should never have changed you tax code to with dependants (although I do know there are some differences between the cantons), I think this was propbably a mistake that they are now rectifying.

Last edited by kb92830; 20.10.2011 at 23:18.
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Old 20.10.2011, 23:16
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Bradley,


terms of residency, as long as you completed the P85 for the HMRC prior to leaving and you have been here for in excess of one tax year the UK will not see you as being intending to return to the UK, however some of the benefits managed through the HMRC and DWP (now the same group) will see it differently.
That's a huge assumption on your part , there is no statutory definition on residence, depending on ties with the uk , the OP should seek specialist tax advice in the UK
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Old 20.10.2011, 23:22
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Re: Wife and dependent children under 25 in UK

Fatman, I have spoken at length with the revenue on this subject. For income tax purposes it is clear, for benefits it is not, here is the extract from the HMRC:



You'll be treated as non-resident from the day after you leave the UK if you can show:
  • you left the UK to go abroad permanently or your absence and full-time work abroad lasts at least the whole tax year
  • your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years
I accept that if you have not been absent for a complete tax year it may be contestable, but once the full tax year has elapsed it is much clearer. It is obvioulsy different in you still have a UK income but if the sole income is here and you are resident here the HMRC do not care. However I do agree with your statement about getting an Accountant .
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Old 20.10.2011, 23:33
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Fatman, I have spoken at length with the revenue on this subject. For income tax purposes it is clear, for benefits it is not, here is the extract from the HMRC:


You'll be treated as non-resident from the day after you leave the UK if you can show:
  • you left the UK to go abroad permanently or your absence and full-time work abroad lasts at least the whole tax year
  • your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years
I accept that if you have not been absent for a complete tax year it may be contestable, but once the full tax year has elapsed it is much clearer
That's the simplified answer, there is a much longer & more complicated available from the revenue. There guide note are not an interpretation of the law, that's also stated.

Having a wife , house & children in the uk would imply you were just working away & have not 'left' the UK. Ignore this if you wish, tax evasion is not covered by the statute of limitations.

From next year there should be a statutory definition of residence, then the no of days an individual can spend in the uk will be much clearer, however it's not retrospective.
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Old 21.10.2011, 08:07
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Bradley,

One thing I do not understand is why the Swiss want to include your wifes income, this would be against the double taxation treaty which is meant to ensure that you do not pay tax twice on the same amounts (they would be if they were taxing your wifes income here as it is already taxed in the UK).
It isn't against the treaty, the combined income is used to determine the tax rate as it would be if everything was earned in Switzerland, but the tax already paid in the UK is taken into account so you don't end up owing any more on income already taxed in the UK.

I appreciate it's frustrating as I've been through it but I also see the Swiss perspective that you can't have the tax benefits of being married without the downsides.

Btw I often see the double taxation agreements referred to in the context of not being 'taxed twice on the same income', but this description is slightly misleading to anyone who is new to the topic. Obviously the agreements differ between countries and the finer points often change, but mainly they only limit your liability to the amount of tax that would be due in the highest taxation country, so if you live on the lower tax country (eg Switzerland) and a higher tax country (eg UK) decides you are subject to it's tax laws too, you can in fact be taxed twice but your second bill will take into account what you gave already paid so you only owe the difference.
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