Tax implications of NI a/c

[robd10]

Hi, your advice in idiot’s language please !!
I receive a UK company pension in sterling which is converted to Euro at my local Ulster branch monthly. With such a low exchange rate I thought of having a sterling account and sitting on it until exchange rates become more favourable but was advised by my local branch to open a current sterling a/c in the North (Ulster bank again), which I duly did. It now strikes me, a simple soul, that this may complicate my tax liabilities. What do I declare to ROS ? My annual sterling income converted by the monthly exchange rate, or only when I change a lump sum to euro’s ( maybe once a year to my local Ulster branch ). Is there any other pitfalls or complications that I need to be aware of.

 

[ClubMan]

You should declare the annual interest payments received on the account regardless of when you actually convert these to €. You may be liable for income tax (and possible PRSI/health levy?) at your marginal rate on this income.

 

[robd10]

Thanks Clubman,
It’s the paying of income tax that I need clarifying, what or how should I declare it? I will not know what my Eruo income is until I transfer a lump into my Irish Euro a/c from the NI sterling a/c, this might be once a year or I may wait 2 or 3 years to take advantage of better exchange rates. Or do I just declare my monthly pension converted into Euros at whatever is the monthly exchange rate, even though the money is still in the NI sterling a/c ? Logically I need to declare annually to take advantage of allowances.
I appreciate I can enquire at the revenue but its nice to have some info. upfront so I at least I sound as though I know what I’m talking about.

 

[ClubMan]

Thanks Clubman,
It’s the paying of income tax that I need clarifying, what or how should I declare it?

You may need to do a Form 11 or ROS self assessed return to cover additional non PAYE income such as foreign deposit interest.

I will not know what my Eruo income is until I transfer a lump into my Irish Euro a/c from the NI sterling a/c

Not true - you take any GBP£ interest payments and convert them to € at a suitable rate (e.g. Revenue or Central Bank daily rates) for income tax declaration purposes even if you don't actually do this at the time.

 

[robd10]

Thanks again Clubman, especially your patience !!
Sorry that I’m not grasping what your telling me or me not expressing my concerns eligibly.
It’s a £ current a/c so interest is negligible or non existent (I have to check), so declaring interest is not the problem.
Its how do I declare on ROS what my annual private pension income is when its sat and accumulating monthly in a Northern bank £ account. How do I tell ROS what my annual income is in €’s if I only transfer a sterling lump to a Irish € account once a year or even two year intervals?

 

[ClubMan]

How do I tell ROS what my annual income is in €’s if I only transfer a sterling lump to a Irish € account once a year or even two year intervals?

You convert the GBP£ income to € using the appropriate exchange rate. The fact that you don't actually convert the money from GBP£ to € until later is irrelevant.

 

[robd10]

OK thanks Clubman, so I need to ‘exchange’ a £ lump sum to my Irish € a/c at least once a year and declare it as income to be eligible for the tax relief. I need only declare the sums that come to the South as Euros whilst the NI a/c keeps accumulating sterling awaiting better exchange rates. If I accrue any interest then that needs to be declared as well.
Thanks again…

 

[Domo]

You need to declare the actual amount of pension receive by you whether or not you bring it into the Republic if you are Irish resident and domiciled.

Therefore if you get paid your pension every month, you will be taxable on the total annual amount, but you must use the exchange rate for the date of receipt. Therefore you will have 12 transactions with 12 different exchange rates to calculate each year.

I assume that you are not paying any UK tax on this pension - if so, you should get it paid gross, if you can, or claim a refund of the UK tax as a non-resident, as this is only taxable in Ireland under the Double Tax Treaty.

However, if you are non-domiciled in Ireland, you will only be taxable on the remittance of funds to the Republic since 31 January 2008.

You should consider getting professional advice if your domicile is in question.

 

[robd10]

Domo,
Yes I’m resident, pension is gross without UK tax deductions, so your instructions apply. My concern lay with declaring my annual pension in Euros even though the pension resides in a UK bank (NI) awaiting better exchange rates, it may lay there for 2 years or more before being brought into the Republic.
Thanks for clarifying