Lent – Give Up Paying Tax!

Christian churches that observe Lent in the 21st century, use it as a time for prayer and penance. Only a small number of people nowadays fast for the whole of Lent, although some maintain the practice on Ash Wednesday and Good Friday, and it is more common for believers to give up a particular ‘vice’ such as a favourite food or smoking.

So, for Lent can we not give up the vice of paying tax? Why not!

Let’s look at some of the ways this can be done;

 

Paying no tax on your foreign pension received in Malaysia.

If you reside in Malaysia and receive a pension from a former employer, you can apply to the Malaysian tax office using a form DT (Individual) to receive gross income free of UK tax. Under the double tax treaty between many European countries and Malaysia this is allowable. (There are a few exceptions such as UK government pensions for example the Police Pension)

If you have been living and receiving a pension in Malaysia for some time, for example under MM2H scheme, you can claim for a refund of the deducted Tax backdated a number of years from the UK tax office.

 

The dividend tax free allowance

If your investments in stocks and shares provide dividend payments of up to £5,000 per annum, no tax is payable under the new dividend allowance brought in for the 2016/17 UK tax year.

 

The savings allowance.

If you have savings in a UK bank or building society that generates interest up to £1,000, then this amount of interest is not subject to tax, as long as you are a basic rate UK tax payer. However, if you are a higher rate tax payer (i.e. 40%) you will benefit from only half that amount.

 

Double bubble for married couples

Married couples will benefit from double the tax free amounts mentioned above. Therefore it makes sense to ensure that investments and share holdings are equalized, to take full advantage of the reliefs which apply to each individual.

Individual savings accounts (ISAs).

Whilst a non UK resident cannot have a tax free ISA in the UK, should the ‘better half’ reside in the UK then they can open a tax free ISA. From April 2017, the ISA limit is increasing from the current £15,240 to £20,000 per annum. Remember children can have a tax free Junior ISA too!

Jon Golding ATT (Fellow) TEP

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