Nunn Hayward - June 2005

Abacus June 2005

European Savings Directive Will your name be passed to HMRC from your overseas bankers?

You may have received a letter from your overseas bankers in connection with the European Savings Directive, which comes into effect from 1 July 2005. The Directive applies where an individual is resident in one EU country and has savings income arising in another EU country, any of the Crown Dependencies such as Jersey, Guernsey, Isle of Man, etc, and certain other designated countries such as countries of the United States of America, Switzerland, Andorra, Liechtenstein, Monaco, San Marino, etc.

Under the Directive, individual account holders have the following options available with effect from 1 July 2005: -

1.	Do nothing - This will automatically authorise your bankers to deduct tax at source "retention tax", which is then remitted by the tax authorities of the relevant country to the tax authorities in the country of your residence, without disclosing your personal identity. The retention tax rate is 15% from 1 July 2005 and then will rise to 20% from 1 July 2008 and rise again to 35% from 1 July 2011.
2.	Notify your bank - You can instruct your bank to pay you interest without deduction of tax. This will automatically authorise them to inform the tax authorities in your country of residence of the amount of interest paid to you.
3.	Non UK Domicile - If you can provide your bankers with an acceptable form of evidence of your non UK domicile status, and upon acceptance of this, no tax is deducted and your tax authorities are not informed of the amount of interest paid to you.

If you have an overseas account, you need to act fast. The following planning opportunities are available: -

Individuals who are resident, ordinarily resident and domiciled in the United Kingdom have always been required to declare all their worldwide income on their personal tax returns as it arises. This is regardless of whether remitted to the UK, spent overseas or just accumulated. Therefore, the income from any overseas bank account should have been declared in your personal tax return. If you haven't been declaring this income, then please get in contact with a professional advisor. Nunn Hayward have a specialist tax department who can assist you in complying with the law ,whilst ensuring tax, interest and Penalties (which can be 100% of the tax) are mitigated and managed to your best advantage.

A key point is that the directive does not apply to interest paid to trusts and companies. If you are a basic rate (22%) tax payer, you would not want to pay tax at 35% in 2011 only to be able to recover 22%! In appropriate circumstances therefore, use of another type of holding vehicle may be advantageous from a tax planning perspective.

If you have any queries regarding this article please contact Steve Cook, Tax Partner on either steve@nunn-hayward.com or 01753 888211.

STOP PRESS

SAGE INSTANT ACCOUNTS + SAGE LINE 50 END OF LIFE

Sage will no longer be supporting versions 4, 5, 6 & 7 as of 31 July 2005.

For further information contact Sage Sales on 0800 33 66 33

Important Tax Dates

6 July	�	Ensure forms P11D (b), P9D and P11D are submitted to the Revenue
	�	Ensure copy forms P11D and P9D are given to employees

19 July	�	Payment deadline for Class 1a NICs (22 July if paid electronically)

31 July	�	Second self assessment payment on account due for 2004/05
	�	Liability to 2nd �100 fixed penalty arises if 2004 Tax Return not filed
	�	Additional 5% surcharge on any underpaid tax for 2003/04 imposed

Please contact us to discuss the above further

Tel: 01753 888211 Fax: 01753 889669 Email: abacus@nunn-hayward.com
Nunn Hayward, Sterling House, 20 Station Road, Gerrards Cross, Bucks SL9 8EL.

Chartered Accountants, Registered Auditors and Insolvency Practitioners. This publication has been prepared as a guide only to topics of current financial and business interest. It is not intended to be a substitute for professional advice. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this publication can be accepted by either the authors or Nunn Hayward. All rights reserved.

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