Tax Form 720 Asset declaration
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Re: Tax Form 720 Asset declaration
Miro, because it's much easier to get all residents to do the work for them. It is then just a programming job to identify the most likely targets.
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Re: Tax Form 720 Asset declaration
Miro wrote:In which case, why bother with this asset reporting lark at all? Surely they're just creating a mountain of work for themselves that will have very little use or result. If they have any reason to suspect any individual of wrongdoing, why not use their resources to chase that specific lead instead?
It's simple - this law gives them the ability to effectively confiscate the assets if they find them. Under current law the fine would be too small to make much difference.
Sid
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Re: Tax Form 720 Asset declaration
Which is precisely why they are insisting it is done online - that way it just fills up a bit of computer storage until they choose to to a tax investigation on an individual.alpujarran wrote:Miro, because it's much easier to get all residents to do the work for them. It is then just a programming job to identify the most likely targets.
If they insisted on forms being filled in it would bring the system to a grinding halt as all the form's data would have to be entered into the system to be of any use.
Sid
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Re: Tax Form 720 Asset declaration
So is anyone out there with a private pension going take a chance on this and not declare it
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Re: Tax Form 720 Asset declaration
If already declaring the income from a pension, no point in trying to hide it, but HOW do you declare it? The latest I read from Blevins Franks includes in one asset group " Shares, securities, life assurance policies, annuity income, income generated from loans, rights or other assets"; annuity income? How do put a value on an income? I don't understand.
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Re: Tax Form 720 Asset declaration
If you have a simple annuity with a fixed income then the current asset value can be worked out fairly easily from actuarial tables.
However if it is a with profits annuity or index linked etc I have no idea how they would value it. I have asked Prudential for a valuation on mine to see what they come up with.
Failing that I will just declare the purchase cost as it must be less than that now and anyway, as I am declaring the income there is no reason why they should be interested in it.
To answer Alpujarrans point, anyone taking income from a private pension annuity would would be crazy not to have already declared the income from it in Spain as there is very little tax to pay on it. If it was still being taxed in the UK the tax would be far higher.
Sid
However if it is a with profits annuity or index linked etc I have no idea how they would value it. I have asked Prudential for a valuation on mine to see what they come up with.
Failing that I will just declare the purchase cost as it must be less than that now and anyway, as I am declaring the income there is no reason why they should be interested in it.
To answer Alpujarrans point, anyone taking income from a private pension annuity would would be crazy not to have already declared the income from it in Spain as there is very little tax to pay on it. If it was still being taxed in the UK the tax would be far higher.
Sid
Re: Tax Form 720 Asset declaration
so, in the case of some friends who are Spanish residents. They own a villa worth now about 500,000, a London apartment about the same value. Added together and plus their investments, they will immediately come into the present wealth tax of over 700,000 in assets Am I correct?
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Re: Tax Form 720 Asset declaration
No Katy, you aren't quite right. You have missed the fact that for their habitual residence in Spain they will each get an additional allowance of €300k so in fact the house in Spain will be exempt.
Assuming the other house and their assets are jointly owned they will need to have a total wealth of over €1.4million.
Sid
Assuming the other house and their assets are jointly owned they will need to have a total wealth of over €1.4million.
Sid
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Re: Tax Form 720 Asset declaration
Sid, I didn't just mean an annuity - I was referring to the Cash Equivalent Value on any kind of personal or private pension. On the 720.
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Re: Tax Form 720 Asset declaration
Do you mean the value of a personal pension FUND that has not started paying out?
Those should be easy to value but annuities are also specifically mentioned.
Sid
Those should be easy to value but annuities are also specifically mentioned.
Sid
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Re: Tax Form 720 Asset declaration
Sid, yes partly. A CETV is not difficult within a year of payout - though the provider can take up to 3 months to supply it. But even once a fund starts paying out it still has a CEV. Ask any divorce solicitor.
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Re: Tax Form 720 Asset declaration
Don't know what actuarial tables are or how to use them, don't even know if my annuity is "index linked" - the income goes up 3% each year - it's a "defined benefits" scheme. Is that the same?El Cid wrote:If you have a simple annuity with a fixed income then the current asset value can be worked out fairly easily from actuarial tables.
However if it is a with profits annuity or index linked etc I have no idea how they would value it. I have asked Prudential for a valuation on mine to see what they come up with.
I'm not averse to paying for professional help on these matters, because I'm not that clued up on such things (obviously!) but I'm not sure there are any gestors around here who even know what an annuity is. What's the Spanish, by the way?
Don't worry about what people think, they don't do it very often
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Re: Tax Form 720 Asset declaration
Miro, as a starting point you can try
http://www.hmrc.gov.uk/pensionschemes/gad-tables.htm
As a simple rule of thumb, a pension value is about 20 times the annual pension payment for someone aged 55. Less as you get older as you are more likely to die. Using this as a basis then anyone receiving more than 2.5k euros a year has a pension pot\fund\trust\whatever worth in the region of 50k or more.
http://www.hmrc.gov.uk/pensionschemes/gad-tables.htm
As a simple rule of thumb, a pension value is about 20 times the annual pension payment for someone aged 55. Less as you get older as you are more likely to die. Using this as a basis then anyone receiving more than 2.5k euros a year has a pension pot\fund\trust\whatever worth in the region of 50k or more.
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Re: Tax Form 720 Asset declaration
Rentas Vitalicias.Miro wrote:. What's the Spanish, by the way?
Sid
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Re: Tax Form 720 Asset declaration
So is my suggestion that the original purchase value is likely to be more than the current value correct?alpujarran wrote:Miro, as a starting point you can try
http://www.hmrc.gov.uk/pensionschemes/gad-tables.htm
As a simple rule of thumb, a pension value is about 20 times the annual pension payment for someone aged 55. Less as you get older as you are more likely to die. Using this as a basis then anyone receiving more than 2.5k euros a year has a pension pot\fund\trust\whatever worth in the region of 50k or more.
Also is a "defined contributions" company pension scheme (as opposed to the older final salary) considered to be a personal annuity?
As I understand it, under Spanish tax rules, it is only recognized as a "renta vitalicia" if you actually had the cash in a pension fund that you used to make a conscious decision to buy an annuity with the fund. Normally that wouldn't apply to a company pension but it's so long since I retired these new schemes are foreign to me. In my working days personal pension plans were only available to personal investors or company directors.
Sid
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Re: Tax Form 720 Asset declaration
Oh cr4p, maybe what I have isn't even an annuity!
Only started it last year, so will take your advice and just put down the "pot" total before turning it into a monthly income.
Thanks for all the info & advice, by the way, it's helping calm my nerves!
Only started it last year, so will take your advice and just put down the "pot" total before turning it into a monthly income.
Thanks for all the info & advice, by the way, it's helping calm my nerves!
Don't worry about what people think, they don't do it very often
"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.
"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.
Re: Tax Form 720 Asset declaration
A defined befits scheme is usually a "final salary" type scheme, rather than a personal pension type scheme. Recently a number of schemes have switched to 'average' rtaher than final salary, but they are still 'defined benefits'If this the case, then I don't think you need to report this, as technically you don't have a 'pension pot', which determines the amount you receive.Miro wrote:Oh cr4p, maybe what I have isn't even an annuity!
Only started it last year, so will take your advice and just put down the "pot" total before turning it into a monthly income.
Thanks for all the info & advice, by the way, it's helping calm my nerves!
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Re: Tax Form 720 Asset declaration
Maybe - but not necessarily. At time you bought your annuity the provider probably used your money to buy UK Gilts at the interest-rate at the time. They could then be sure of always being able to pay yoor annual pension. The GAD table at that time will have indicated what your pension could be for a given lump-sum. But if the yield on UK gilts has fallen since that time then more of a lump-sum might be needed today to buy the same annual pension. The current GAD tables are a good indication of the present-day value. A statement from your annuity provider would probably be far better.El Cid wrote:
So is my suggestion that the original purchase value is likely to be more than the current value correct?
I don't think any UK company-pension fund is allowed to operate as anything other than a trust - regardless of its contribution or payout methods. Trusts are definitely of interest on the 720.El Cid wrote: Also is a "defined contributions" company pension scheme (as opposed to the older final salary) considered to be a personal annuity?
Sid
That makes sense - otherwise anyone could simply cash their 30k of premium bonds and buy an annuity with favourable income tax rates on the revenue.El Cid wrote: As I understand it, under Spanish tax rules, it is only recognized as a "renta vitalicia" if you actually had the cash in a pension fund that you used to make a conscious decision to buy an annuity with the fund.
Sid
Nowadays everyone in the UK has the right to a personal pension.El Cid wrote: Normally that wouldn't apply to a company pension but it's so long since I retired these new schemes are foreign to me. In my working days personal pension plans were only available to personal investors or company directors.
Sid
I think people need to realise that you don't need to be in receipt of a huge pension for it to have a value of over 50k. Bearing in mind that all pension funds are allowed up to 3 months to give you a reply, it might be a good idea to request this valuation asap.
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Re: Tax Form 720 Asset declaration
Re defined benefits . . .
After this point you can only get the pension payments as decided by the trustees - they won't allow you to transfer it. Two points come to mind here..
1 - Trustees normally run a trust don't they? And trusts are one of the things the 720 is looking for
2 - Can it really suddenly have no value when it starts paying out?
It would be hard to put up a convincing argument that it is has NO value - especially in Spanish. Under pressure. In a courtroom. Is it now worthless because you lost the ability to transfer it? I think not.
Any defined-benefits scheme can be transferrred up to a year before the start of pension payout. The provider has to supply you with a CETV - cash equivalenet transfer value. You can use this money to buy an annuity, SIPP, drawdown pension etc. You can even get 25% of the value in cash - possibly more if you are determined. At this point it certainly behaves like a 'pension pot'.CapnBilly wrote: . . . . If this the case, then I don't think you need to report this, as technically you don't have a 'pension pot', which determines the amount you receive.
After this point you can only get the pension payments as decided by the trustees - they won't allow you to transfer it. Two points come to mind here..
1 - Trustees normally run a trust don't they? And trusts are one of the things the 720 is looking for
2 - Can it really suddenly have no value when it starts paying out?
It would be hard to put up a convincing argument that it is has NO value - especially in Spanish. Under pressure. In a courtroom. Is it now worthless because you lost the ability to transfer it? I think not.
Re: Tax Form 720 Asset declaration
I agree with that, but I was answering miro's post, who has already drawn italpujarran wrote:
Any defined-benefits scheme can be transferrred up to a year before the start of pension payout. The provider has to supply you with a CETV - cash equivalenet transfer value. You can use this money to buy an annuity, SIPP, drawdown pension etc. You can even get 25% of the value in cash - possibly more if you are determined. At this point it certainly behaves like a 'pension pot'.
This is an interesting point. Surely it only has an asset value if you can crystallise and draw/transfer that value, otherwise it's not worth a jot.alpujarran wrote:After this point you can only get the pension payments as decided by the trustees - they won't allow you to transfer it. Two points come to mind here..
1 - Trustees normally run a trust don't they? And trusts are one of the things the 720 is looking for
2 - Can it really suddenly have no value when it starts paying out?
It would be hard to put up a convincing argument that it is has NO value - especially in Spanish. Under pressure. In a courtroom. Is it now worthless because you lost the ability to transfer it? I think not.
However, with a defined benefits scheme, normally ( but not always), there's a guarantee of 5 years payments, so if you die after a year, your estate (I think) receives the balance. So, does this mean Miro has to declare that value.
I've been drawing mine over 5 years, so my estate won't receive anything, however, second point, is that most schemes pay an income (varies around 50/60%) to a surviving spouse ( not sure about partners). So my wife would receive 60%, technically that could be declareable. No idea, think I'll lie down in a dark room.
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