Payment of an annuity to a non-resident

If you are not resident in the United Kingdom (UK) you are normally taxable on sources of UK income. This means tax should be deducted from your annuity.

At the present time retirement annuities are either paid to pensioners with no tax taken off, or with tax taken off at the basic rate of 22%. Providers can pay the annuity in full to a non resident but only if the pensioner has either:

completed a form AF confirming that they are not liable to pay any tax on their total UK income

made a claim to relief from UK tax under a double taxation agreement which the UK has with the country in which they are now resident.

You can claim to have your annuity paid without tax deducted if you are not liable to pay tax on your total UK income. You can do this using Form AF if you meet all of the following conditions:

you are not resident in the UK

you are entitled to claim UK personal tax allowances

your total UK income is less than your UK personal tax allowances.

Double taxation relief

If you cannot claim on Form AF you may still be able to have your annuity paid without tax taken off if you are now living in a country with which the UK has a double taxation agreement and that agreement gives relief from UK tax on annuities.

Life Offices' Newsletter (PDF 123K)

This newsletter is to remind Life Offices of the procedures for a non-resident individual to have their Schedule D annuity paid without deduction of tax.

If you are not sure about your UK residence status or if you need advice about filling in form AF, or a double taxation form, please telephone the HMRC Residency helpline.

Whilst the present arrangement gives the correct result for the majority of pensioners who receive retirement annuities, it does not help those pensioners who are only liable to pay tax on part of their annuity and have claim the excess tax back every year.

As from April 2007 this system will change, and all retirement annuities will be taxed under Pay As You Earn, just like a personal or works pension. This will mean that it will be easier to work out how much tax, if any, you should pay on your annuity.

Once we have found out some straightforward information about every pensioner, we can work out the tax code number that will enable the Provider to deduct just the right amount of tax from every payment.

For non-residents who have made claims under a double taxation agreement there should be no change. The existing exemption authority will carry over to the new system.

UNIT VII.

Do the UNIDROIT Principles of International Commercial Contracts form a new lex mercatoria?

Party autonomy allows the parties to choose the law that shall be applicable to their contract. Especially in the context of arbitration, the question arises, as to whether the parties may also choose the lex mercatoria or "principles of transnational law" as applicable law to the contract. The answer is highly controversial, in particular because the possible user does not have recourse to a defined and concrete set of rules.

Not long ago in 1994, UNIDROIT (International Institute for the Unification of Private Law) published its "Principles of International Commercial Contracts". By its drafters and some commentators, these Principles were soon celebrated as the new lex mercatoria and an answer to the longlasting debate. Is there a good reason for this enthusiasm?

This essay will pursue the question of whether the UNIDROIT Principles (hereafter called "Principles") can really be considered as a new lex mercatoria. Starting with a historical description of the ancient lex mercatoria, it will then turn to the theory of a modern lex mercatoria and outline the debate concerning the lex mercatoria as being an autonomous body of law. In its second part, this paper will explain the idea of the Principles and examine them in light of the specific characteristics of a lex mercatoria and the criticism put forward against it. Hereby, it will be demonstrated that the Principles with their autonomous and yet non-binding character do not only meet the substantive requirements of a true law merchant, but that they also counter some of the main points of criticism against the modern lex mercatoria. As such, the Principles constitute a corner stone in the lex mercatoria debate and may become the heart of the new lex mercatoria.

Date: 2016-01-14; view: 572