tax credits and do we need a tax accountant??

[SenoraPostrophe]

This is a very complex situation so I'm not necessarily expecting answers. But a recommendation of an accountant who could help would be good!

We live in Spain. Dp and I are both self-employed: I am registered in Spain, but as he travels to the UK so much on business he technically lives there and still pays his taxes there (which he is likely to continue to do).

Neither of us earn huge amounts - I only work part time - and we discovered yesterday that we actually qualify for family tax credit. But does anyone know if we can claim it given that dd lives in Spain?

The online forms on the IR website would suggest that we can - it allowed dp to enter my foreign income. But it also asked for my UTR which of course I don't have.

Things are also complicated by the fact that dd has to go on my social security account so she can get medical treatment.

Anyone have any ideas? I would welcome responses both on a technical level and a moral level (is it right to claim it when dd and I don't live in the UK? ) And if we don't claim anything and carry on as we are, how will things change when we get married next year? Can we continue to live and be taxed in separate countries?

technical- no idea

moral- I would have thought so as your dh is still paying UK tax. If he was tax exempt I would say no, but as he is giving to the system I would say that morally it is OK to take from it.

Hi SP - don't know the technical answer yet, will by the end of this year when have done my tax exams! I'll look through my textbooks if I get a chance to see if I can find anything (if someone can't answer you in the meantime). But morally, don't see the problem. Your partner pays UK tax therefore you're entitled to some relief from that for the care of your child. If you were claiming an equvalent in Spain as well then, morally, that may be questionable but you're not.

What is UTR?

May well be worth getting an accountant. I've got one as I'm clergy and the clergy taxation rules are ridiculously complicated - it only costs me c. £80 a year (which itself is claimable against tax, so only actually costs c. £60). Thats a clergy specialist company though, so others may be more, but its probably worth finding one who specialises in ex-pat taxation. It would be awful to suddenly get a huge tax bill and find you had to pay it...
If your total family income is less than about £56K then you will be entitled to c.£465 tax credit (more if total is less than about £25k, haven't got the exact details on me). So you could pay a fair bit to an accountant if it meant you got that when you wouldn't otherwise.
Also, I believe the inland revenue has a helpline and people who've used it say its v.good. I know you can email them through their website. Why not ask them this question and see what they say?Good luck.
P.s. - morally, no problem if your paying UK tax. All the tax credit is is an adjustment to the amount of tax they think you owe, so you may as well pay what they think is right, not more!

Tinker - UTR is "unique tax reference" which all UK self-employed people have. Why they need it when the NI number is supposedly unique I don't know.

On claiming dd in Spain - I did last year so we'd be talking about this year. But I don't know if I can claim her on social security but not tax ISWIM.

Good luck with your exams!

Miranda - blimey! I didn't realise you could earn that much! Tax helpline hasn't been so good for us so far, but maybe we should try again. I thought clergy were tax exempt somehow.

If you want to claim, I think you will find that you both need to be in Self Assessment for UK tax (hence the request for your UTR). You can fill in a non-residence page, & there is (probably) a double taxation agreement between Spain & the UK so that you aren't taxed twice on the same income.

You really need to speak to someone with Technical knowledge (this may be beyond the Helpline..). Try the helpline first, or otherwise ring your DHs own tax office & ask to speak to someone who can explain the rules (won't be the person who answers the phone, but someone senior or an Inspector).

The answer to your last point is yes you can be taxed separately under UK law. Don't know about Spain tho.

Thanks tallulah - I did suspect that. Presumably that means we'll have to wait another year so I can get registered etc, but I'll phone and see.