This article, "Non-UK Resident - 'Normal' vs S811 Computation," originally appeared on AccountingWeb.com.
Background:
The person in question is a Non-UK Resident and is a resident in Spain.
Recieves a state pension, which is not taxable in the UK under article 17 of the UK/Spain DTT.
Question:
I am struggling to follow the computations IRIS is preparing by default to compare the ‘normal’ computation to the ‘maximum’, S811 computation.
The Croner-i notes states: ‘The first computation calculates the tax due as normal on all the non-resident’s taxable income in the UK, taking account of the personal allowance if the individual is entitled to this as a non-resident’ and any other personal reliefs the individual may be entitled to as a non-resident.’
As such, when calculating the first, ‘normal’ calculation I was expecting for the state pension income to have been excluded as it is not taxable income in the UK, under the DTT.
However, IRIS does include the state pension income in the computation.
Is my understanding incorrect or is it IRIS?