UK Pensions (2018)

[ivor bigun]

On 10/31/2019 at 9:03 PM, Bruntoid said:

Why would they need to go to all that bother ? 
 

Presumably anyone not declaring they have shipped out of the U.K. will be getting their pensions paid into a U.K. bank account, so it then follows thats then transferred to their Thai account yes ? 
 

So given HMRC now have full access to swoop into your UK account and can spot the blindingly obvious why all the subterfuge ? 
 

Serious question ...

why would they check a bank account ,unless they suspected you ,and what if you are not transfering money from it?

[izod10]

36 minutes ago, ivor bigun said:

why would they check a bank account ,unless they suspected you ,and what if you are not transfering money from it?

To put it bluntly  they(DWP) would not be interested,<deleted>,the worlds going mad and MI5  6 too  are all in on the game

Death and destruction at the hands of DWP have long been debated,...my favourite two posters ,ones now dead,went down spouting rubbish,the other one has not been posting for long time,got it all mixed up with Universal Credit

 

   "Met at the airport by the police and arrested on return to the UK",   now that was a good one,even I would be hard put too to realise that at the time was a fake,...another, arguing my case for the reinstatement of my OAP in court  again  <deleted>    who pumps this rubbish out?

 

  you could add Mickey Mouse was arrested last night down soi 6 for under age sex

[topt]

On 11/1/2019 at 9:35 AM, Bruntoid said:

Thanks for your reply - not sure of the answers but I will refer them back to my FA and see what they say

 

The first paragraph is extremely interesting - so are you saying ALL UK pensions are taxed at source in the UK if you declare you are living in Thailand ? (Unless you have a civil service pension if that’s what you mean by ‘government’ ?) 

 

If you are saying the above I would alter my strategy and take just 12k from the SIPP so stay under the tax threshold and take the other 18k from other non taxable sources (ISA’s, savings etc) - result no tax! 

 

Your second - have no idea which article - but I assumed (very happy to be corrected) that if you leave the U.K. and are a non resident via the required criteria then a nil tax band would follow ? My FA stated you merely have to apply to the HMRC, provide evidence you are a non resident and it’s granted. Do you have experience of this ? Admittedly my FA won’t have a lot of experience in this field but he discussed it with a pensions expert before replying to me. No reason though why they both may not be wrong. 
 

Third paragraph - I believe they would treat it as pension, how else could it be viewed if paid directly from a SIPP ? 
 

Thanks in advance for any clarification 

As @cleopatra2 said pensions other than "civil Service/govt" (does not include the State Pension) do not fall under the DTA so any pension paid in the UK is taxed in the UK as income. The only way to avoid that is to transfer out to QROPS scheme or whatever they are called now but lot of issues. A whole different subject and suggest you read up if interested. 

 

When you leave the UK to live abroad you are supposed to tell the taxman via a specific form. You are also supposed to send in a self assessment every year unless the taxman agrees you do not have to. I did this over 10 years ago. There are certain residency tests to ensure you meet the criteria but as long as you are not spending too long in the UK every year then no problem.

if you want to really confuse yourself - https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt

 

You can still pay into a SIPP up to 5 years after leaving the UK (I believe this is still the case?) and receive the tax rebate on contributions but only up to a small amount - used to be 3,880 from memory Apparently it is £3,600. You can continue to claim the Personal Allowance as I do now.

 

There exists I believe (other posters have mentioned this) a mechanism whereby if you forgo the PA you are not taxed on any dividends/interest etc which obviously would be beneficial if you had a very high level of payout. You may want to ask your IFA if he knows about this - to be fair unless involved with expats very unlikely. 

 

If you have earnings offshore (eg. bonds/income paying equity) held in a offshore broker (Isle of Man, Singapore, Hong Kong etc) then you pay no tax on any income generated from these to the UK tax man as long as you are non resident for tax.

 

Theoretically and in practice any income you bring into Thailand in the calendar year after it was earned is not liable for Thai tax. As you can imagine for the Thai tax people to sort out whether income came from this years income or savings would be difficult (unless a direct pension oayment monthly.....) so it does not happen at the moment.

As you can see it is theoretically possible to structure your assets to pay no tax anywhere..........

Oh - if you have property income in the UK that has to be taxed in the UK 

Edited November 2, 2019 by topt
change to figure

[Harry2]

For those of us still paying Class 2 NI contributions towards our state pension its worth noting the abolition of Class 2 was only postponed for the current Parliament (06.09.18 announcement). Which has now ended with the election, so it will be up to the next Parliament & Government to decide whether to let us keep paying Class 2.  More info on announcement here:

https://blogs.mazars.com/letstalktax/2018/09/class-2-nic-will-not-be-abolished-in-this-parliament/

[steve187]

On 10/31/2019 at 1:54 PM, izod10 said:

Anyone effected by the frozen pension step back and think,think hard on the amount of money you have lost ,essentially from bad and id say despicably ignorant and totally false advice from posters who basically know nothing of DWP regulations and how they are applied,thousands,more like, tens of thousands of pounds lost and wasted

   Anyone in the frozen hole ,yes cold comfort for one,if the OAP is main source of income then blighty called a long time ago

   Now I do know what I talk about,obviously here ,at least one person does not,being constantly reminded where the right information is to hand,completely ignored to rant his own brand of rubbish,well some recipients of the OAP have to their very cost,the likers certainly have been taken in,  tough that one

   DWP regulations are there,at hand,but as night follows day some igrnoramous will shout it down,all I say is show me just where I can find the font of your totally inaccurate and downright lies come from,go on show me   lol  nowhere is it    No?,not there

i read this post 3 times and still failed to understand it.

[steve187]

6 hours ago, Harry2 said:

For those of us still paying Class 2 NI contributions towards our state pension its worth noting the abolition of Class 2 was only postponed for the current Parliament (06.09.18 announcement). Which has now ended with the election, so it will be up to the next Parliament & Government to decide whether to let us keep paying Class 2.  More info on announcement here:

https://blogs.mazars.com/letstalktax/2018/09/class-2-nic-will-not-be-abolished-in-this-parliament/

it would seem they have no answer to some lower earning self employed persons,  having a jump from less that £3.00 a week( class 2 stamp) to £16.00 a week( class 3 stamp)

[topt]

4 hours ago, steve187 said:

i read this post 3 times and still failed to understand it.

I even went back and read the preceding couple of pages to try and see what it was all about........still none the wiser so I thought best to ignore 

[evadgib]

Loppylugs pops up in disguise (currently @izod10 ) every 3-4 months and does much the same as he's done this time.

We are all on the same songsheet but his destructive trolling brings nothing of use to the board & is best ignored.

HTH

Edited November 3, 2019 by evadgib

[billd766]

2 hours ago, topt said:

I even went back and read the preceding couple of pages to try and see what it was all about........still none the wiser so I thought best to ignore 

Best ignore the poster as well. I have.

[denby45]

On 11/1/2019 at 9:35 AM, Bruntoid said:

Thanks for your reply - not sure of the answers but I will refer them back to my FA and see what they say

 

The first paragraph is extremely interesting - so are you saying ALL UK pensions are taxed at source in the UK if you declare you are living in Thailand ? (Unless you have a civil service pension if that’s what you mean by ‘government’ ?) 

 

If you are saying the above I would alter my strategy and take just 12k from the SIPP so stay under the tax threshold and take the other 18k from other non taxable sources (ISA’s, savings etc) - result no tax! 

 

Your second - have no idea which article - but I assumed (very happy to be corrected) that if you leave the U.K. and are a non resident via the required criteria then a nil tax band would follow ? My FA stated you merely have to apply to the HMRC, provide evidence you are a non resident and it’s granted. Do you have experience of this ? Admittedly my FA won’t have a lot of experience in this field but he discussed it with a pensions expert before replying to me. No reason though why they both may not be wrong. 
 

Third paragraph - I believe they would treat it as pension, how else could it be viewed if paid directly from a SIPP ? 
 

Thanks in advance for any clarification 

Income taken from your SIPP is not tax free even if you live in Thailand. Also when you finally do take your drawdown you should factor in the initial 25% tax free. Means you will be able to take a little over 15 grand without paying any tax as long as you don't have any other UK income.

 

 

Den

[Bruntoid]

On 11/2/2019 at 12:16 PM, topt said:

As @cleopatra2 said pensions other than "civil Service/govt" (does not include the State Pension) do not fall under the DTA so any pension paid in the UK is taxed in the UK as income. The only way to avoid that is to transfer out to QROPS scheme or whatever they are called now but lot of issues. 

I’m struggling with that. (So is my FA) - if pensions really do fall outside the DTA then effectively my entire pension pot becomes tax free once I claim my nil tax banding from the U.K. as an overseas resident, (and obviously make no mention of it to the Thai tax authorities). So I obtain the banding from HMRC, provide that to my SIPP provider, they send me the payment GROSS to my account, I transfer it to Thailand. 
 

I then don’t mention it to anyone here and enjoy a tax free pension pot for life OR inform the Thai tax authorities (no idea how to do that or the tax rates??? does anyone know ?).

As before the onus is on me to tell them, HMRC will not. 

 

I think Philip Hammond killed off QROPS - or certainly made it not worth while 

 

[Bruntoid]

6 hours ago, denby45 said:

Income taken from your SIPP is not tax free even if you live in Thailand. 

As post above Den it is if you obtain a nil tax banding from HMRC (to pay the tax in the partner country if applicable) 

[topt]

12 hours ago, Bruntoid said:

if pensions really do fall outside the DTA then effectively my entire pension pot becomes tax free once I claim my nil tax banding from the U.K. as an overseas resident,

 

12 hours ago, Bruntoid said:

As post above Den it is if you obtain a nil tax banding from HMRC

I am struggling with this. I was not aware you could do this and as several have stated my understanding has always been that pensions will be taxed at source.

https://www.gov.uk/tax-uk-income-live-abroad

https://www.gov.uk/tax-right-retire-abroad-return-to-uk

 

And this which is not directly comparable -

https://www.taxback.co.uk/tax-tips-for-uk-citizens-living-abroad-with-uk-based-pension/

 

However this seems to support what you are suggesting - 

https://www.litrg.org.uk/tax-guides/pensioners/what-happens-if-i-retire-abroad

Quote

Other occupational pensions are usually taxed in the country of residence, so you can make a claim to HMRC to have them paid without deduction of UK tax. There is more information on GOV.UK and, for those in Self Assessment, in HMRC’s helpsheet HS304.

I would be very happy to be corrected on my current  (mis)understanding so If you can get away with it then wonderful 

[partington]

49 minutes ago, topt said:

 

I am struggling with this. I was not aware you could do this and as several have stated my understanding has always been that pensions will be taxed at source.

https://www.gov.uk/tax-uk-income-live-abroad

https://www.gov.uk/tax-right-retire-abroad-return-to-uk

 

And this which is not directly comparable -

https://www.taxback.co.uk/tax-tips-for-uk-citizens-living-abroad-with-uk-based-pension/

 

However this seems to support what you are suggesting - 

https://www.litrg.org.uk/tax-guides/pensioners/what-happens-if-i-retire-abroad

I would be very happy to be corrected on my current  (mis)understanding so If you can get away with it then wonderful 

Expat UK pensions are taxed at source in the UK, except when there exists a tax treaty with the country that an expat is living in that allows the pension to be taxed in that country of residence.

 

There is NO SUCH AGREEMENT in the tax treaty between the UK and Thailand, except for the quite specific case of pensions paid by the UK government for UK government service.

 

Therefore you cannot apply for a simple UK pension, either state or private, to be taxed in Thailand rather than the UK. These pensions will be taxed in the UK.

 

It is very clear and very simple. See uk gov tax treaty table here 

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/710099/DT_Digest_April_2018.pdf

 

 

Edited November 6, 2019 by partington

[topt]

1 hour ago, partington said:

It is very clear and very simple. See uk gov tax treaty table here

I am aware of this and that is what we have been saying in previous posts. However his IFA seems to believe differently so it will be interesting to see what transpires...... 

[billd766]

3 hours ago, topt said:

 

I am struggling with this. I was not aware you could do this and as several have stated my understanding has always been that pensions will be taxed at source.

https://www.gov.uk/tax-uk-income-live-abroad

https://www.gov.uk/tax-right-retire-abroad-return-to-uk

 

And this which is not directly comparable -

https://www.taxback.co.uk/tax-tips-for-uk-citizens-living-abroad-with-uk-based-pension/

 

However this seems to support what you are suggesting - 

https://www.litrg.org.uk/tax-guides/pensioners/what-happens-if-i-retire-abroad

I would be very happy to be corrected on my current  (mis)understanding so If you can get away with it then wonderful 

AFAIR plus what the HMRC told me when I was still working as a contractor was that any monies earned while working for a UK based company (even if you are working offshore) is deemed to be taxable in the UK.

 

If you are working for yourself and base your company elsewhere then the HMRC is not interested though you may have to pay taxes to that countries version of the HMRC.

[topt]

40 minutes ago, billd766 said:

AFAIR plus what the HMRC told me when I was still working as a contractor was that any monies earned while working for a UK based company (even if you are working offshore) is deemed to be taxable in the UK.

 

If you are working for yourself and base your company elsewhere then the HMRC is not interested though you may have to pay taxes to that countries version of the HMRC.

Not really relevant to the guy who is asking as it was about pension/SIPP payments.  

[cleopatra2]

17 hours ago, Bruntoid said:

I’m struggling with that. (So is my FA) - if pensions really do fall outside the DTA then effectively my entire pension pot becomes tax free once I claim my nil tax banding from the U.K. as an overseas resident, (and obviously make no mention of it to the Thai tax authorities). So I obtain the banding from HMRC, provide that to my SIPP provider, they send me the payment GROSS to my account, I transfer it to Thailand. 
 

I then don’t mention it to anyone here and enjoy a tax free pension pot for life OR inform the Thai tax authorities (no idea how to do that or the tax rates??? does anyone know ?).

As before the onus is on me to tell them, HMRC will not. 

 

I think Philip Hammond killed off QROPS - or certainly made it not worth while 

 

This is my understanding of the process.

The HMRC will examine the claim for no tax deduction. They will see that a DTA between UK and Thailand exist but excludes the provision of pensions.

The HMRC will regard the pension as UK sourced income thus subject to UK income tax. The claim for nil tax will be rejected.

 

Can you clarify on what cicumstances is the FA basing is claim to no tax is due.

[denby45]

On 11/5/2019 at 7:38 PM, Bruntoid said:

As post above Den it is if you obtain a nil tax banding from HMRC (to pay the tax in the partner country if applicable) 

Thanks for that. I did some further research and came up with this statement:

The DTA between the UK and Thailand does not permit the payment of UK pensions to a Thai resident without being subject to UK taxation at the marginal rate. This means that residents of Thailand will pay up to 45% tax on their pensions.

and this statement:

If you’re not a UK resident, you don’t usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK.

I already took drawdown payments from one of my pension and they were subject to UK Tax. I was advised from the pension company to keep the claims below the personal threshold after deducting the 25% tax free, so I could claim my tax back. In that case I did what they said. They were aware that I was non resident. That is why I made my statement. Was I advised incorrectly? I will ask my FA about this. I have a meeting with him on 12th. I will report back and confirm the same.

 

 

Den 

Edited November 6, 2019 by denby45

[Bruntoid]

12 hours ago, partington said:

Expat UK pensions are taxed at source in the UK, except when there exists a tax treaty with the country that an expat is living in that allows the pension to be taxed in that country of residence.

 

There is NO SUCH AGREEMENT in the tax treaty between the UK and Thailand, except for the quite specific case of pensions paid by the UK government for UK government service.

 

Therefore you cannot apply for a simple UK pension, either state or private, to be taxed in Thailand rather than the UK. These pensions will be taxed in the UK.

 

It is very clear and very simple. See uk gov tax treaty table here 

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/710099/DT_Digest_April_2018.pdf

 

 

But with respect your cart may be leading your horse. Forget for a moment your pension.

 

You don’t apply for your pension to be taxed in Thailand - there is no process to do that however you apply for the nil tax banding as a resident of Thailand (or wherever) 

 

As an expat you can apply for a nil tax banding (not sure of criteria to get it but looking into it) - now suppose that is granted - HMRC then wouldn’t have a tax code applicable to you to tax the pension (or anything else) 

 

I am coming to the conclusion that this IS a possibility but the onus is on the individual to inform their new residencies govt! What checks are in place to monitor that is anybody’s guess. 
 

 

[Bruntoid]

1 hour ago, denby45 said:

Thanks for that. I did some further research and came up with this statement:

The DTA between the UK and Thailand does not permit the payment of UK pensions to a Thai resident without being subject to UK taxation at the marginal rate. This means that residents of Thailand will pay up to 45% tax on their pensions.

and this statement:

 

Why does it mean you will pay up to 45% ?? I can’t follow that bit - so you pay the marginal rate of 20%, where is the other 25% coming from? 
 

I might regret asking this ????

[sanemax]

10 minutes ago, Bruntoid said:

Why does it mean you will pay up to 45% ?? I can’t follow that bit - so you pay the marginal rate of 20%, where is the other 25% coming from? 
 

I might regret asking this ????

Isnt that the highest taxation rate for income above a certain amount ?

[Bruntoid]

12 hours ago, sanemax said:

Isnt that the highest taxation rate for income above a certain amount ?

Oh yes of course it is - never reached those lofty heights so didn’t compute at first 

[cleopatra2]

12 hours ago, Bruntoid said:

But with respect your cart may be leading your horse. Forget for a moment your pension.

 

You don’t apply for your pension to be taxed in Thailand - there is no process to do that however you apply for the nil tax banding as a resident of Thailand (or wherever) 

 

As an expat you can apply for a nil tax banding (not sure of criteria to get it but looking into it) - now suppose that is granted - HMRC then wouldn’t have a tax code applicable to you to tax the pension (or anything else) 

 

I am coming to the conclusion that this IS a possibility but the onus is on the individual to inform their new residencies govt! What checks are in place to monitor that is anybody’s guess. 
 

 

Where is the criteria for UK non residents to recieve a nill tax banding ?

My understanding is the nil banding applies to inheritance 

Edited November 7, 2019 by cleopatra2

[billd766]

13 hours ago, sanemax said:

Isnt that the highest taxation rate for income above a certain amount ?

https://www.mileiq.com/en-gb/blog/income-tax-rates-2019-20-uk/

 

The new income tax rates and thresholds for 2019-20 are:

Tax Rate (Band)         Taxable Income      Tax Rate
Personal allowance    Up to £12,500             0%
Basic rate                 £12,501 to £50,000      20%
Higher rate               £50,001 to £150,000    40%
Additional rate          Over £150,000            45%
This means that the minimum income you have to earn in a year to start paying tax in the UK will now be £12,500. Similarly, the basic tax rate of 20 percent, which currently applies if you earn up to £46,350 a year, has been extended.

[Expattaff1308]

Anyone have the email address for the international desk at the DWP?

[Jip99]

21 minutes ago, Expattaff1308 said:

Anyone have the email address for the international desk at the DWP?

I think it is an online email system:-

 

 

 

 

https://secure.dwp.gov.uk/ipc/personal-details

 

 

 

[sandyf]

12 hours ago, Expattaff1308 said:

Anyone have the email address for the international desk at the DWP?

You can try this one of these, the first is Linda Marsden, Complaints Resolution Manager.

[email protected] 

or

[email protected]

[Expattaff1308]

Thanks Guys

[evadgib]

6 hours ago, sandyf said:

You can try this one of these, the first is Linda Marsden, Complaints Resolution Manager.

[email protected] 

or

[email protected]

HMG are or have made changes to their GSI accounts. If the above no longer works DWP can be contacted as explained here.