Query on UK Taxation of my Thai Wife's future UK private Pension Income when I die

[gdhm]

I hope I have posted this in correct Forum. My apologies if I have not.

 

I have searched the Forum and Web but have been unable to find a definitive answer to my question and am hoping a member here can provide me with a definitive answer.

 

When I die my Thai National, (citizen living in Thailand) wife (eleven years my junior) will receive a reduced spouse pension based on my old firm's employee private pension scheme. She will also receive a tiny annuity based on my private annuity.

My current understanding is that (CURRENTLY) :

1) Thailand and UK have a double taxation Treaty it does NOT include UK Private Pension income.

2) Because of 1) my wife's future UK Private Pensions after my death (based on my pensions) will be taxed in UK.

 

My questions (assuming current laws, rules etc. prevail at time of my death)

1) Will my wife need and will she be allowed to have a UK National Insurance Number so the Pensions can have UK tax deducted at source under the UK PAYE scheme (which is what is currently happening with my Pensions)?.

 

2) If so, how would she arrange getting a National Insurance number after my death?

 

3) IF she will be entitled to a UK National Insurance Number (for purposes of paying UK Pension tax at source under the UK PAYE system, would she be eligible for the Personal UK Tax free allowance (as I currently am)?  (i.e. is the UK Personal Tax Free Allowance based upon citizenship or whether UK tax is paid (irrespective of foreign residence or citizenship of the payer).

 

4) Due to the UK- Thailand Double Taxation Treaty not covering Private Pension Income, does this mean my wife will potentially be vulnerable to BOTH UK and Thailand wanting to tax her separately.

 

5) If answer to 4) is yes, then what can/should my wife do to legally prevent being unfairly taxed twice on the same private UK Pension Income (will be her only source of income as she has none in Thailand)

 

Many thanks

 

 

 

[pontious]

To get a NI number your wife has to be in the UK.

[doctormann]

11 minutes ago, pontious said:

To get a NI number your wife has to be in the UK.

Not too sure about that.

 

My Thai wife has an NIN that was issued to her as my dependent when I first claimed my UK State Pension, back in 2009.  I also receive a dependent's allowance for her.  She has never lived or worked in the UK - only made a couple of holiday visits.

 

I do know though that the rules have changed and that the dependent's allowance can no longer be claimed by new applicants.  The allowance is time-limited anyway and terminates in 2020.

 

I suggest that you contact the DWP in Newcastle.  I don't have the phone number to hand but Google is your friend, as usual.  I have found them to be very helpful.

[pontious]

13 hours ago, doctormann said:

Not too sure about that.

That's what is says on Gov.UK website.

[pontious]

On 4/29/2019 at 5:12 PM, gdhm said:

If so, how would she arrange getting a National Insurance number after my death?

Look at Gov . UK website - it has all the details about NI numbers. I read you have to be in UK to get one.

[gdhm]

Thanks for comment so far. Unfortunately, clearly differing views, experiences and interpretations. 

 

If a NI number is not allowed then how does HMRC tax a wife receiving a UK private pension following death of the UK citizen?

As I understand it, UK Tax cannot be deducted at source under PAYE without a NI number because the Private Pension company would need a Tax code of BR or emergency Codes to tax the Thai wife's pension.  Assuming HMRC could not do this, then are they therefore really expecting Thai citizen wive's to liaise with them in English regarding sending the tax back to the HMRC - seems highly unlikely they'd have much success with overseas Foreign Nationals who, like my wife, would find it extremely difficult communicating with HMRC in English or understanding UK Tax rules etc.,  what they need or are saying or how to fill out forms.  How many UK citizens understand?

 

To be honest irrespective of my OP question 3, surely it has to be to the advantage of HMRC to be able to provide a NI Number to an Overseas Foreign National who is subject to UK Tax on their Private Pensions or whatever so they can collect the tax they want via PAYE. 

Am I missing something here?

 

I can of course contact HMRC and ask but in my past experience the persons I have spoken to have not always understood all the rules etc.

For example when I was about to receive my UK Pension I asked how HMRC would collecting tax on it. Would it be via PAYE?

Answer: We pay you Gross of tax.  I would how many would think with that short answer that the UK State pension is not taxable, not realizing that it is subject to UK taxation rules.

I had to ask several further questions myself to find that Tax is due, and I needed to contact various Depts. to arrange how it would be paid.

I commented at the time. I wonder how many expats living overseas permanently, received their Gross pension unaware UK Tax was probably payable. I was told HMRC (or who ever) would realize at sometime it was not being collected and paid, someone would contact the Expats concerned . To be honest the procedures seemed very vague and in fact I spoke with 2 Depts. each telling me the other should provide them with information and I was in the middle telling each of them that they were both telling me the same thing, I assume this means some stuff slips between the cracks if BOTH Dept. only act IF the others informs them of things and they Both think each other should be the trigger . 

 

 

[cleopatra2]

9 hours ago, gdhm said:

Thanks for comment so far. Unfortunately, clearly differing views, experiences and interpretations. 

 

If a NI number is not allowed then how does HMRC tax a wife receiving a UK private pension following death of the UK citizen?

As I understand it, UK Tax cannot be deducted at source under PAYE without a NI number because the Private Pension company would need a Tax code of BR or emergency Codes to tax the Thai wife's pension.  Assuming HMRC could not do this, then are they therefore really expecting Thai citizen wive's to liaise with them in English regarding sending the tax back to the HMRC - seems highly unlikely they'd have much success with overseas Foreign Nationals who, like my wife, would find it extremely difficult communicating with HMRC in English or understanding UK Tax rules etc.,  what they need or are saying or how to fill out forms.  How many UK citizens understand?

 

To be honest irrespective of my OP question 3, surely it has to be to the advantage of HMRC to be able to provide a NI Number to an Overseas Foreign National who is subject to UK Tax on their Private Pensions or whatever so they can collect the tax they want via PAYE. 

Am I missing something here?

 

I can of course contact HMRC and ask but in my past experience the persons I have spoken to have not always understood all the rules etc.

For example when I was about to receive my UK Pension I asked how HMRC would collecting tax on it. Would it be via PAYE?

Answer: We pay you Gross of tax.  I would how many would think with that short answer that the UK State pension is not taxable, not realizing that it is subject to UK taxation rules.

I had to ask several further questions myself to find that Tax is due, and I needed to contact various Depts. to arrange how it would be paid.

I commented at the time. I wonder how many expats living overseas permanently, received their Gross pension unaware UK Tax was probably payable. I was told HMRC (or who ever) would realize at sometime it was not being collected and paid, someone would contact the Expats concerned . To be honest the procedures seemed very vague and in fact I spoke with 2 Depts. each telling me the other should provide them with information and I was in the middle telling each of them that they were both telling me the same thing, I assume this means some stuff slips between the cracks if BOTH Dept. only act IF the others informs them of things and they Both think each other should be the trigger . 

 

 

Where an individual is not entitled to a NINO (as seems the case here ) the pension scheme should request an alternative identifier.

 

https://webarchive.nationalarchives.gov.uk/20110617022825/http://www.hmrc.gov.uk///pensionschemes/guid-ind-nino.htm

[cleopatra2]

To answer your the OP .

 

Your wife wold not be entitled to a NINO ( see previous post)

 

 Q2 (alternative identifier) contact pension provider and explain situation and ask if they could provide information on steps to be taken.

 

Q3 The DTT non discrimination clause means the personal allowance will be granted.

 

Q4 assuming the pension does not fall into the Government Pension classification, Yes both countries retain taxing rights.

 

Q5 Double taxation is avoided by applying credits . See the DTT agreement

[gdhm]

1 hour ago, cleopatra2 said:

To answer your the OP .

 

Your wife wold not be entitled to a NINO ( see previous post)

 

 Q2 (alternative identifier) contact pension provider and explain situation and ask if they could provide information on steps to be taken.

 

Q3 The DTT non discrimination clause means the personal allowance will be granted.

 

Q4 assuming the pension does not fall into the Government Pension classification, Yes both countries retain taxing rights.

 

Q5 Double taxation is avoided by applying credits . See the DTT agreement

 

Hi cleopatra2 , Thanks ever so much for your information and more so for the interpretation of https://webarchive.nationalarchives.gov.uk/20110617022825/http://www.hmrc.gov.uk///pensionschemes/guid-ind-nino.htm

 

Regarding your Q5 Answer. Are you saying Tax would be deducted in UK and should also be in Thailand and then at end of Tax year wife would need to claim for credits or are they applied each month.  I am totally confused with all this. May I ask where I can see DDT agreement and relevant section

 

Regarding your Q3) answer Referring to the pdf downloadable from https://www.gov.uk/government/publications/double-taxation-treaties-territory-residents-with-uk-income

In the Treaty summary section for Thailand "Other Pensions and Annuities" column its says No Relief form UK Tax see Note 4 (which says "Treaty does not include an article dealing with Non-Government Pensions. Also no relief for State Pension or "trivial commutation Lump sum"

 

If I understand this correctly is this saying Pensions (except UK Govt. Service Pensions are NOT included in the treaty. IF SO then I ask how the "The DTT non discrimination clause means the personal allowance will be granted" can be relevant if these pensions are not in a DTT?

I apologize if my understanding shows a high degree of not understanding the workings of DTTs and UK - Thai DDT.  Goodness knows how my wife will ever sort this out.

 

In your q2 Answer, you suggested I contact the Private Pension providers.  One provider (the tiny Pearl annuity pension) Administrators (have changed 3 times so far each with different admin rules.) has proven to be very unhelpful in the past. The Administrators at that time seem to only really want to deal with anything once I am dead and they know for sure if I have a surviving spouse at the time. I cannot even get them to accept Proof of my wife or 13 years, Date of Birth in advance of my death so they can note their records that XXXXX has Proven Date of Birth. I used to work for this Company so I know the Insurance Industry all the time accept proof of date of Birth in Advance. Had they been more helpful I (who can speak and write English) could have sent her passport and Thai Ministry of Foreign Affairs sanctioned English Translations of Our Marriage certificate. Then when I die, all they would have needed was Proof of my death and proof my wife (whose D.O.B proof they held) was still married to me at date of my death.

 

The major provider (my Pearl Group Staff Pension) Administrators accepted these mentioned documents as proof 12 Years ago but Pearl say different Pensions/ Annuities, different Administrators and different procedures. Of course totally ridiculous. I knew it would be pointless to ask them to note their record to contact the Trustees and Administration of my Staff Pension after my death to see the proof they hold and accepted.

 

ANOTHER crazy thing is that the current Administration Company of that tiny Pearl Annuity pension told me they could not pay my wife's pension to a foreign Bank account (only to a UK account) (previous 2 could and had agreed procedure with me). I asked how my wife can get a UK bank account if non resident, as illegal. They at first were not helpful (sort of suggesting it is her problem to solve). I said the amount would only be around GBP 24 monthly so do they intend to keep my wife's pension from her due to their lack of payment procedures. They came to a "one off" arrangement after I suggested I needed to write to the Insurance ombudsman because to deny my wife her future pension (be it tiny) due to payment technicalities of the CURRENT Administration Company for the Pension annuity is NOT her fault.

 

I am telling me and other these issues so you can see what MY Wife faces dealing with (and possibly other spouses of UK Expats living in Thailand may face similar issues upon the death of the UK Expat). Add the Language, taxation and Treaty issues and Thai spouses (many not great with English, English Taxation/legal terms face a nightmare (and I suspect language an ignorance, will not be an acceptable excuse).

 

Thai National living in Thailand must dread the prospect of seeking to inform the Thai Revenue of any UK Taxed UK pensions received with all the hoops (i wonder in reality how many actually do).

 

Why on Earth the UK HMRC cannot offer some acceptable number JUST FOR UK TAXATION) that could be used by UK companies for the PAYE I really do not know. Too easy and logical I presume, AND why of Earth UK and Thailand do not have a better Treaty.

 

Regards

 

 

 

 

 

 

 

[cleopatra2]

1 hour ago, gdhm said:

 

Hi cleopatra2 , Thanks ever so much for your information and more so for the interpretation of https://webarchive.nationalarchives.gov.uk/20110617022825/http://www.hmrc.gov.uk///pensionschemes/guid-ind-nino.htm

 

Regarding your Q5 Answer. Are you saying Tax would be deducted in UK and should also be in Thailand and then at end of Tax year wife would need to claim for credits or are they applied each month.  I am totally confused with all this. May I ask where I can see DDT agreement and relevant section

 

Regarding your Q3) answer Referring to the pdf downloadable from https://www.gov.uk/government/publications/double-taxation-treaties-territory-residents-with-uk-income

In the Treaty summary section for Thailand "Other Pensions and Annuities" column its says No Relief form UK Tax see Note 4 (which says "Treaty does not include an article dealing with Non-Government Pensions. Also no relief for State Pension or "trivial commutation Lump sum"

 

If I understand this correctly is this saying Pensions (except UK Govt. Service Pensions are NOT included in the treaty. IF SO then I ask how the "The DTT non discrimination clause means the personal allowance will be granted" can be relevant if these pensions are not in a DTT?

I apologize if my understanding shows a high degree of not understanding the workings of DTTs and UK - Thai DDT.  Goodness knows how my wife will ever sort this out.

 

In your q2 Answer, you suggested I contact the Private Pension providers.  One provider (the tiny Pearl annuity pension) Administrators (have changed 3 times so far each with different admin rules.) has proven to be very unhelpful in the past. The Administrators at that time seem to only really want to deal with anything once I am dead and they know for sure if I have a surviving spouse at the time. I cannot even get them to accept Proof of my wife or 13 years, Date of Birth in advance of my death so they can note their records that XXXXX has Proven Date of Birth. I used to work for this Company so I know the Insurance Industry all the time accept proof of date of Birth in Advance. Had they been more helpful I (who can speak and write English) could have sent her passport and Thai Ministry of Foreign Affairs sanctioned English Translations of Our Marriage certificate. Then when I die, all they would have needed was Proof of my death and proof my wife (whose D.O.B proof they held) was still married to me at date of my death.

 

The major provider (my Pearl Group Staff Pension) Administrators accepted these mentioned documents as proof 12 Years ago but Pearl say different Pensions/ Annuities, different Administrators and different procedures. Of course totally ridiculous. I knew it would be pointless to ask them to note their record to contact the Trustees and Administration of my Staff Pension after my death to see the proof they hold and accepted.

 

ANOTHER crazy thing is that the current Administration Company of that tiny Pearl Annuity pension told me they could not pay my wife's pension to a foreign Bank account (only to a UK account) (previous 2 could and had agreed procedure with me). I asked how my wife can get a UK bank account if non resident, as illegal. They at first were not helpful (sort of suggesting it is her problem to solve). I said the amount would only be around GBP 24 monthly so do they intend to keep my wife's pension from her due to their lack of payment procedures. They came to a "one off" arrangement after I suggested I needed to write to the Insurance ombudsman because to deny my wife her future pension (be it tiny) due to payment technicalities of the CURRENT Administration Company for the Pension annuity is NOT her fault.

 

I am telling me and other these issues so you can see what MY Wife faces dealing with (and possibly other spouses of UK Expats living in Thailand may face similar issues upon the death of the UK Expat). Add the Language, taxation and Treaty issues and Thai spouses (many not great with English, English Taxation/legal terms face a nightmare (and I suspect language an ignorance, will not be an acceptable excuse).

 

Thai National living in Thailand must dread the prospect of seeking to inform the Thai Revenue of any UK Taxed UK pensions received with all the hoops (i wonder in reality how many actually do).

 

Why on Earth the UK HMRC cannot offer some acceptable number JUST FOR UK TAXATION) that could be used by UK companies for the PAYE I really do not know. Too easy and logical I presume, AND why of Earth UK and Thailand do not have a better Treaty.

 

Regards

 

 

 

 

 

 

 

The lack of a provision regarding pensions in the DTT does not render the convention irrelevant.

 

The pre-amble states the purpose of the convention , namely to avoid double taxation with respect to taxes on income.

Article 2 lists the specific taxes covered, for your purposes income tax.

 

The other articles give definitions  , or details of which state has taxing rights. for specific sources of income.

 

There is no provision for pensions in the DTT thus both countries have taxing rights. However the convention purpose is to avoid double taxation , thus article 23 is applicable, Elimination of Double Taxation.

 

Article 24 non discrimination should ensure the personal allowance. ( under current UK law)

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf

 

Edited May 2, 2019 by cleopatra2

[gdhm]

Once again cleopatra2 I cannot thank you enough for you time effort and info in assisting me.

Sorry for more questions. I'll keep it short.

 

Based on your latest post #10;

1) would I be correct in my understanding. UK will have the main right to Tax my wife on her UK Pensions when I die.

2) If so, AND does that mean my wife will probably have no need to bother informing Thai IR and discussing, unless they contact her as they would not be the Taxation country anyway.

 

3) I think what you are saying is that my wife' will get the same UK Personal Tax allowance as I was getting at date of my death currently get (unless UK taxation rules change on Personal allowances). If so this will be extremely good news for my wife.  To get that would it mean she will have to contact Thai IR to trigger UK HMRC operating Article 24 non discrimination, Or should they do that automatically for taxation of a Thai National living in Thailand as they already knwo the DTT rules and about Article 24.

 

 

Thanks

 

[UKresonant]

Interesting info, 

I think I better think about drafting an In case of emergency note for my wife.

I found that all my pensions wanted the wifes details up front, for one of them I had to take her original passport to the pension dept. copied it and certified it that they had sited the original!

The other thing is inheritance Tax, but I think they have sorted that to an extent now...a few years back.

 

 

 

Edited May 5, 2019 by johnwf1963

[banK]

gdhm

Have sent a pm to you.

 

banK