UK Annuity Paid to Thai Wife

[johnnort]

Hi guys! Does anyone have any experience and able to offer insight into the correct procedure to take in the following? :-

I have a UK annuity pension, 65% of which is paid to my wife (Thai) on my death. I am a Brit who is not resident in the UK, (Thailand), and pays no tax. My wife has never lived in the UK so does not have a UK Nat. Ins. No. nor tax reference. What happens with regards my wife paying tax, or not, on her portion of the annuity after I am dead? 

The annuity company will have to tell the UK tax authorities of my death, and that they will now be paying a monthly sum to my wife. Will they, company or HMIT, then take tax at source until there is some contact with my wife? Will she then have to provide a tax reference number from Thailand, and if so, will she be liable for tax in Thailand? At present the monthly annuity payment is paid into a UK bank joint account. Although more difficult for my wife should this continue after my death? Or, if it was paid monthly into a Thai bank account, would this make my wife liable for Thai tax if she was not liable in the first scenario?   

[Kwasaki]

Not quite sure what you mean but if your not paying tax on your UK annuity pension why should your wife pay any.

[johnnort]

I am not paying tax, but had to provide much information to tax authorities in the UK as the pension payments are in my name alone. When I am dead, the payments will be in my wifes name.

[treetops]

Why are you not paying tax?  Is it due to residence status or earnings being below the tax threshold or something else?

[johnnort]

Residence status.

[prakhonchai nick]

8 hours ago, johnnort said:

Residence status.

I do not understand why you re not paying tax due to residence status. Any money, whether it be pension, annuity, interest etc derived from the UK is ELIGIBLE for tax.  Only if your total annual income is below the personal tax threshold, currently £12,500 would you not pay tax.

 

Your wifes 65% annuity will likely be taxed at source, and she may or may not be entitled to the personal tax allowance available at the appropriate time. Strictly speaking, non UK citizens, or others who are not resident in the UK are not entitled to the personal tax allowance. However having assisted many Thai widows in the Isaan area, I have always managed to secure the Personal tax allowance for them.

 

Note though, that even if your wife/widow does get the allowance it can easily take 1 year or more for things to be finalised. In that situation tax paid would be refunded.

[theoldgit]

1 hour ago, prakhonchai nick said:

non UK citizens, or others who are not resident in the UK are not entitled to the personal tax allowance. However having assisted many Thai widows in the Isaan area, I have always managed to secure the Personal tax allowance for them.

That's interesting, I'd also been led to believe that that a recipient of any UK pension not resident in the UK would't qualify for any personal allowance so would pay the standard rate on the full sum received.

 

With the current tax rate and PA that would equate to an extra £2,500 tax a year, quite a saving if you're able to secure the PA for a Thai beneficiary based here.  

[DPKANKAN]

Johnnort, how do you get away with out paying tax on your pension/annuity from the UK???

[Surasak]

50 minutes ago, DPKANKAN said:

Johnnort, how do you get away with out paying tax on your pension/annuity from the UK???

You, me and many others would be interested in the answer to that question.

[Iem]

Established non residents don't pay tax . Your wife would not be liable for tax although in the first year it is possible it would have to be claimed after having been deducted , though unlikely as the remittance payer will be fully aware of the circumstances . This even applies to foreigners owning UK stocks and shares , although in that circumstances the taxes have to be reclaimed each year .

[bobnuts]

I'm no expert on this but in my own case I was granted tax free status whilst working for a UK company. This was on the three strike basis that I:

 

a. Was essentially non-resident, spending sufficient time each tax year out of the UK.

b. Had no assets in the UK. No property etc.

c. All of the work which I did for the UK company was in other countries meaning any money I earned earned did not "arise" in the UK.

 

On this basis I was told I met the criteria for non-taxable status and my tax code was changed to NT on all subsequent pay slips from the UK employer. The tax man also refunded 5 years of tax that I had been paying up until that point.

 

Have not paid a penny in tax since but also interested to know what my tax liability might be on my UK pension since again, payments into the pension scheme were not made from income that "arose" in the UK.

[prakhonchai nick]

1 minute ago, Surasak said:

You, me and many others would be interested in the answer to that question.

I would imagine it can only be because his total UK "income" does not exceed £12,500, or conceivably that his persnal allowance is a bit higher, if he can claim extra allowance for a wife whose income falls short of £12,500...................As lem stated above, much or all of the income could have been derived from outside the UK

[prakhonchai nick]

4 minutes ago, Iem said:

Established non residents don't pay tax . Your wife would not be liable for tax although in the first year it is possible it would have to be claimed after having been deducted , though unlikely as the remittance payer will be fully aware of the circumstances . This even applies to foreigners owning UK stocks and shares , although in that circumstances the taxes have to be reclaimed each year .

 

What is an Established non-resident"?    A wife/widow is unlikely to be regarded as "established, if like so many she never set foot in the UK. As for the remittance payer being aware of the facts, in my wide experience of claiming occupational widows pensions, you have to be joking! ????

[JAS21]

4 hours ago, prakhonchai nick said:

I do not understand why you re not paying tax due to residence status. Any money, whether it be pension, annuity, interest etc derived from the UK is ELIGIBLE for tax.  Only if your total annual income is below the personal tax threshold, currently £12,500 would you not pay tax.

 

Your wifes 65% annuity will likely be taxed at source, and she may or may not be entitled to the personal tax allowance available at the appropriate time. Strictly speaking, non UK citizens, or others who are not resident in the UK are not entitled to the personal tax allowance. However having assisted many Thai widows in the Isaan area, I have always managed to secure the Personal tax allowance for them.

 

Note though, that even if your wife/widow does get the allowance it can easily take 1 year or more for things to be finalised. In that situation tax paid would be refunded.

This topic could be useful, thank you.

As I am nine years older than my wife I expect that she will have to sort the pension out. She will be entitled to quite a substantial widows pension.

 

Unfortunately, when we lived in the UK we never got her an NI number as we didn’t want her to work. Now we realize it was probably an error,

 

She does have citizenship and a UK passport. And we maintain a joint UK bank account into which my pension is paid.

 

I understand, that my pension company only need a death certificate and then they will pay her widows pension into the joint bank account.

 

How they can do that without a tax ID or an NI number I’m not sure,

 

May be a good idea to make a note of your details, just in case she needs some help.????

I am Non-resident and not ordinary resident and also an overseas landlord.

 

Although she is mentioned in both my UK and Thai wills, she will not inherit any UK Property.

 

Any comments greatly appreciated....

 

 

[johnnort]

It appears that most are assuming something that isn't there.

I am Non-resident and not ordinary resident in the UK, have no property or other links to UK other than a Bank account which I have held for decades. My UK tax code is NT and as such do not qualify for any tax free allowances. The pension income, including the Gov. Retirement Pension (non-civil servant), is considerably more than the amount that would be under the tax threshold and would not be liable for tax.

l have registered for tax in another country and have a tax reference from that country (Thailand?), which has had to be supplied to HMIT in the UK. Any income generated from outside of that country is tax free. Hence, I do not pay tax.

Many people here have a Thai tax number and do not pay tax on their foreign income as if is not brought into Thailand the year it is received.

To reiterate my query: If my wife's portion of the pension, after I have died, continues to be put into the UK bank each month, will tax be taken at source until she supplies the authorities a tax reference, which she doesn't have at present, anywhere? If she chooses to have the monthly payment paid directly to a Thai bank, will she be liable for paying tax in Thailand?

[DPKANKAN]

4 hours ago, Surasak said:

You, me and many others would be interested in the answer to that question.

Yes I would. You can always message me!!

[MikePBrown]

Re: UK Non-Resident receiving tax free pension from UK:

I am a Retired British non-resident and for the last 10 years of my working life I worked for a UK company but always overseas (i.e. I had a non-resident and not ordinarily resident tax status). Salary was all paid in the UK in sterling, I now receive a tax free pension from this employment, paid in the UK under an NT tax code. My understanding is that I qualify for this pension to be tax free on the basis that I am still a UK non-resident, my employment was all overseas and the employment was for at least 10 years duration. The relevant tax regulation in 2006 was EP8281 copied below, however this regulation may not be current now as when I just looked it up I could only find it in the HMRC archives.

EP8281 - International employments: Part3: Subjects needing special care: When is PAYE to be applied?

 

PAYE is to be applied to all pensions paid to non-residents except where the pension arises wholly from an employment carried on abroad.

In practice this is extended to apply to pensions where:

• the last ten years service in respect of which the pension is paid was abroad

or

• the service abroad amounted to

• • half the total service in respect of which the pension is paid was abroad

and

• • at least ten of the last twenty years.

 

Don't know if this is the same situation for Johnnort - but might help anyone in a similar situation.  

[johnnort]

Don't get hung up about me! The question is about my wife, who is Thai.

[treetops]

3 hours ago, JAS21 said:

I understand, that my pension company only need a death certificate and then they will pay her widows pension into the joint bank account.

 

Both yourself and the OP may be advised to find out what happens to a joint account on the death of one holder.  If it gets shut down then best to open another account in your wifes' names now.

[johnnort]

Thanks treetops. I will certainly enquire with the bank, as I will with HMIT, although they will not be able to offer any views on the tax situation in Thailand.

It appears that no Brit in Thailand has ever opted for a joint annuity where a percentage is paid to the spouse after death.

Thanks also to lem for your response.

[MikePBrown]

Johnnort - I was only trying to answer the question raised by bobnuts and others - apologies if this annoys you.

Re your wife - Prakhonchai nick has confirmed your wife will be liable for UK tax on your pension, this would also be my understanding. As she will not have a tax code your pension provider is most likely to use the emergency code and tax 20% at source.

 

Re tax liability in Thailand my understanding (though may be wrong) is that the Thailand tax applies to "earned" income from abroad, brought into Thailand within 12 months - I would have thought your pension would not be "earned" income.

 

I do not believe Lem is correct and have not heard of the "Established non-residence" referred to - perhaps lem can give some more details.

[snairb]

how everyou could arrange for an automatic transfer via bangkok bank (assuming you have a bk a/c

in london to your wifes thai a/c provided its a joint a/c i think

how ever i do know that the state pension is paid gross to overseas expats but al civil service pensions must be declared in uk and taxed accordingly and as such also quaifies for the tax allowance

 

[JAS21]

6 hours ago, treetops said:

Both yourself and the OP may be advised to find out what happens to a joint account on the death of one holder.  If it gets shut down then best to open another account in your wifes' names now.

I have already checked, it remains open

[UKresonant]

12 minutes ago, JAS21 said:

I have already checked, it remains open

That's good, because a fairly big annuity  insurance provider in the UK said to me over the phone when enquiring about one of about one of their annuity products late 2017. They would only pay my wife, if she could open a UK bank account or they would not pay it out! Needless to say they won't be getting any of my business.....

All the other companies said they would sort something, if she did not have a UK bank account!

[JAS21]

6 hours ago, UKresonant said:

That's good, because a fairly big annuity  insurance provider in the UK said to me over the phone when enquiring about one of about one of their annuity products late 2017. They would only pay my wife, if she could open a UK bank account or they would not pay it out! Needless to say they won't be getting any of my business.....

All the other companies said they would sort something, if she did not have a UK bank account!

Good or bad we are with RBS. I’ve been with them for about 40 years and us jointly for about 16 years

 

[prakhonchai nick]

13 hours ago, UKresonant said:

That's good, because a fairly big annuity  insurance provider in the UK said to me over the phone when enquiring about one of about one of their annuity products late 2017. They would only pay my wife, if she could open a UK bank account or they would not pay it out! Needless to say they won't be getting any of my business.....

All the other companies said they would sort something, if she did not have a UK bank account!

Normally it is necessary to be in the UK to open a bank account, whether for a British subject or a foreigner.

 

However you and /or your wife can open a TRANSFERWISE  borderless account from Thailand with very limited ID required which can be sent online./ Pensions/annuities paid direct to Transferwise and sent to Thailand at considerably less that High Street Bank charges.

[topt]

23 hours ago, MikePBrown said:

Re tax liability in Thailand my understanding (though may be wrong) is that the Thailand tax applies to "earned" income from abroad, brought into Thailand within 12 months - I would have thought your pension would not be "earned" income.

My understanding is that pensions count as income and theoretically would be taxed subject to Thai tax exemptions etc. - if they even picked up on it  

If transferred in the calendar year after it was paid out then currently no tax. Note it is calendar year not 12 months so income received in December could be transferred to Thailand in January with no tax arising. 

On 11/4/2019 at 2:42 PM, johnnort said:

The question is about my wife, who is Thai.

 

[johnnort]

In that case, as long as she has at least one years worth of pension income sitting in the bank at all times, as she transfers monthly pension payments to Thailand, it can be deemed as taking money from the previous year, and not the latest amount deposited by the pension company. As I do something similar at present.

[lungbing]

21 hours ago, JAS21 said:

I have already checked, it remains open

I did the same with HSBC.  They said that on receipt of a certified translation of the Thai death certificate they would simply remove my name from the account leaving the account in the name of my wife only.