Tax on UK pension

[Andy1961]

Apologies if this in the wrong forum, I searched elsewhere but couldn't find anything about tax.

I am moving to Thailand on an O-A retirement visa and will have a private pension through Canada Life and another smaller civil service pension.   I know the UK taxman will get his claws into the civil service pension but as this will be less than my personal allowance I hope to receive it without the deduction of UK tax.

 

I spoke to the UK tax office today and they told me my Canada Life pension will be taxed until I get a Double Taxation Agreement signed by the Thai tax authority and I have sent that document back to the UK.  As my CL pension will be paid direct into my Thai bank account I was under the impression I would not be liable for UK tax on it. 

 

I'm guessing there are many British expats who receive a private pension in Thailand so can anyone advise whether the above is the right way to go....or point me in the direction of an accountant in the Pattaya area that won't charge me a fortune in fees?

Many thanks all. 

[UKresonant]

Your UK pension will be taxable, but if you are under the £12750 personal allowance your tax code will be sent to CSP & Canada Life, and result in no tax getting actually deducted, as you know. Though it takes them a few months to get it right, but the codes will be re-adjusted and it will settle to a stable payment. 

The Civil service one is clearly covered under the DTT as gov service, though the Canada life one may not be.  The HMRC said that they may ask you to pay the tax in Thailand on the CSP and then refund it.

As I always continuously have an address and commitments in the UK, I will likely always be tax resident in the UK, though it was possible I could also become tax resident >180 in Thailand . I made sure I was less than 180 days in Thailand in the calendar year I actually took my pension(not the state one yet), as that was just going to complex ????. I worked out the amount that second pension, (as your CA) did not exceed the UK £12.57k PA enough to justify getting involved with the Thai revenue. I just don't send any same year income to Thailand ????. 

.......

 

[Oxx]

7 hours ago, Andy1961 said:

my Canada Life pension will be taxed until I get a Double Taxation Agreement signed by the Thai tax authority and I have sent that document back to the UK. 

 

This sounds wrong to me.  The DTA only covers government pensions (i.e. pensions of civil servants).  It does not cover the state pension or private pensions.

 

7 hours ago, Andy1961 said:

As my CL pension will be paid direct into my Thai bank account I was under the impression I would not be liable for UK tax on it. 

 

This is wrong.  What matters is where the income arises, not where it's paid to.

 

Had you considered the option of not spending 180+ days in a given year in Thailand to avoid any involvement with the tax system here?

[ubonjoe]

Not visas or extensions related. Moved to here.

[Andy1961]

Hi ubonjoe, where did you move it to?

[theoldgit]

1 hour ago, Andy1961 said:

Hi ubonjoe, where did you move it to?

 

It's moved to here.

 

Your Personal Allowance will be reduced by the amount of your State Pension, and taxed by MyCSP.

 

I'm not sure how Canada Life will tax you, is it an annuity, is it from the UK?

 

I suspect they'll tax you at the emergency rate, ie on all of it, and then you'll have to reclaim any overpayment, but that's really an (un)educated guess. 

[Saltire]

Don't know how I did it but I have a UK pension and 2 private ones all paid to my UK bank untaxed..

 

Last year they were under the UK personal allowance so I paid no tax. Next year however they will be more and I will have to pay UK tax, but not much.

 

I use a UK accountant to do my returns as it's easier from here and HMRC does not let you do an online self assessment if you are non resident, although for those who are not in the non UK resident category, probably could get away with self assess.

 

I have never earned anything in Thailand so have no dealings with Thai tax authorities at all.

 

 

[chilly07]

As Thailand has a tax agreement with the UK unless you opt for Qrops and move all pension funds out of the UK you will be taxed at source in the UK in which case your pension provider will deduct tax as directed by HMCR. This is based on the pension tax allowance given to you on your pension contributions. In theory if you want your private pension paid gross into your Thai bank because Thai tax rates are lower you will need the confirmation DWP and HMRC need. 

[bradiston]

34 minutes ago, Saltire said:

Don't know how I did it but I have a UK pension and 2 private ones all paid to my UK bank untaxed..

 

Last year they were under the UK personal allowance so I paid no tax. Next year however they will be more and I will have to pay UK tax, but not much.

 

I use a UK accountant to do my returns as it's easier from here and HMRC does not let you do an online self assessment if you are non resident, although for those who are not in the non UK resident category, probably could get away with self assess.

 

I have never earned anything in Thailand so have no dealings with Thai tax authorities at all.

 

 

You can still do self assessment abroad, but you will have to download and purchase approved software with which to so do. HMRC has a list. About £15 plus vat. Generally very well written, easy to use software covering every aspect of self assessment, including all the optional sheets, and very useful online help pages. I did foul up one time ticking the wrong box but got it straightened out when I noticed only half my occupational pension was being paid.

 

Course, YMMV!

[Oxx]

36 minutes ago, bradiston said:

You can still do self assessment abroad, but you will have to download and purchase approved software

 

Or use good old fashioned paper.

[chilly07]

6 minutes ago, Saltire said:

Don't know how I did it but I have a UK pension and 2 private ones all paid to my UK bank untaxed..

 

Last year they were under the UK personal allowance so I paid no tax. Next year however they will be more and I will have to pay UK tax, but not much.

 

I use a UK accountant to do my returns as it's easier from here and HMRC does not let you do an online self assessment if you are non resident, although for those who are not in the non UK resident category, probably could get away with self assess.

 

I have never earned anything in Thailand so have no dealings with Thai tax authorities at all.

 

 

You can do your own self assessment on line from Thailand by using a software package quoted on the HMRC website. I haven't tried doing it via an accountant. I use ABC self assessment which is v easy to use and allows you to submit your return on line

[DaLa]

I have 4 pensions and a state pension, all paid in the Uk and thus taxed in the UK. My bank sent me a dual taxation form to fill in with my Thai tax number. I completed it with the note ‘Thai tax authority will not provide me with a tax number as I do not make any income in Thailand’. NO PROBLEM.

 

All my payments are made into a UK current account and I transfer the money in chunks as and when I require. NO PROBS.

 

I have a c/o (care of address) in the UK and all my dealings are undertaken from there. NO PROBS.

 

I complete my SA1 (self assessment) form on-line from los as I have done for years without any requirement for any special accountancy software. NO PROBS

 

You’ll start with an allowance of 12,570, they will reduce this by your State Pension ( example £8,025). That will leave £4545 ( eg ) , they will send a note to Canada Life that £4545 of your income from that pension will be tax free and issue them with a code of 454L. If your pension from CL is £4,546 they will tax you on £1, ie £0.20. (Just insert your own figures into that.) You don’t even need to go through the arithmetic, the SA1 will issue you with a figure once you’ve completed it.

 

Tax man is happy s/he’s taking a good chunk from you and me. NO PROBS.

 

I wouldn’t personally consider QROPS on a small(ish) pension. Certainly not from a government based pension. Furthermore the criterion for validity is 10 times more onerous than acquiring an O-A here.

 

Done.

[bradiston]

1 hour ago, Oxx said:

 

Or use good old fashioned paper.

What, and send it in snail mail? No thanks! DHL will cost about £30.

Edited June 26, 2021 by bradiston

[bradiston]

1 hour ago, chilly07 said:

You can do your own self assessment on line from Thailand by using a software package quoted on the HMRC website. I haven't tried doing it via an accountant. I use ABC self assessment which is v easy to use and allows you to submit your return on line

Ditto. You'll need to register online with HMRC at gov.uk.

 

One of the advantages is you can make unlimited changes to your return if needed at a later date with no penalty.

Edited June 26, 2021 by bradiston

[Parsve]

I am not a civilian from any of the countries you mention, but the normal rule is that you pay income tax, pension is an income, in one country, not in other countries. Normally is the country where you get the income the country where you also should pay the tax.

[Oxx]

53 minutes ago, Parsve said:

I am not a civilian from any of the countries you mention, but the normal rule is that you pay income tax, pension is an income, in one country, not in other countries. Normally is the country where you get the income the country where you also should pay the tax.

 

You are also not competent to comment.  There is no "normal rule".  Each country has its own rules.  For example, the United States taxes its people for all their income, irrespective of in which country the income arises.  And in the absence of a DTA, you potentially end up liable for tax twice.

Edited June 26, 2021 by Oxx

[khunPer]

18 hours ago, Andy1961 said:

I spoke to the UK tax office today and they told me my Canada Life pension will be taxed until I get a Double Taxation Agreement signed by the Thai tax authority and I have sent that document back to the UK.  As my CL pension will be paid direct into my Thai bank account I was under the impression I would not be liable for UK tax on it. 

That sounds wrong, DTAs (Double Taxation Agreement) are signed between states, they have nothing to with individual, apart from the rules which stops double taxation; i.e. you cannot be taxed both in UK and Thailand for the same pension.

 

You need to read the DTA between UK and Thailand, there will be a section about pensions (I'm Danish, so don't recall your DTAs details even I've scanned through it, but penisons might be chapter 18 or thereabout.

 

If your Canadian pension is paid directly from Canada it's the DTA between Canada and Thailand you shall consult.

 

Retirement pensions might be taxable in both countries (I think UK's DTA also has that rule), i.e. Britain withhold income tax from pensions paid by Britain, or paid from Britain; but the amount transferred into Thailand (and only that amount) might also be taxable in Thailand. However, due to DTA that eventual Thai tax shall be refunded.

 

In practice most folks that have already been deducted withholding tax on retirement pensions in their home country don't do anything; i.e. not register for a TIN (Tax Identification Number), nor making annual tax return forms.

 

If you need to prove that you are tax resident of Thailand, you need to apply for a TIN, which in some cases might be little complicated if your are retired (I talk from experience), as you need some kind of income to register (only abot 6 percent of Thailand's population is registered for income tax, and only around 4 percent pays income tax).

 

Having a TIN might not be enough proof, so you also need to make an annual tax return form (normally before end of March), and then apply for R.O.21 "Income Tax Payment Certificate", and R.O.22 "Certificate of Residence" from the tax office, and as the documents covers only one income year, so it's an ongoing annual procedure. Those might be the documents the UK tax-office asks for, they are it in my case...????

[Oxx]

13 minutes ago, khunPer said:

However, due to DTA that eventual Thai tax shall be refunded.

 

As I think I previously mentioned, UK state and private pensions are not covered by the DTA.  I've never heard of anyone paying Thai tax on their UK pension, but theoretically it should be paid, and there is no mechanism for refunding.

[Tuvoc]

There is so much conflicting advice on this. My IFA in the UK who manages my SIPP said that no tax is deducted at source in the UK or payable in the UK, and for his clients in the UK who have retired to Thailand he gets a certificate from HMRC to provide to the pension company so that no tax is deducted. I have not put that to the test yet but that is what he says is already happening with his existing clients.

[khunPer]

32 minutes ago, Oxx said:

 

As I think I previously mentioned, UK state and private pensions are not covered by the DTA.  I've never heard of anyone paying Thai tax on their UK pension, but theoretically it should be paid, and there is no mechanism for refunding.

This is what UK-Thailand DTA says (it was then article 19, I said around article 18)...????

 

Article 19 Governmental Services

 

(1)

(a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

 

(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that other Contracting State who: (i) is a national of that State; or

 

(ii) did not become a resident of that State solely for the purpose of performing the services.

 

(2)

(a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

 

(b) However, such pension shall be taxable only in the other contracting State if the recipient is a national of and a resident of that State.

 

(3) The provisions of Articles 16 and 17 shall apply to remuneration in respect of services rendered in connection with any business carried on by one of the Contracting States or a political subdivision or local authority thereof.

Edited June 26, 2021 by khunPer

[Andycoops]

On 6/26/2021 at 7:10 AM, Oxx said:

 

This sounds wrong to me.  The DTA only covers government pensions (i.e. pensions of civil servants).  It does not cover the state pension or private pensions.

 

 

This is wrong.  What matters is where the income arises, not where it's paid to.

 

Had you considered the option of not spending 180+ days in a given year in Thailand to avoid any involvement with the tax system here?

This is correct, as your pension (income) arises in the UK it is subject to UK income tax at source.

CL will be obliged to inform HMRC of your income, you will probably have to complete a tax self assessment.

I did when I moved here and stopped working but started receiving a company pension but after 3 years I asked them to review my status as my income was a single source regular payment and they agreed to stop self assessment unless any major changes to my income occur.

[Chongalulu]

17 hours ago, Oxx said:

 

Or use good old fashioned paper.

It’s old fashioned and certainly not 'good'. Apart from being cumbersome and expensive to send you also have to submit the return by October rather that the following January. The online form does the calculations for you . 

[bradiston]

1 hour ago, Andycoops said:

This is correct, as your pension (income) arises in the UK it is subject to UK income tax at source.

CL will be obliged to inform HMRC of your income, you will probably have to complete a tax self assessment.

I did when I moved here and stopped working but started receiving a company pension but after 3 years I asked them to review my status as my income was a single source regular payment and they agreed to stop self assessment unless any major changes to my income occur.

I don't think mine is taxed at source, partly because I am now below the tax threshold, so taxing me at source would mean it would all have to be returned. I just declare my pension income on my self assessment form, and take it from there. As it's my only income as of this year, it's incredibly simple. And 0 tax to pay, finally!

[theoldgit]

14 hours ago, khunPer said:

If your Canadian pension is paid directly from Canada it's the DTA between Canada and Thailand you shall consult.

 

Whilst the OP hasn't clarified yet, I don't think he has a pension from Canada, Canadian Life is a UK based pension provider.

[Oxx]

1 hour ago, nchuckle said:

18 hours ago, Oxx said:

 

Or use good old fashioned paper.

It’s old fashioned and certainly not 'good'. Apart from being cumbersome and expensive to send you also have to submit the return by October rather that the following January. The online form does the calculations for you . 

I'm not sure I'd call 34 baht "expensive to send".  And HMRC does the calculations for you.  (No need for EMS since you can check online whether the return has been received or not.)

[NoshowJones]

On 6/26/2021 at 4:28 AM, UKresonant said:

Your UK pension will be taxable, but if you are under the £12750 personal allowance your tax code will be sent to CSP & Canada Life, and result in no tax getting actually deducted, as you know. Though it takes them a few months to get it right, but the codes will be re-adjusted and it will settle to a stable payment. 

The Civil service one is clearly covered under the DTT as gov service, though the Canada life one may not be.  The HMRC said that they may ask you to pay the tax in Thailand on the CSP and then refund it.

As I always continuously have an address and commitments in the UK, I will likely always be tax resident in the UK, though it was possible I could also become tax resident >180 in Thailand . I made sure I was less than 180 days in Thailand in the calendar year I actually took my pension(not the state one yet), as that was just going to complex ????. I worked out the amount that second pension, (as your CA) did not exceed the UK £12.57k PA enough to justify getting involved with the Thai revenue. I just don't send any same year income to Thailand ????. 

.......

 

If you are not a member of the "scared of your own shadow" brigade, there are ways to avoid paying tax in the UK on private pensions if they are paid into your UK bank.

[bradiston]

51 minutes ago, Oxx said:

I'm not sure I'd call 34 baht "expensive to send".  And HMRC does the calculations for you.  (No need for EMS since you can check online whether the return has been received or not.)

I find it hard to believe you're suggesting this is a better method than online. Paper? In this day and age? The software does all the calculations for you. You just enter your figures. You can see exactly what your liabilities are before you even upload it. Tweak it, amend it, cancel it and start again. You're in complete control. And I don't get 34 THB to send. How many months to get there? And how many copies do you keep? And downloading the different forms? Oh boy! My head hurts.

[NoshowJones]

17 hours ago, Parsve said:

I am not a civilian from any of the countries you mention, but the normal rule is that you pay income tax, pension is an income, in one country, not in other countries. Normally is the country where you get the income the country where you also should pay the tax.

I say it is every UK citizens duty, to claim all you can illegally or not, from anything involving the UK government. They are sending billions of taxpayers money abroad in overseas aid, MPs are claiming taxpayers money for their second mortgages, they are allowing illegal immigrants into the country at the taxpayers expense, they are stealing money from state pensioners living in countries abroad, including Thailand. by not allowing them their annual pension increases, even after paying into it all their working lives.

[Oxx]

5 minutes ago, bradiston said:

I find it hard to believe you're suggesting this is a better method than online. Paper? In this day and age?

 

34 baht versus the cost of your fancy software, which (I believe) only works for one tax year? Paper is a no-brainer for me.

[bradiston]

16 minutes ago, Oxx said:

 

34 baht versus the cost of your fancy software, which (I believe) only works for one tax year? Paper is a no-brainer for me.

The cost of the software is tax deductible as a business expense. Ok, end of argument, each to his own...