uk income tax

[chang50]

Hi guys I started to receive my UK state pension in April 2022 all fine there but when combined with my work pension I am now over the income tax personal allowance for this current tax year.In due course i will fill in an annual UK tax return for 2022-23 declaring my full income as usual.My question is since I haven't paid any tax yet when will HRMC start deducting income tax from my work pension as I believe is the normal procedure?Thanks.

[Chomper Higgot]

If you do nothing now you will receive a tax bill after you complete your self assessment.

 

This will come with a payment plan (I think two part payments or an option to add it to your PAYE for the coming year).

 

Alternatively you can contact HMRC and ask for an interim assessment so you start paying now.

 

I personally would do the latter so as to not have big bills next year.

[howerde]

have you opened a government gateway account,  https://www.gov.uk/log-in-register-hmrc-online-services

Everything can be done online, i have just had my 2021-2022 tax bill sorted, i owe 62 pounds, like you i have 2 pensions and it takes time for them to sort out, if you have a work place pension and state pension then there is no need for a self assessment, either send an online form or call them. Don't worry if you owe tax they WILL collect it

Edited September 30, 2022 by howerde

[chang50]

51 minutes ago, Chomper Higgot said:

If you do nothing now you will receive a tax bill after you complete your self assessment.

 

This will come with a payment plan (I think two part payments or an option to add it to your PAYE for the coming year).

 

Alternatively you can contact HMRC and ask for an interim assessment so you start paying now.

 

I personally would do the latter so as to not have big bills next year.

Thanks for the info.

[chang50]

28 minutes ago, howerde said:

have you opened a government gateway account,  https://www.gov.uk/log-in-register-hmrc-online-services

Everything can be done online, i have just had my 2021-2022 tax bill sorted, i owe 62 pounds, like you i have 2 pensions and it takes time for them to sort out, if you have a work place pension and state pension then there is no need for a self assessment, either send an online form or call them. Don't worry if you owe tax they WILL collect it

I'm sure they will!

[jimn]

If I was you I would contact HRMC by either phone or online ASAP. If you delay all thats happening is that you are building up a large sum to be paid in bulk when they get round to sorting it. When I got my State Pension also in April I had to pay £150 a month extra tax. I already delayed like you and when I contacted them 4 months later my pension was reduced by £600 for the next month to pay the back tax. The longer you delay the bigger the bill, do it now and dont wait until they get around to it.

[chang50]

3 minutes ago, jimn said:

If I was you I would contact HRMC by either phone or online ASAP. If you delay all thats happening is that you are building up a large sum to be paid in bulk when they get round to sorting it. When I got my State Pension also in April I had to pay £150 a month extra tax. I already delayed like you and when I contacted them 4 months later my pension was reduced by £600 for the next month to pay the back tax. The longer you delay the bigger the bill, do it now and dont wait until they get around to it.

Thanks I'm thinking about it do you have a contact number?.Luckily I wouldn't be paying as much as you as I have just scraped into the tax bracket I estimate about 25 quid a month.

[spambot]

When you start to receive a pension for the first time, HMRC are not able to work out your tax code until they have received some information from either you or your pension provider. You may have a P45 from your pension provider if you have just stopped working and immediately afterwards start to take a pension. If you do not have a P45, your pension provider should send details of your new pension directly to HMRC via the electronic PAYE system. As a pensioner, you will not see this yourself, as the pension company will submit the information directly to HMRC. 

 

If you get money from occupational pension, private pension or retirement annuity, the pension payer deducts tax from your pension under the Pay As You Earn (PAYE) system. In order to do this HM Revenue & Customs (HMRC) issues a PAYE code to the pension payer to tell them how much tax to take off. When HMRC issues you with a tax code check your coding notice, to make sure you are paying the right tax on your state pension since mistakes do occur.

 

HMRC generally collects any tax due on your state pension through the Pay As You Earn (PAYE) system since you have other taxable income. If for some reason it is not possible for HMRC to collect any tax due on your state pension through the PAYE system, you may have to complete a Self Assessment tax return each year. Alternatively, HMRC may send you what is called a Simple Assessment.

 

I am assuming that you already know, but worth noting that if your address with HMRC is defined as Thailand your pension will not be indexed each year and since inflation is currently significant this issue will become an increasingly important consideration.

 

If HMRC holds your address as being in the Philippines you will get the benefit of the annual indexation.

 

To contact HMRC (including Web Chat) click Here

[spambot]

I should have mentioned that the above assumes that the work pension is from the UK and is not an overseas pension. If its an overseas pension, the process is a lot more complex than is defined above.

[spambot]

One last thing...

As long as you are receiving a pension at 5 April, the end of the tax year, your pension provider will give you an ‘end of year certificate’ P60. This might be given to you electronically, rather than on paper. This shows the total amount of tax they have deducted in the tax year.

[chang50]

44 minutes ago, spambot said:

One last thing...

As long as you are receiving a pension at 5 April, the end of the tax year, your pension provider will give you an ‘end of year certificate’ P60. This might be given to you electronically, rather than on paper. This shows the total amount of tax they have deducted in the tax year.

Thanks for all that info very helpful.

[tadpole22]

i worked at post office and baa gatwick pension from 60-69yrs only paid 30 pound tax to uk

and done nothing about tax     told then leave uk in 2007 retired at 54 and only got to pay tax

10 pound BAA  and 20 pound tax POST  OFFICE this year and got GOVT pension last 4 years

[tadpole22]

also got P60 last 9 yrs with this year being the 30 pound tax from 2 pensions

[Mutt Daeng]

19 hours ago, Chomper Higgot said:

If you do nothing now you will receive a tax bill after you complete your self assessment.

 

This will come with a payment plan (I think two part payments or an option to add it to your PAYE for the coming year).

 

Alternatively you can contact HMRC and ask for an interim assessment so you start paying now.

 

I personally would do the latter so as to not have big bills next year.

This is good advice, better to contact HMRC sooner rather than later IMHO.

[Mutt Daeng]

15 hours ago, spambot said:

When you start to receive a pension for the first time, HMRC are not able to work out your tax code until they have received some information from either you or your pension provider. You may have a P45 from your pension provider if you have just stopped working and immediately afterwards start to take a pension. If you do not have a P45, your pension provider should send details of your new pension directly to HMRC via the electronic PAYE system. As a pensioner, you will not see this yourself, as the pension company will submit the information directly to HMRC. 

 

If you get money from occupational pension, private pension or retirement annuity, the pension payer deducts tax from your pension under the Pay As You Earn (PAYE) system. In order to do this HM Revenue & Customs (HMRC) issues a PAYE code to the pension payer to tell them how much tax to take off. When HMRC issues you with a tax code check your coding notice, to make sure you are paying the right tax on your state pension since mistakes do occur.

 

HMRC generally collects any tax due on your state pension through the Pay As You Earn (PAYE) system since you have other taxable income. If for some reason it is not possible for HMRC to collect any tax due on your state pension through the PAYE system, you may have to complete a Self Assessment tax return each year. Alternatively, HMRC may send you what is called a Simple Assessment.

 

I am assuming that you already know, but worth noting that if your address with HMRC is defined as Thailand your pension will not be indexed each year and since inflation is currently significant this issue will become an increasingly important consideration.

 

If HMRC holds your address as being in the Philippines you will get the benefit of the annual indexation.

 

To contact HMRC (including Web Chat) click Here

Good info.

[foreverlomsak]

19 hours ago, spambot said:

When HMRC issues you with a tax code check your coding notice, to make sure you are paying the right tax on your state pension since mistakes do occur.

Of course they do, and be aware of the HMRC automatically assuming you get the annual increases to your DWP pension and hence a reduction to your other pensions tax free amount. This happened to my father to the tune of over 900GBP before he spoke to me about it.

In my case I have 2 private pensions, a small annual one which is a fixed amount and a larger monthly pension which has annual increases. They set my tax code based on the monthly getting no increases and gave the small one all the remaining allowance. OK for year 1, but year 2 tax was deducted despite the total income being 5,000GBP less than the personal allowance.

In neither case was there any problem getting a refund, I just wrote to them explaining the correct situation, they were quite quick to reply.

 

[chilly07]

Worth knowing you  cannot  use HMRC on line submission directly from overseas. I use abcsa.co.uk to do my annual return. 

[spambot]

3 hours ago, chilly07 said:

Worth knowing you  cannot  use HMRC on line submission directly from overseas. I use abcsa.co.uk to do my annual return. 

Good point Chilly07,

A subject on its own and outside the scope of this post is completing the tax return, remaining resident or becoming non-resident.

 

Sending a Self Assessment tax return

You cannot use HMRC’s online services to tell them about your income if you’re non-resident. Instead, you must do one of the following:

• fill in a paper version of the Self Assessment tax return and also SA109 form  (This is just some supplementary pages that record your residence and domicile status added to your SA100 Tax Return), send this only by post in the ‘residence, remittance basis etc’ section)

• use commercial self assessment software similar to abcsa.co.uk that supports SA109 reporting (this will appear in the section relating to "Residence remittance basis" Section) 

• Or can get a tax professional to report your UK income for you

Edited October 1, 2022 by spambot
Removed some bold text formatting

[spambot]

Error made - disregard the text at end of first bullet point

"in the ‘residence, remittance basis etc’ section)"

Not sure how this happened - After change of the formatting - seems to have added text from an earlier cut and paste.

Edited October 1, 2022 by spambot

[lungbing]

I no longer need to fill in a yearly return as my  sole income is from two UK based pensions and they never change.  HMRC sent me a letter confirming this, only telling me that if my circumstances should change I must tell them.  If your situation is the same then perhaps it's worth asking HMRC if this applies to you.

[lungbing]

for 'send'  read 'sent'.   (Where's the edit button gone?)

[chickenslegs]

33 minutes ago, lungbing said:

for 'send'  read 'sent'.   (Where's the edit button gone?)

Click on the three dots (top-right of your post).

[chang50]

Thanks everyone!

[lungbing]

22 hours ago, chickenslegs said:

Click on the three dots (top-right of your post).

Thank you!

[chang50]

Well I did phone HMRC and they are getting back to me about moving to PAYE so we shall see.

[Chomper Higgot]

On 10/1/2022 at 12:27 PM, chilly07 said:

Worth knowing you  cannot  use HMRC on line submission directly from overseas. I use abcsa.co.uk to do my annual return. 

Odd, because I’ve submitted my self assessment to HMRC from 6 different counties and I’ve always given my overseas address when making the return.

[nigelforbes]

10 minutes ago, Chomper Higgot said:

Odd, because I’ve submitted my self assessment to HMRC from 6 different counties and I’ve always given my overseas address when making the return.

You can use the UK online Self Assessment system from overseas, providing you're filing as UK resident for tax purposes. BUT you cannot use the same system if filing as not UK resident for tax purposes, that requires an agent or tax consultancy software which is not available to the general public. So, if expats are filing from overseas they are pretending to be UK resident, is my presumption.

[Chomper Higgot]

3 minutes ago, nigelforbes said:

You can use the UK online Self Assessment system from overseas, providing you're filing as UK resident for tax purposes. BUT you cannot use the same system if filing as not UK resident for tax purposes, that requires an agent or tax consultancy software which is not available to the general public. So, if expats are filing from overseas they are pretending to be UK resident, is my presumption.

There is a ‘tax domicile test’, it’s very easy to become ‘tax domiciled’ in the UK if you own UK property, have a UK pension, life assurance, bank accounts, UK based dependent family etc.

I suspect many UK origin expats in Thailand who are living of rental income and pensions from the UK are in fact UK tax domiciled.

 

 

[nigelforbes]

20 minutes ago, Chomper Higgot said:

There is a ‘tax domicile test’, it’s very easy to become ‘tax domiciled’ in the UK if you own UK property, have a UK pension, life assurance, bank accounts, UK based dependent family etc.

I suspect many UK origin expats in Thailand who are living of rental income and pensions from the UK are in fact UK tax domiciled.

 

 

Domicile and tax residency are very different things, it's very difficult for most UK citizens not to be UK domiciled, as Lord Denning, Master of the Rolls said, "Domicile is not a raincoat that can be taken off and put on at will". Tax residency on the other hand is a simple matter to determine using the tax residency tests and this status can change every year. For most people, domicile only really comes into play for inheritance Tax purpose and estate planning, For the uber rich, domicile can be used to avoid taxation on overseas income, but you'd need to be in the top 0.5% of income earners to be able to sensibly use that option. I for example am a Britt., I've been in Thailand for 30 years but own UK property that earns rental income. I am UK domiciled because of the property and my income but I am not UK tax resident.

Edited October 12, 2022 by nigelforbes

[hotandsticky]

15 minutes ago, nigelforbes said:

  I for example am a Britt., I've been in Thailand for 30 years but own UK property that earns rental income. I am UK domiciled because of the property and my income but I am not UK tax resident.

 

 

To whom do you pay the tax due on your rental income?