Thai Tax on UK pensions

[Mike Teavee]

26 minutes ago, sandyf said:

Your are wrong.  The state pension is taxable, not at source but lumped with other income to determine liability.

Why haven't you backed up this claim.

" but as things stand it is considered Assessable Income in Thailand."

Many seem to think they know the answers, but reluctant to substantiate.

Sorry, I didn't want to repeat myself from the post directly above the one you quoted where I said:-

 

State Pensions:-

1. Are not considered a Government Pension, these are things like Civil Service & Military etc, not the pension of your average Joe. 
2. Are taxed, it's just that they're the 1st thing that's added to your total income so are covered by your Personal Allowance which is considered taxed at 0%.  

The fact that they are considered assessable income has been discussed many times (too death) in the other Tax threads but here's a Q&A from ExpatTax... (Search for State Pension)...

 

UK DTA: I’ve got two pensions and I transfer money to a Thai bank account every 5 months. Do we need to worry about tax as Thailand and the UK have a DTA, plus the money is already being taxed in the UK?

 

Potentially, yes. This is dependent on the tax rate in the UK and if it was remitted into Thailand. State and private pensions in the UK are taxable in Thailand, but you can use tax already paid as a credit. Even if your tax rate is high in the UK, and even if there is no tax to pay in Thailand for your situation, you will still have to file a tax return.

I have a retirement visa. I am UK citizen living in Thailand. i have no assets in UK. I have a UK state pension and a small private pension. I pay tax in UK on my combined pensions by PAYE. My pensions are paid into my UK bank account. I transfer cash each month to my Thai bank account. Are there any circumstances where I would need to pay tax in Thailand?

Both your state pension And private pensions are classed as assessable income If you transfer To Thailand. You will likely have To file a tax return. Our Assisted Tax Filing Service will help you to claim the tax credits for tax paid In the UK. This is called assisted tax filing. Click here to learn about foreign sourced assessable income.

 

 

 

Show me where it's not-Tax assessable & if you can't then by default it is Tax Assessable. #

 

[sandyf]

25 minutes ago, topt said:

I have no idea why you are deflecting - I pointed you to a specific place in that document that states -

In case you have forgotten this was in reply to this post of yours -

 

Apologies, I missed the reference to the RH side in your previous post.

Thanks, it is the first serious response on the thread rather than conjecture. You say it has appeared many times but first I have seen.

The opening statement is a bit ambigous but on the basis your interpretation is right it may mean assessable income.

At the end of the day I am not going to get particularly bothered until they actually come and ask for money. Could well be pushing up daisies by then.

[sandyf]

10 minutes ago, OJAS said:

 

So precisely "what services of a governmental nature rendered to that (Contracting) State or subdivision or local authority thereof" have been provided by State Pensioners as a prerequisite to their receiving the State Pension? I await your reply with bated breath!

The state pension would be covered by the statement before the first OR.

Unless of course you think it is not a pension or paid by the government.

[sandyf]

7 minutes ago, Mike Teavee said:

State Pensions:-

1. Are not considered a Government Pension, these are things like Civil Service & Military etc, not the pension of your average Joe. 

Read the 5th post on this thread.

[Mike Teavee]

8 minutes ago, sandyf said:

Read the 5th post on this thread.

Can you provide a source for that statement so we can understand it's context more....

 

Doesn't really matter as the DTA says... 

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.  

 

So for the purposes of Thai Taxation, State Pensions are Tax assessable whereas "Government Pensions" like Military, Civil Service, NHS, Council Worker etc... pensions are not. 

 

Edit: Playing Devils Advocate, State Pensions are mainly paid for out of Employer & Employee National Insurance contributions so where the Employer wasn't a Government department could be argued are not being paid for by the Government. 

 

 

[LivinLOS]

The DTA states

"Any pension paid .. 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."

The caveat of 'in respect to' should also be clear ? 

[sandyf]

52 minutes ago, topt said:

I have no idea why you are deflecting - I pointed you to a specific place in that document that states -

In case you have forgotten this was in reply to this post of yours -

 

Further to my previous post I would suggest that the statement in your document 

"Also, no relief for State Pension or ‘trivial commutation lump sum’."

may possibly be misinterpreted. The same statement appears against many other DTAs.

According to this document, if UK has exclusive taxing rights then there is no relief.

"The notes to the foreign pages (SA106) explains DTAs. Essentially, if a DTA gives exclusive taxing rights to the UK, no foreign tax is payable and so there is no question of relief."

https://www.gov.uk/government/publications/calculating-foreign-tax-credit-relief-on-income-hs263-self-assessment-helpsheet/relief-for-foreign-tax-paid-2023-hs263

 

Comes back to the question, does the UK have exclusive taxing rights on the state pension? The wording of the DTA would suggest it has.

I had "trivial commutation" at one time and if I remember right it was tax free.

[sandyf]

3 minutes ago, LivinLOS said:

 

The caveat of 'in respect to' should also be clear ? 

It is against the rules to alter a post.

 

[motdaeng]

why don't you uk guys just ask your british embassy in bangkok for clarification?

i'm sure they'll be very helpful ...  (sorry, i couldn't resist)

[LivinLOS]

Just now, sandyf said:

It is against the rules to alter a post.

 

I was not aware of that rule.. However I hope the edit should make it clear why the statement works.. There is a conditional in the statement which you seem to seek to avoid. 

[sometimewoodworker]

1 hour ago, sandyf said:

The statement "Any pension paid by the Contracting State" is  followed by the word "or"

 

Are we to take it that you are stating quite categorically that the UK state pension is not a pension or not paid by the state.

You really should read the DTC completely. The only pensions covered are, as I said in article 19 Governmental Services. It specifically covers services of a governmental nature rendered to that State or subdivision or local authority

 

the state pension is not paid for services of a governmental nature.

it is not covered by article 19.
 

Article 19 is the only section mentioning pensions

Q.E.D. Since the state  pension  is not listed in the DTC it is not covered

it is irrelevant by whom it is paid because it is not in the DTC

 

[Mike Teavee]

10 minutes ago, sandyf said:

Comes back to the question, does the UK have exclusive taxing rights on the state pension? The wording of the DTA would suggest it has.

I had "trivial commutation" at one time and if I remember right it was tax free.

You seem to be the only person that believes that & as several of us have posted information (including links to the DTA & Expat Tax companies) that says it's not true we'll have to agree to disagree, it's been argued enough in the other threads already.. 

 

I had "Trivial Commutation" once, Worked for EDS for a couple of months (Ironically at DWP) & had a small (IIRC the limit was/is <£10,000) pension that they were moving to another provider so I had the choice of taking it tax free... so I did. 

[sometimewoodworker]

1 hour ago, sandyf said:

The DTA does not say " the pension must be paid for services rendered to the govt."

That statement comes after the word "or".

The DTC DOES explicitly state that the pensions covered are  in respect of services of a governmental nature rendered to that State or subdivision or local authority

[sometimewoodworker]

1 hour ago, OJAS said:

In the case of the State Pension I don't believe that there is (unfortunately) any way of avoiding double taxation through UK offsets of Thai tax.

You seem to totally misunderstand double taxation and double taxation agreements.

double taxation is the same income being taxed in both countries (most income is double taxed) the DTAs DTCs provide that tax outside Thailand on income remitted to Thailand is offset against that Thai due, this is a simplistic rendering and excludes the more complicated sections.

 

country A calculates income and tax due and subsequently paid

remit the money to country B

country B calculates the tax due on the remittance, deducts the tax paid in country A, if the result is zero or negative, no tax is due to country B if the result is positive country B collects the remaining tax due

 

again a simplified explanation 

[nong38]

5 hours ago, nong38 said:

 I was looking at TNT 9(Tim Newton Today ) on youtube yesterday and for the edition of July 5th he quotes an article in the Pattaya newspaper, it might be worth going and having a look at this. The article says that pensions will not be taxed in Thailand and also that any money brought into Thailand before 31st December 2024 i will also not be taxed. We were waiting for clarification in July is this what we were waiting for?

The article in the Pattaya Mail  dated  quotes from the Thai revenue department  orders number 161 and 162 of the year 2566. I think anyone who is concerned about the proposed new Thai Tax arrangements and how it is likely to effect them should go and have a read or have a look on you tube as previously mentioned, the part you need to look at starts at 3 minutes and last for about that time, before dismissing this out of hand, could be 3 minutes well spent.

[sometimewoodworker]

31 minutes ago, motdaeng said:

why don't you uk guys just ask your british embassy in bangkok for clarification?

Because however much they they are paid in Thailand, working in Thailand they pay no tax to the TRD, their remuneration is exempt because of the DTC

[Tony M]

I think I understand the ins and outs of the state pension thing, and it is assessable income if it is not a government pension, etc, etc ......  The DTA says -  "Any pension paid .. 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."  My pension was a civil service pension, until I changed it to an overseas QROPS pension.  So, although it is now an overseas pension does it still remain a pension "in respect of services of a governmental nature rendered to that State............".     Assessable or non-assessable ?

[JimGant]

Let sandyf have his way on state pensions. With his self assessment logic, he would not declare his state pension on a Thai tax return. Thus, there would be no number -- maybe not even a tax return -- upon which the TRD could call him in for a discussion. But, in the <1% chance he's called in for an audit -- and the missing state pension number is brought up -- if he can blow just half the wind he's blowing on this subject on this thread -- they'll eventually toss him out of the office in exasperation.

 

Seriously, if you really believe a position that's to your benefit, go for it -- but be prepared to have your defense in order. In this situation, everyone but sandy believes he's on shaky ground. But if sandy believes it -- why shouldn't he go for it. He may end up paying a Thai tax on this, after an audit. But with such a huge amount of BS to throw at the TRD -- he certainly wouldn't be seen as complicit in tax evasion. Just pay the tax, with fine and interest. But, again, the chance of him being called in for an audit over a missing number -- is probably zilch.

[OJAS]

3 hours ago, sometimewoodworker said:

You seem to totally misunderstand double taxation and double taxation agreements.

double taxation is the same income being taxed in both countries (most income is double taxed) the DTAs DTCs provide that tax outside Thailand on income remitted to Thailand is offset against that Thai due, this is a simplistic rendering and excludes the more complicated sections.

 

country A calculates income and tax due and subsequently paid

remit the money to country B

country B calculates the tax due on the remittance, deducts the tax paid in country A, if the result is zero or negative, no tax is due to country B if the result is positive country B collects the remaining tax due

 

again a simplified explanation 

 

So what do the statements on pages 3 and 34 of HMRC's Digest of Double Taxation Treaties that State Pension "relief from UK income tax is available under the terms of many, but not all, double taxation treaties" and "Also, no relief for State Pension or ‘trivial commutation lump sum’" in the case of Thailand mean then? What you have said only appears to apply to the various income types specifically referred to in individual Articles of the DTA - which, with one notable exception, we all agree does NOT include the State Pension.

 

In other words, upon which higher authority is HMRC's Digest of Double Taxation Treaties being subverted?

 

[Moonlover]

10 hours ago, nong38 said:

 I was looking at TNT 9(Tim Newton Today ) on youtube yesterday and for the edition of July 5th he quotes an article in the Pattaya newspaper, it might be worth going and having a look at this. The article says that pensions will not be taxed in Thailand and also that any money brought into Thailand before 31st December 2024 i will also not be taxed. We were waiting for clarification in July is this what we were waiting for?

I have now read the article you refer to in the Pattaya Mail, plus 2 others in the same publication. All three strongly suggest that expats pension are very unlikely to the target of taxation by the TRD.

 

I've also made reference to a number similar articles many times on this forum going back as far as September last year. And you know what, no one takes a blind bit of notice!

 

I am a UK pensioner with three pensions being remitted to Thailand and I am not in the least bit concerned about this tax business. And it is not a 'head in the sand' attitude at all. I've done a very thorough search on the internet and cannot find a single reference that suggests that I need be concerned. In fact, very much the opposite. Here are just 3 for your amusement.

 

https://www.thaienquirer.com/50744/thai-government-to-tax-all-income-from-abroad-for-tax-residents-starting-2024/

 

https://www.siam-legal.com/thailand-law/relationship-between-the-new-thai-tax-law-retirement-visa-holders-and-long-term-residency/

 

https://btisolutions.co/will-you-be-impacted-by-thailands-revised-tax-code/

[OJAS]

2 hours ago, OJAS said:

What you have said only appears to apply to the various income types specifically referred to in individual Articles of the DTA - which, with one notable exception, we all agree does NOT include the State Pension.

 

@sometimewoodworker What you have said also appears to apply to the State Pension in the case of those countries where relief from UK taxation is available through the relevant DTA. But Thailand clearly ain't one of them, I'm afraid.

 

However I certainly don't consider a "one size fits all" approach to the alleviation of double taxation across the board (in terms of both individual countries and individual income categories), as you seem to be advocating, to be approriate. This must surely all turn on what is said in individual DTA's (or not as the case may be when it comes to the UK/Thailand DTA and the State Pension). But at the end of the day we may well just have to agree to disagree between ourselves on this particular matter.

[sometimewoodworker]

14 hours ago, Tony M said:

I think I understand the ins and outs of the state pension thing, and it is assessable income if it is not a government pension, etc, etc ......  The DTA says -  "Any pension paid .. 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."  My pension was a civil service pension, until I changed it to an overseas QROPS pension.  So, although it is now an overseas pension does it still remain a pension "in respect of services of a governmental nature rendered to that State............".     Assessable or non-assessable ?

Your civil service pension was exclusively taxed in the U.K. and also exempt from assessment in Thailand.

Unless (extremely unlikely) your overseas QROPS pension is still taxed exclusively in the U.K.

you have probably moved the funds outside the U.K. DTC and it is likely that it is now assessable income if remitted to Thailand.

It is likely that moving into QROPS pension was done in part to save U.K. tax, but even if not it is no longer a civil service pension so likely now assessable income if remitted.

 

However you need to consult a specialist in the field. 

[sometimewoodworker]

10 hours ago, Moonlover said:

I am a UK pensioner with three pensions being remitted to Thailand and I am not in the least bit concerned about this tax business. And it is not a 'head in the sand' attitude at all. I've done a very thorough search on the internet and cannot find a single reference that suggests that I need be concerned. In fact, very much the opposite. Here are just 3 for your amusement.

The devil is in the details. Your need to pay tax or not depends on the source of the pensions, the allowances you have in Thailand, and the total you remit. You may have a tax liability you may not, it is reasonably easy to calculate. You certainly are not in the “can benefit from a tax consultant” bracket. Those who need to be concerned are those for whom any reduction in income (so any Thai tax liability) is a problem.

[Tony M]

28 minutes ago, sometimewoodworker said:

Your civil service pension was exclusively taxed in the U.K. and also exempt from assessment in Thailand.

Unless (extremely unlikely) your overseas QROPS pension is still taxed exclusively in the U.K.

you have probably moved the funds outside the U.K. DTC and it is likely that it is now assessable income if remitted to Thailand.

It is likely that moving into QROPS pension was done in part to save U.K. tax, but even if not it is no longer a civil service pension so likely now assessable income if remitted.

 

However you need to consult a specialist in the field. 

Thanks for your input. I tend to agree on the one hand, but the wording of the DTA is a little ambiguous ?   You are correct, the pension is not taxed in the UK. In fact I have not yet drawn down any of the pension funds, and (for information) the QROPS was initially opened to benefit my dependants on my death.  Your final piece of advice is, of course, the way to go.. 

[Surasak]

21 hours ago, Unamerican said:

Mine is! (as I have large SERPS extras).

Just not “at source”:

the tax (a lot!) is collected by deductions (paye) on other income sources.  

Which was my intention to say, but obviously did not state clearly.

[Surasak]

20 hours ago, sandyf said:

That is to do with the Social Security Act,  not the DTA.

Only a certain mentality would believe that when the DTA was drawn up that the UK would give up the right to be the sole beneficiary of the tax collected on the UK state pension.

Please explain the DTA? No such thing in the UK.

[sometimewoodworker]

2 hours ago, Tony M said:

Thanks for your input. I tend to agree on the one hand, but the wording of the DTA is a little ambiguous ?   You are correct, the pension is not taxed in the UK. In fact I have not yet drawn down any of the pension funds, and (for information) the QROPS was initially opened to benefit my dependants on my death.  Your final piece of advice is, of course, the way to go.. 

given the wording 

Quote

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. 

And that the pension is now tax free it strongly suggest to me that you no longer have a civil service pension, but you swapped the civil service pension for a QROPS pension and that it is certainly not covered by the DTC so if funds are remitted to Thailand they are definitely assessable. 
 

I think you will find that you effectively sold your civil service pension and bought a QROPS pension

 

I suspect that a specialist will agree with the assessment.

 

However you also need to carefully read all of the literature and documents surrounding the transfer as they may give an answer 

 

I do not think that any DTC/DTA is phrased to allow any income to be untaxed, it specifies which income is only taxable in the home country and must not be taxed in the country of residence. The personal tax allowance in the respective countries govern how much, if any, tax is due

 

[jwest10]

On 8/1/2024 at 8:50 AM, Raindancer said:

I am in the same boat:

But my total allowances according to the table produced by @Mike Lister, provide 560k per year.

 

Therefore as my UK state pension is below that, I have no tax to pay. 

 

My military pension, according to the TRD is exempt, therfore, I  still have no income tax to pay.

 

I hope that reassures you.

 

[Tony M]

1 hour ago, sometimewoodworker said:

given the wording 

And that the pension is now tax free it strongly suggest to me that you no longer have a civil service pension, but you swapped the civil service pension for a QROPS pension and that it is certainly not covered by the DTC so if funds are remitted to Thailand they are definitely assessable. 
 

I think you will find that you effectively sold your civil service pension and bought a QROPS pension

 

I suspect that a specialist will agree with the assessment.

 

However you also need to carefully read all of the literature and documents surrounding the transfer as they may give an answer 

 

I do not think that any DTC/DTA is phrased to allow any income to be untaxed, it specifies which income is only taxable in the home country and must not be taxed in the country of residence. The personal tax allowance in the respective countries govern how much, if any, tax is due

 

Your logic sounds correct.  Thanks again !!!

[jwest10]

On 8/1/2024 at 8:50 AM, Raindancer said:

I am in the same boat:

But my total allowances according to the table produced by @Mike Lister, provide 560k per year.

 

Therefore as my UK state pension is below that, I have no tax to pay. 

 

My military pension, according to the TRD is exempt, therfore, I  still have no income tax to pay.

 

I hope that reassures you.

We still not know if we have to lodge a tax form but wait until later on the year and forms are due to be printed Oct/Nov