Taxation on UK Pensions Assets in Thailand: State Pension, SIPPs, Annuities QROPS and QNUPs

[jojothai]

1 hour ago, jojothai said:

Other country DTA’s have specific provision for pensions, but the UK does not.
e.g. Canada article 18 , Australia article 18.
The UK does not have this in article 18.
Be warned.
 

I forgot to mention however that the article 18 in many countries states specifically  that e.g.
Pensions paid to A RESIDENT of one of the Contracting states shall  be taxable only in that state.

or

pension paid to A RESIDENT of a Contracting Party in consideration of past employment shall be taxable only in that Contracting Party. 

 

The first version is the worst. The second could be argued that the past employment was not in Thailand.
These both could be interpreted that if a person is RESIDENT in Thailand and not in their home country where the pensions are paid then the pension can be taxable in Thailand.
At present it would apply only if the pension is transferred or remitted into Thailand (as the rules currently stand).
If they change the rules to world wide income taxation (not just based on remittal)  then this has serious implications for potentially all foreigners that get pensions paid overseas but are resident in Thailand.
That is a bigger concern and why some people are looking at what other countries they could move to.

[Jaggg88]

On 8/15/2024 at 4:41 PM, MikePBrown said:

They give details of the change to the tax regulation application at the start and then proceed to talk mainly about the original tax regulations that have not changed. I.e. anyone who has been living in Thailand more than 180 days per year and brings their pension into Thailand in the same tax year as received is potentially liable for income tax on the remittance - Nothing has changed and anyone doing this without submitting a tax return was practicing tax avoidance either knowingly or unknowingly.

 

What you say is mostly true but the original tax regulations have changed. Originally you could bring UNTAXED money onshore tax-free if it was earned in previous years. The amendment to the original tax laws says all UNTAXED money brought onshore is now liable for tax no matter what year it was earned. Thailand, like most countries, has an enormous problem with people earning money online that is not taxed and this was the reason for the amendment to the tax rules. Under double taxation agreements, if you have paid tax on earnings, this will be credited to your tax liability in Thailand. If you don't earn any money in Thailand (investments or work) or bring UNTAXED money onshore then you don't have a tax liability and this is why they have never pushed for expats to file a tax return. If you have no tax liability in Thailand and do not file a tax return, then you have not committed an offence. Tax evasion is the criminal offence you allude to and failing to file a tax return when there is no liability is not an offence. Whether any of this will change going forward we will have to wait and see.

[UKresonant]

On 8/15/2024 at 9:36 AM, Surasak said:

All very straight forward but, where does a newbie stand, bringing 400 or 800K for a retirement Visa? If it is in any way taxable,then it is totally unfair!

Taxable, if not savings pre 2024 or savings created whilst non tax resident in Thailand,

If you are a newbie, plan it so you are under the 180 days in that calendar when you move the money across? (That's what I did back in 2018)

 

[UKresonant]

On 8/15/2024 at 11:38 AM, nong38 said:

According to the 180 day rule I am a Thai tax resident although currently HMRC are taxing my state and private pension, is it the UK tax law that my UK sourced pensions are taxed in the UK? If I fill out the HMRC form P85 which takes from a UK tax resident to a Thai tax resident would that mean that I no longer pay any tax in the UK and that I would declare and pay Thai Tax on my UK pensions which then become assessable in Thailand?

If you read Form DT-individual in conjunction with the 2018 DTA digest for UK / Thailand, unlikely that you would get a NT tax coding.

[UKresonant]

On 8/15/2024 at 4:18 PM, nong38 said:

This is the real question that I think a lot of people want the answer to and I have asked this to HMRC and they have not answered it. The question is a simple one to me and it is this Are my UK state pension and or my private pension taxed in the UK regardless of my tax residency?

If the answer to this is yes than the P85 is not worth bothering about, I just get a credit for the UK tax to set against my Thai tax return.

If on the other hand I have no UK tax to pay and I declare my pensions in Thailand I pay the tax on them in Thailand.

'Are my UK state pension and or my private pension taxed in the UK regardless of my tax residency?'

Yes, if the contracting state of residence is Thailand (in other jurisdictions a NT tax code may be possible)

https://assets.publishing.service.gov.uk/media/5b05425fed915d1317445ed2/DT_Digest_April_2018.pdf

https://assets.publishing.service.gov.uk/media/637e192f8fa8f56eabf75e5b/Double_Taxation_Treaty_Relief_Form_DT-Individual.pdf

As Thailand is remittance based taxation, if you only send 50% of your pension to Thailand, who is taxing the other 50% in the UK . UK will tax it and you apply for tax credit relief along with the Thai submission, (or get a form from Thai RD to get the excess back from HMRC. Just a paperwork guddle for small amounts).

 

Edited August 19 by UKresonant

[Jumbo1968]

If I  leave Thailand before 180 days in one year for a week or two, does the ‘clock’ reset to zero when I return  ?

[Mike Teavee]

2 hours ago, Jumbo1968 said:

If I  leave Thailand before 180 days in one year for a week or two, does the ‘clock’ reset to zero when I return  ?

In a nutshell NO

 

its number of days (In Thailand) between 1st Jan & 31st Dec that count 

Edited August 20 by Mike Teavee

[MikePBrown]

On 8/19/2024 at 12:08 PM, jojothai said:

 

I did not want to discuss this further, but i consider that there is no misunderstanding. 
Most UK related arguments simply do not recognise that DTA's need to specifically  state where there are provisions for pensions.

The advice that I have seen on many legal advice websites states something like this for pensions =
If there are no special rules in the DTA to say that it is not taxable, then it is potentially taxable in Thailand.
But only if the pension is transferred or remitted into Thailand (as the rules currently stand).

I have seen websites that specifically state that State and private pensions in the UK are taxable in Thailand (but you can use tax already paid as a credit).

There are no special rules for pensions in general in the UK DTA, except for those from government service.
This is why there is the advice that pension income is potentially taxable here 
Why would there need to be special rules exempting government service as stated in article 19, if all pensions are exempt from DT?

What most people do not understand is that DTA’s mostly have a standard format that is the same. People disagreeing on UK need to go and look at them.

Other country DTA’s have specific provision for pensions, but the UK does not.
e.g. Canada article 18 , Australia article 18.
The UK does not have this in article 18.
Be warned.
 

Please will you go back and read my post and you will find we are 100% in agreement.

[MikePBrown]

On 8/19/2024 at 2:21 PM, Jaggg88 said:

What you say is mostly true but the original tax regulations have changed. Originally you could bring UNTAXED money onshore tax-free if it was earned in previous years. The amendment to the original tax laws says all UNTAXED money brought onshore is now liable for tax no matter what year it was earned. Thailand, like most countries, has an enormous problem with people earning money online that is not taxed and this was the reason for the amendment to the tax rules. Under double taxation agreements, if you have paid tax on earnings, this will be credited to your tax liability in Thailand. If you don't earn any money in Thailand (investments or work) or bring UNTAXED money onshore then you don't have a tax liability and this is why they have never pushed for expats to file a tax return. If you have no tax liability in Thailand and do not file a tax return, then you have not committed an offence. Tax evasion is the criminal offence you allude to and failing to file a tax return when there is no liability is not an offence. Whether any of this will change going forward we will have to wait and see.

You are correct I should have used Tax Evasion rather than Tax Avoidance - thanks for the correction. However please can you re-read my post which says "anyone who has been living in Thailand more than 180 days per year and brings their pension into Thailand in the same tax year as received is potentially liable for income tax on the remittance" I think you will agree your final comment does not apply to this situation.

[redwood1]

So does ExpatTax  have any thing to gain financially by hoodwinking as many expats as possible and getting them working with them with lots of fees involved?.....All for a nonsense tax..?

 

Answer.....Of course ExpatTax has plenty to gain financially......Or they would not bother even making these videos.... 

[Jaggg88]

On 8/20/2024 at 8:33 PM, MikePBrown said:

You are correct I should have used Tax Evasion rather than Tax Avoidance - thanks for the correction. However please can you re-read my post which says "anyone who has been living in Thailand more than 180 days per year and brings their pension into Thailand in the same tax year as received is potentially liable for income tax on the remittance" I think you will agree your final comment does not apply to this situation.

The Thai government has said that any tax paid under a double taxation agreement will be used as credit. My UK pensions and earnings are taxed at 20% far higher than the Thai tax rate so I will not have a Thai tax liability. The double taxation agreement says the tax will always be paid at the higher rate so I'm stuck with that or I would happily pay tax here instead of in the UK. Other countries may not be in the same position. Extract from UK Gov website and extract from PwC accountants Thailand

[jojothai]

58 minutes ago, Jaggg88 said:

The Thai government has said that any tax paid under a double taxation agreement will be used as credit. My UK pensions and earnings are taxed at 20% far higher than the Thai tax rate so I will not have a Thai tax liability. The double taxation agreement says the tax will always be paid at the higher rate so I'm stuck with that or I would happily pay tax here instead of in the UK. Other countries may not be in the same position. Extract from UK Gov website and extract from PwC accountants Thailand

 

Good, all correct as far as I am aware. But please note that the UK DTA does not cover state or private pensions as mentioned earlier.
I have not yet seen any posts confirming that they have been nailed for Thai tax on this issue. So far so good.
There is a burning question that I have not seen discussed when people refer to the UK DTA,
and think they do not have a tax liability in Thailand because the UK tax can be offset. 
Perhaps you may have seen some discussion and/ or conclusion.
As follows, simple but could be a headache for those people if the Thai tax authorities do pursue tax required.
 

In the UK, the personal allowance is set at £12,570.
If your pension is below this, then you do not need to make a UK tax return and have no UK tax to pay.
As is the case with a standard state pension, and there are people in that category.

GBP 12570 = approx 563,000 THB.

So, if resident in Thailand for 563,000 THB, there would be tax to pay on this amount.
But there was no UK tax due and you have paid no tax in UK. 
So if you have paid no tax in UK then you have no tax to offset against Thai tax.
Surely then the Thai authorities can still pursue a tax liability in Thailand?
 

[Mike Teavee]

8 hours ago, jojothai said:

In the UK, the personal allowance is set at £12,570.
If your pension is below this, then you do not need to make a UK tax return and have no UK tax to pay.
As is the case with a standard state pension, and there are people in that category.

GBP 12570 = approx 563,000 THB.

So, if resident in Thailand for 563,000 THB, there would be tax to pay on this amount.
But there was no UK tax due and you have paid no tax in UK. 
So if you have paid no tax in UK then you have no tax to offset against Thai tax.
Surely then the Thai authorities can still pursue a tax liability in Thailand?

 

Correct, there is a band between approx. 42K & 49K per month where you would owe tax in Thailand, any less than this and your TEDA will probably cover it, any more than this and you've probably paid more tax in the UK than would be due in Thailand. 

 

Your example of 563,000 THB (approx. 47K pm) is a good example of this, after deducting your allowances of at least 350K (60K personal allowance, 190K for being over 65 & 100K for "Expenses") then the 1st 150K is at 0% tax so you would owe 5% on 63K =  3,150B.

 

[chiang mai]

On 8/20/2024 at 8:54 PM, redwood1 said:

So does ExpatTax  have any thing to gain financially by hoodwinking as many expats as possible and getting them working with them with lots of fees involved?.....All for a nonsense tax..?

 

Answer.....Of course ExpatTax has plenty to gain financially......Or they would not bother even making these videos.... 

How are expats being hoodwinked, aren't they just offering a service like anywhere else?

[Raindancer]

37 minutes ago, Mike Teavee said:

 

Correct, there is a band between approx. 42K & 49K per month where you would owe tax in Thailand, any less than this and your TEDA will probably cover it, any more than this and you've probably paid more tax in the UK than would be due in Thailand. 

 

Your example of 563,000 THB (approx. 47K pm) is a good example of this, after deducting your allowances of at least 350K (60K personal allowance, 190K for being over 65 & 100K for "Expenses") then the 1st 150K is at 0% tax so you would owe 5% on 63K =  3,150B.

 

But if you are married, you add in 60k to your allowances.

 

This would bring your total allowances to 410k, add on the 1st 150k at 0% and you have 560k.  

 

563000- 560000= 3000@ 5% band.

Total tax liability =1500 baht.

[Expat68]

On 8/22/2024 at 7:11 AM, Mike Teavee said:

 

Correct, there is a band between approx. 42K & 49K per month where you would owe tax in Thailand, any less than this and your TEDA will probably cover it, any more than this and you've probably paid more tax in the UK than would be due in Thailand. 

 

Your example of 563,000 THB (approx. 47K pm) is a good example of this, after deducting your allowances of at least 350K (60K personal allowance, 190K for being over 65 & 100K for "Expenses") then the 1st 150K is at 0% tax so you would owe 5% on 63K =  3,150B.

 

Would you be able to claim expenses on your rented property?

[Mike Teavee]

1 minute ago, Expat68 said:

Would you be able to claim expenses on your rented property?

Any expenses on your UK property would be offset against your UK Taxes so I believe it’s just the net proceeds that you’re remitting to Thailand. 
 

E.G If I get £1,000 pm in rental income but spend £400 pm on agent fees, maintenance, insurance etc… I would send £7,200 to Thailand as rental income not the £12,000. 

[Expat68]

5 minutes ago, Mike Teavee said:

Any expenses on your UK property would be offset against your UK Taxes so I believe it’s just the net proceeds that you’re remitting to Thailand. 
 

E.G If I get £1,000 pm in rental income but spend £400 pm on agent fees, maintenance, insurance etc… I would send £7,200 to Thailand as rental income not the £12,000. 

I actually meant your rented property in Thailand 

[chiang mai]

13 minutes ago, Expat68 said:

Would you be able to claim expenses on your rented property?

Property that you own that you rent out and receive income from? Yes, there is a standard deduction, Category 5 income is allowed 30% of rental income as an expense, without proof or receipts, or, actual expense with receipts and proof. 

[chiang mai]

3 hours ago, Expat68 said:

I actually meant your rented property in Thailand 

Forgot to add: if you receive rent from property and you receive rent income in the first six months of the year, you must file a six month or interim tax return so two returns per year.

[Expat68]

24 minutes ago, chiang mai said:

Forgot to add: if you receive rent from property and you receive rent income in the first six months of the year, you must file a six month or interim tax return so two returns per year.

? Why can't you just work out 1st January to 31st December for Thai Tax 

[chiang mai]

4 minutes ago, Expat68 said:

? Why can't you just work out 1st January to 31st December for Thai Tax 

It's a TRD Tax Code rule, just  like self employed have to file interim returns every 6 months. If you don't receive any rent income, January thru June, no need to file.

[cjinchiangrai]

32 minutes ago, Expat68 said:

? Why can't you just work out 1st January to 31st December for Thai Tax 

You can, but you will owe interest on the late payment.

[Expat68]

3 hours ago, chiang mai said:

It's a TRD Tax Code rule, just  like self employed have to file interim returns every 6 months. If you don't receive any rent income, January thru June, no need to file.

This is getting more complicated

[chiang mai]

11 hours ago, cjinchiangrai said:

You can, but you will owe interest on the late payment.

You cannot, you must file. It's highly probable that the first six month filing will not result in any tax being due since TEDA will absorb most of the income. 20k pm rental income, less 30% standard expense deduction = 14 x 6 months is only 84k, still in the zero rated band for tax purposes.

Edited August 29 by chiang mai

[Expat68]

On 8/20/2024 at 12:04 PM, Mike Teavee said:

In a nutshell NO

 

its number of days (In Thailand) between 1st Jan & 31st Dec that count 

Question. I have a QROPS which basically has gone TITS up and I am not drawing a pension from. I have a ISA, can I move money each into this and thus avoid paying Tax because ISA'S are Tax free

[Mike Teavee]

25 minutes ago, Expat68 said:

Question. I have a QROPS which basically has gone TITS up and I am not drawing a pension from. I have a ISA, can I move money each into this and thus avoid paying Tax because ISA'S are Tax free

QROPS are treated like any other pension distribution except most are in countries that do not have a DTA with Thailand so you wouldn't have any Tax Credits you could use to offset against Tax owed in Thailand. 

 

There is no special treatment of Tax Free accounts like ISAs so anything coming out of them (Dividends, Interest, Capital Gains etc...) will be treated as assessable income just like it would if it came out of a General Investment Account & again, you wouldn't have any Tax Credits to use against Tax owed in Thailand. 

 

 

As an aside, are you still Tax Resident in the UK? If you're not then you are not allowed to Open new ISAs or add anything to existing ones. 

 

 

Edited September 5 by Mike Teavee

[sandyf]

On 8/16/2024 at 10:14 AM, sometimewoodworker said:

Quite possibly I have one however I have no idea where I would find it, I haven’t filed a U.K. tax return myself for over 40 years, I have received letters occasionally from HMRC and they may have had a tax code, I don’t recall.

I would have thought you would have received a P60 from the pension provider, but maybe not if paid gross. If you did get a P60 then your code will be on there.

I was under the impression that all pension providers, other than the government , are required to provide P60s. They not only indicate tax paid but also addressed Lifetime Allowance which was replaced this year by Lump Sum and Death Benefit Allowances.

Hope your address is current with provider, a couple of years ago I got caught out when they sent out a proof of life certificate.

[Expat68]

1 hour ago, Mike Teavee said:

QROPS are treated like any other pension distribution except most are in countries that do not have a DTA with Thailand so you wouldn't have any Tax Credits you could use to offset against Tax owed in Thailand. 

 

There is no special treatment of Tax Free accounts like ISAs so anything coming out of them (Dividends, Interest, Capital Gains etc...) will be treated as assessable income just like it would if it came out of a General Investment Account & again, you wouldn't have any Tax Credits to use against Tax owed in Thailand. 

 

 

As an aside, are you still Tax Resident in the UK? If you're not then you are not allowed to Open new ISAs or add anything to existing ones. 

 

 

I was told that I could add to existing one but that was a long time ago, things change

[Mike Teavee]

42 minutes ago, Expat68 said:

I was told that I could add to existing one but that was a long time ago, things change

Non-UK Tax Residents have never been able to add additional funds...

[This was made clear to me by my ISA Provider (Barclays) & PWC when Barclays moved me to Singapore in 2008].

 

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad

Edited September 5 by Mike Teavee