Double Taxation Laws - Re Uk Pensions/Interest

[tonika]

Anyone had any experience, or give me advice concerning the double taxation laws that exist between the UK and Thailand, with regards UK pensions and Interest (from overseas)?.

[sinbin]

UK pensions has nothing to do with tax. Surely it's to do with 'National Insurance' ? 'Interest' ? Are you talking about bank savings interest earned in Thailand ?

Edited August 11, 2011 by sinbin

[binnsy]

UK pensions has nothing to do with tax. Surely it's to do with 'National Insurance' ? 'Interest' ? Are you talking about bank savings interest earned in Thailand ?

I have a company pension and pay UK tax on it However I have it paid into a bank account in Thailand and pay tax again on the interest.

[meatboy]

never mind how much you trans.to thailand through the banks and declared what its for you will not be taxed,if you put it into for example a fixed acc.paying interest you will pay 15% tax on the int.only.

[jay-uk]

You may find the information on HMRC website useful. My understanding when a treaty exists is that you pay in only one country either UK or Thailand:

http://www.hmrc.gov.uk/si/double.htm

[sinbin]

UK pensions has nothing to do with tax. Surely it's to do with 'National Insurance' ? 'Interest' ? Are you talking about bank savings interest earned in Thailand ?

I have a company pension and pay UK tax on it However I have it paid into a bank account in Thailand and pay tax again on the interest.

I think I understand you. You are not being double taxed on your pension !! You are paying UK tax on your pension and tax on monies interest after it's entered Thailand. Two seperate taxes which is normal. I do the same.

[tonika]

Thanks for all the replies. I did manage to get the ' Digest of Current Double Taxation Treaties - 2011 ' from HMR&C. Unfortunately, I'm no computer whizkid. I tried to get it onto this reply, but failed. Maybe someone out there could. If you go to :http://www.hmrc.gov....r/dt.digest.pdf if interested.

For example, THAILAND it states under - 1. INTEREST = 25% Relief (ST) and see Note 2.

( ST = The Income must be subject to tax in the territory to Qualify from UK tax.)

( Note 2 = 10% or Full Relief in certain circumstances)

2. Government Pensions = Full Relief ( N&R)

( N&R = Relief ( or allowances) available ONLY where the individual is both A National and a Resident of the territory )

3. Other Pensions/Annuities = No Relief see note 4

( Note 4 = Treaty does NOT include an article dealing with Non -Government pensions. Also, No Relief for STATE PENSION or ' trivial communication lump sum'. ( I haven't a clue what that means)

Hence my question, about Double Taxation Laws - the way I read it you get 25% tax relief for Bank Interest. But, in certain circumstances 10% or full relief. ( What are the circumstances ?) And relief on some pensions but not the State Pension.

* Not that it applies to Thailand, but it appears that in some countries you can even get your Incapacity Benefit paid under this Double Taxation Law..

[SantiSuk]

I don't know all the answers and I suspect this is a more complex question than respondents are making it out to be. I'll have a shot at pushing the topic further forward but I believe that problems with threads on taxation are fraught with difficulties of people generally wishing to 'lie low' or avoid being told how wrong they have been. Also most people hate paying for advice so a million people run around like me with half-baked ideas about the principles and practices. If you want to be absolutely sure you have to pay for advice specific to your own circumstances.

That said, here goes ...

A foreigner who lives in Thailand for more than 180 days in a tax year (the calendar year) is considered a Thai resident for tax purposes. A resident is required to file taxes in Thailand on all income received within Thailand as well as income received from foreign sources brought into Thailand.

Does anyone out there know if pension income is treated and taxed the same way as earned income in Thailand?

If the answer is yes then, because your pension is paid directly into a Thai bank account you would be required to file a tax return in Thailand and declare your UK pension income. However you would be able to offset any UK taxation paid on your pension income against any Thai taxation due on that income received in Thailand. That's what a Double Taxation treaty is about - making sure that you do not get taxed in two countries on the same income (although a double tax treaty can result in you paying tax at the higher of the two country's rates). It is very unlikely that you would pay additional taxation to the Thai authorities on your pension income but you would have to register and file with them. I suspect many falang in this situation just lie low and don't bother, but as I read the various English translations of Thai tax laws and knowing UK tax provisions and the principles of double taxation agreements reasonably well it seems to me that a reputable tax adviser would so advise you.

The interest income on your Thai account is clearly income received within Thailand and taxable in Thailand if you 'live in Thailand for more than 180 days'. However if the interest on your bank account in Thailand is modest then by itself it will probably be less than the personal allowances available to you on your Thai tax return, so that no tax may ultimately be payable (other than any tax deducted at source by the bank in Thailand, which even then may be reclaimable from Thai taxation authorities - I don't know how tax on interest is collected in Thailand yet - anyone help out here?)

Unless you have declared to be non resident to HMRC in the UK *, the Thai bank interest is taxable in the UK but an offset can be claimed for any taxation you suffer in Thailand under the Double Taxation treaty (ie it works both ways in protecting you from being taxed on the same income in two countries). If you already file a UK tax return then you would need to include the Thai income in your UK return and study the notes carefully how to claim the tax relief for taxation suffered in Thailand. If, as I suspect, you do not complete a tax return then call HMRC and let them know roughly how much it is and how much Thai tax you suffer: it is possible that they will choose to ignore it as de minimis, otherwise they will adjust the tax coding given to your pension payer or insist on you filing a UK tax return.

It may well be that I have yet to learn something significant - like all pensioners pay no tax on pensions in Thailand. I will be delighted for others with authoritative advice on Thai tax treatments of pension income and interest income to correct any inaccuracies above

* If you have declared non-residence to UK HMRC and completed the necessary forms 'on leaving the UK' then you would need to talk to HMRC and your pension payer to get UK taxation stopped. I doubt you have done this otherwise you would be demonstrating far more knowledge than your basic enquiry implies

Edited August 11, 2011 by SantiSuk

[GeorgeO]

Thanks for all the replies. I did manage to get the ' Digest of Current Double Taxation Treaties - 2011 ' from HMR&C. Unfortunately, I'm no computer whizkid. I tried to get it onto this reply, but failed. Maybe someone out there could. If you go to :http://www.hmrc.gov....r/dt.digest.pdf if interested.

For example, THAILAND it states under - 1. INTEREST = 25% Relief (ST) and see Note 2.

( ST = The Income must be subject to tax in the territory to Qualify from UK tax.)

( Note 2 = 10% or Full Relief in certain circumstances)

2. Government Pensions = Full Relief ( N&R)

( N&R = Relief ( or allowances) available ONLY where the individual is both A National and a Resident of the territory )

3. Other Pensions/Annuities = No Relief see note 4

( Note 4 = Treaty does NOT include an article dealing with Non -Government pensions. Also, No Relief for STATE PENSION or ' trivial communication lump sum'. ( I haven't a clue what that means)

Hence my question, about Double Taxation Laws - the way I read it you get 25% tax relief for Bank Interest. But, in certain circumstances 10% or full relief. ( What are the circumstances ?) And relief on some pensions but not the State Pension.

* Not that it applies to Thailand, but it appears that in some countries you can even get your Incapacity Benefit paid under this Double Taxation Law..

You pay UK Income Tax on your pension income (after deduction of your allowance).

You transfer your pension to Thailand and put it in a bank. The amount of your pension you put into your account is not taxed.

You earn interest on your pension in the Thai bank. This is taxed at 15% (there is no allowance).

These are totally separate taxes.

[sinbin]

You pay UK Income Tax on your pension income (after deduction of your allowance).

You transfer your pension to Thailand and put it in a bank. The amount of your pension you put into your account is not taxed.

You earn interest on your pension in the Thai bank. This is taxed at 15% (there is no allowance).

These are totally separate taxes.

'GeorgeO', that is exactly how I see it . Nothing more, nothing less. It seems the OP can't come to terms that he has to pay tax here being as he pays tax in the UK. But if he gained interest on his pension, which he puts in to his UK bank. then he be taxed on that in the UK. Two separate taxes. Normal practice.