Tax On Uk Pension

[Namphonny]

Hi All,

I recently visited the taxman in the UK and was surprised to learn that under the terms of the double taxation agreement between the UK and Thailand, someone who is non-resident and receiving a pension is entitled to have all the tax deducted by the Thai authorities instead of paying tax at source in the UK.

My question is - is it advantageous to do this? Presumably the pension would be paid gross but all allowances would be lost. Apparently there is not much in the way of allowances from the Thai tax authorities but the tax rate is 7% against 25% in the UK so the difference may greater.

Nam

[yogi100]

You might save a bit of tax but problems could arise in the future regarding health care in the UK and increments in the state pension. We never know what's round the corner and once the government knows you are no longer a UK resident it'll do all it can to save a few quid. A friend of mine recently had a heart attack in Pattaya, his bill came to 13,500 GBPs and that was just having a few stents inserted not a bypass operation. He is back in the UK now and seems OK now but learned an expensive and important lesson for the future.

He was considering retiring to Hua Hin but has now changed his mind. Or you could say a change of heart.

[MAJIC]

Without knowing the Thai Taxation System,as opposed to the UK Taxation system,it would be difficult to work out accurately,which of the two systems would be more to your advantage?

However the UK taxation for Retirees (65 years old) is:

£9940 Annual Allowances (exempt from taxes)

The First Income Tax to be paid starts @ 20% Rate

which is £0 to £37,400 Income (above your allowances) anything above £37,400 is Taxed @ 40% Rate.

If you are living in Thailand,you will not be entitled to Annual UK State Pension Increases.

And It is against the law not to declare that you are non resident in the UK.

[elliss]

You might save a bit of tax but problems could arise in the future regarding health care in the UK and increments in the state pension. We never know what's round the corner and once the government knows you are no longer a UK resident it'll do all it can to save a few quid. A friend of mine recently had a heart attack in Pattaya, his bill came to 13,500 GBPs and that was just having a few stents inserted not a bypass operation. He is back in the UK now and seems OK now but learned an expensive and important lesson for the future.

He was considering retiring to Hua Hin but has now changed his mind. Or you could say a change of heart.

REDICULOUS .

£13.500

i would rather die,

on my teelaks thigh.

:jap:

[Soutpeel]

This applies to a state pension or a private pension ?

[Namphonny]

This applies to a state pension or a private pension ?

It would seem to apply to all pensions.

[Namphonny]

Without knowing the Thai Taxation System,as opposed to the UK Taxation system,it would be difficult to work out accurately,which of the two systems would be more to your advantage?

Thanks, but how to find out about the Thai taxation system without putting your head on the chopping block?

[AyG]

Rather than waste time checking up on Thai taxation, the OP should check the basic facts:

(1) There is a double taxation agreement for government pensions, i.e. pensions paid to retired government employees. There is no agreement for state or private pensions.

(2) Double taxation agreements are effectively to stop income being taxed twice. In the UK you can get tax credit for tax paid overseas where a double taxation agreement exists, but if the UK tax rate is higher than the overseas rate you have to pay the difference between the tax credit and the UK tax rate to the UK authorities.

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

[steve187]

As posted earlier the uk tax exempt allowance for over 65's, is £9940, so all state old age pensions are tax free, its only when other income/pensions, when added exceed this amount that tax is liable on this money over the allowance,and a tax coding would be issued against the source of this income.

[Soutpeel]

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

Thats what I thought...

[cardholder]

You might save a bit of tax but problems could arise in the future regarding health care in the UK and increments in the state pension. We never know what's round the corner and once the government knows you are no longer a UK resident it'll do all it can to save a few quid. A friend of mine recently had a heart attack in Pattaya, his bill came to 13,500 GBPs and that was just having a few stents inserted not a bypass operation. He is back in the UK now and seems OK now but learned an expensive and important lesson for the future.

He was considering retiring to Hua Hin but has now changed his mind. Or you could say a change of heart.

Surely his health insurance covered that ?

[letitbe]

Rather than waste time checking up on Thai taxation, the OP should check the basic facts:

(1) There is a double taxation agreement for government pensions, i.e. pensions paid to retired government employees. There is no agreement for state or private pensions.

(2) Double taxation agreements are effectively to stop income being taxed twice. In the UK you can get tax credit for tax paid overseas where a double taxation agreement exists, but if the UK tax rate is higher than the overseas rate you have to pay the difference between the tax credit and the UK tax rate to the UK authorities.

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

nonsense my wife has a letter from UK IR explaining that under double taxation agreement my wifes UK income can be free of UK tax if she provides a Thai tax reference and papers. Shes not entitled to any Uk tax allowance since shes not UK resident or a UK citizan and we had difficult choice of do we open a possible can of worms by using this to save some tax or just let UK tax her UK income. Tax allowances here are for individual 200,000 pa(raised from 100,000 by last Dem government) and then if I recall correctly 35000 for each dependent so here my wife can claim 200000 pa plus around 105000 for 3 dependents being me (yes thats allowed) and our 2 children. then like UK tax is progressive with top rate if I recall and it not changed of 47%. Of course most people TIT slip some tea money to have a lower assessment made. I wish people here would stop talking total crap. Just go and ask IR in UK and a tax consultant here not that you always get correct answer from them but ill rely on that more than some ignorant posting here.

[letitbe]

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

Thats what I thought...

correct it is subject to UK tax but as stated were told by UK tax people provided you pay Thai tax their is a double taxation agreement which in my wifes case applies to investment income not pension so I dont know if it extends to pension income or not but just ask UK IR they are very helpful although often takes months to get a proper answer and you have to go past idiots who man help lines who obviously have no clue at all and just refer you to leaflets which are not always clear particularly for ex pats and their spouses or children

[letitbe]

Rather than waste time checking up on Thai taxation, the OP should check the basic facts:

(1) There is a double taxation agreement for government pensions, i.e. pensions paid to retired government employees. There is no agreement for state or private pensions.

(2) Double taxation agreements are effectively to stop income being taxed twice. In the UK you can get tax credit for tax paid overseas where a double taxation agreement exists, but if the UK tax rate is higher than the overseas rate you have to pay the difference between the tax credit and the UK tax rate to the UK authorities.

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

From UK IR site some of it not quite up to date

DT18650+ - Double Taxation Relief Manual: Contents

Admissible and inadmissible taxes

List of countries (in alphabetical order)

Thailand

<a href="http://www.hmrc.gov.uk/manuals/dtmanual/DT18650.htm" style="text-decoration: underline; color: rgb(0, 51, 170); ">DT18650

Thailand: Agreement

DT18651

Thailand: Credit

DT18652

Thailand: Source of income

DT18653

Thailand: Subject to tax

DT18654

Thailand: Dividends

DT18655

Thailand: Students, trainees

DT18656

Thailand: Tax spared

DT18657

Thailand: Relief from Thai tax

DT18658

DT: Thailand: Underlying Tax

DT18700

DT: Thailand: double taxation agreement, Article 1: Personal scope

DT18701

DT: Thailand: double taxation agreement, Article 2: Taxes covered

DT18702

DT: Thailand: double taxation agreement, Article 3: General definitions

DT18703

DT: Thailand: double taxation agreement, Article 4: Fiscal domicile

DT18704

DT: Thailand: double taxation agreement, Article 5: Permanent Establishment

DT18705

DT: Thailand: double taxation agreement, Article 6: Limitation of relief

DT18706

DT: Thailand: double taxation agreement, Article 7: Income from immovable property

DT18707

DT: Thailand: double taxation agreement, Article 8: Business profits

DT18708

DT: Thailand: double taxation agreement, Article 9: Air transport

DT18709

DT: Thailand: double taxation agreement, Article 10: Associated enterprises

DT18710

DT: Thailand: double taxation agreement, Article 11: Dividends

DT18711

DT: Thailand: double taxation agreement, Article 12: Interest

DT18712

DT: Thailand: double taxation agreement, Article 13: Royalties

DT18713

DT: Thailand: double taxation agreement, Article 14 Capital gains

DT18714

DT: Thailand: double taxation agreement, Article 15 Independent personal services

DT18715

DT: Thailand: double taxation agreement, Article 16: Dependent personal services

DT18716

DT: Thailand: double taxation agreement, Article 17 Directors' fees

DT18717

DT: Thailand: double taxation agreement, Article 18: Artistes and athletes

DT18718

DT: Thailand: double taxation agreement, Article 19: Governmental services

DT18719

DT: Thailand: double taxation agreement, Article 20: Students

DT18720

DT: Thailand: double taxation agreement, Article 21: Teachers

DT18721

DT: Thailand: double taxation agreement, Article 22: Diplomatic and consular privileges

DT18722

DT: Thailand: double taxation agreement, Article 23: Elimination of double taxation

DT18723

DT: Thailand: double taxation agreement, Article 24: Non-discrimination

DT18724

DT: Thailand: double taxation agreement, Article 25: Mutual agreement procedure

DT18725

DT: Thailand: double taxation agreement, Article 26: Exchange of information

DT18726

DT: Thailand: double taxation agreement, Article 27: Entry into force

DT18727

DT: Thailand: double taxation agreement, Article 28: Termination

[billd766]

I am paying tax on my pensions and HMRC told me that tax is taken from any pension deemed to be earned in the UK.

Therefore the UK State Pension is not taxable, my military pension is taxable and my company pension is also taxable because although I worked offshore for a few years because the company was UK based my salary and taxes were paid and deducted in the UK.

If I had been employed by a company NOT based in the UK I would not pay any taxes on that pension.

[AyG]

Letitbe, I can't be bothered wasting my time looking at all the random links you've posted.

I have two questions:

(1) What nationality is your wife? If not British, then what you posted is irrelevant to the topic in hand.

(2) What part of what I posted is incorrect for a non-resident British national? (A single sentence or a single link would be good.)

[letitbe]

I am paying tax on my pensions and HMRC told me that tax is taken from any pension deemed to be earned in the UK.

Therefore the UK State Pension is not taxable, my military pension is taxable and my company pension is also taxable because although I worked offshore for a few years because the company was UK based my salary and taxes were paid and deducted in the UK.

If I had been employed by a company NOT based in the UK I would not pay any taxes on that pension.

correct but you can I believe get it changed if you live here and pay Thai tax under double taxation agreement

[billd766]

I am paying tax on my pensions and HMRC told me that tax is taken from any pension deemed to be earned in the UK.

Therefore the UK State Pension is not taxable, my military pension is taxable and my company pension is also taxable because although I worked offshore for a few years because the company was UK based my salary and taxes were paid and deducted in the UK.

If I had been employed by a company NOT based in the UK I would not pay any taxes on that pension.

correct but you can I believe get it changed if you live here and pay Thai tax under double taxation agreement

If I could get it done for all 3 it would be worth it but not for just the one pension as that is the smallest.

[Namphonny]

Rather than waste time checking up on Thai taxation, the OP should check the basic facts:

(1) There is a double taxation agreement for government pensions, i.e. pensions paid to retired government employees. There is no agreement for state or private pensions.

(2) Double taxation agreements are effectively to stop income being taxed twice. In the UK you can get tax credit for tax paid overseas where a double taxation agreement exists, but if the UK tax rate is higher than the overseas rate you have to pay the difference between the tax credit and the UK tax rate to the UK authorities.

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

I would be most interested , and grateful, for your source of this information.

I have in front of me a form sent by HM Revenue and Customs - Form DT/Individual.

I quote:

"Application for relief at source from United Kingdom income tax and CLAIM to repayment of United Kingdom income tax"

".....provides for relief from UK income tax on pensions........."

I don't pretend to understand this but am trying to work out whether it would be to my advantage to complete this form and submit it. The tax officer in the UK assured me that it would be. Thai friends advise against it and point to the can of worms scenario.

[nong38]

You might save a bit of tax but problems could arise in the future regarding health care in the UK and increments in the state pension. We never know what's round the corner and once the government knows you are no longer a UK resident it'll do all it can to save a few quid. A friend of mine recently had a heart attack in Pattaya, his bill came to 13,500 GBPs and that was just having a few stents inserted not a bypass operation. He is back in the UK now and seems OK now but learned an expensive and important lesson for the future.

He was considering retiring to Hua Hin but has now changed his mind. Or you could say a change of heart.

A heart by pass here you are looking at 30k up.

Dont burn your bridges and I think tax in the UK .

is 20% so now you are 5% better off already

Whent hey know you are here, they will also freeze your inflation increases on your state pension for you as well, so plan carefully, you might consider defering your pension every year you do they will increase it by 10.4% plus the annual increase and dont take the lump sum offered its not cost effective!

Edited November 29, 2011 by nong38

[nong38]

This applies to a state pension or a private pension ?

It would seem to apply to all pensions.

It does apply to my company pension, so state only.

[yogi100]

You might save a bit of tax but problems could arise in the future regarding health care in the UK and increments in the state pension. We never know what's round the corner and once the government knows you are no longer a UK resident it'll do all it can to save a few quid. A friend of mine recently had a heart attack in Pattaya, his bill came to 13,500 GBPs and that was just having a few stents inserted not a bypass operation. He is back in the UK now and seems OK now but learned an expensive and important lesson for the future.

He was considering retiring to Hua Hin but has now changed his mind. Or you could say a change of heart.

Surely his health insurance covered that ?

He'd let it lapse.

[letitbe]

Letitbe, I can't be bothered wasting my time looking at all the random links you've posted.

I have two questions:

(1) What nationality is your wife? If not British, then what you posted is irrelevant to the topic in hand.

(2) What part of what I posted is incorrect for a non-resident British national? (A single sentence or a single link would be good.)

i also cant be bothered with your total ignorance and links are directly from UK Inland revenue web site if you want to stay ignorant not my problem and I already stated in my post my wife is not a UK citizen or Uk resident and its still relevant since all income derived in UK for whatever national is subject to Uk tax and also covered by UK Thailand reciprocal tax arrangements Just bother to get facts from UK IR site or contact them direct or do you prefer to mislead and continue to post nonsense but up to you Ill leave it to others to look for themselves at UK Ir site contact UK tax people and check with a Thai tax accountant which I have done both for my Thai wifes Uk income and for my UK income as well as our children's UK income and for that matter our income in States and here as well as Singapore and Hong Kong Up to you and others to stay ignorant if they wish my posts are for those who want facts and can easily check themselves without to much trouble and not for those who in their arrogance believe they know Uk and Thai tax laws Its all in public domain so just go look for it

[Billmont]

The best way to get your pension Tax Free (Not State Pension) is to transfer it to a QROPS (Qualifying Recognised Overseas Pension Schemes). There are a few regulations, you must reside outside of the UK, you must expect to live outside the UK for 5 years and then if you return your pension can still stay within the QROPS. You can still take your 25/30% tax free and when you draw your pension it is completely tax free. Your state pension would not be taxed as most likely under your tax free allowance. However your state pension will not be subject to the annual increase. There are many companies that operate QROPS, most are in the Channel Islands or IOM and still regulated by the UK for protection. You need to find a broker outside of the UK, there are such brokers in Bangkok. If you return back to the UK within the 5 years you may have to pay tax on any pensions received tax free.

Regarding paying tax on your pension in the UK does not, as suggested in some posts, keep you covered by the UK NHS. If you live outside the UK for more than a 6 month period in any year you are no longer covered by the NHS and would have to pay for all medical/hospital costs. A friend of mine needs stints, not urgent and went back to the UK, he was told that he would have to remain in the UK for a 6 month period to qualify for free NHS. He had been receiving NHS prescriptions while living in Thailand, he now has been informed that he must pay for all the presciptions he has received. It clearly states in the NHS regulations that being a UK tax payer alone does not qualify you for free NHS treatment, you must be a UK resident or reside in the UK for 6 months prior to receiving free treatment.

[chiang mai]

You might save a bit of tax but problems could arise in the future regarding health care in the UK and increments in the state pension. We never know what's round the corner and once the government knows you are no longer a UK resident it'll do all it can to save a few quid. A friend of mine recently had a heart attack in Pattaya, his bill came to 13,500 GBPs and that was just having a few stents inserted not a bypass operation. He is back in the UK now and seems OK now but learned an expensive and important lesson for the future.

He was considering retiring to Hua Hin but has now changed his mind. Or you could say a change of heart.

A heart by pass here you are looking at 30k up.

Dont burn your bridges and I think tax in the UK .

is 20% so now you are 5% better off already

Whent hey know you are here, they will also freeze your inflation increases on your state pension for you as well, so plan carefully, you might consider defering your pension every year you do they will increase it by 10.4% plus the annual increase and dont take the lump sum offered its not cost effective!

Not to stray too far off track, but:

Angioplasty or stenting at GBP 13,500 is the UK price in a Spire (private) hospital, the Thai private hospital price is substantially less, around THB 200k for one bare metal stent.

Also, CABG (bypass) surgery is around THB 500k at Bumrungrad and not 30k (assuming GBP).

[rak sa_ngop]

(3) For a non-resident, all UK income remains subject to UK income tax. This includes all UK pension income. There is no way to get around this.

Thats what I thought...

Not strictly true as there are some benefits and pensions that are not subject to UK income tax, such as War Widows pension etc.

Unless of course being non-resident suddenly makes them taxable?

[theoldgit]

However the UK taxation for Retirees (65 years old) is £9940 Annual Allowances (exempt from taxes)

And It is against the law not to declare that you are non resident in the UK.

Whilst it's true that the age related personal allowance is £9940, it's important to point out that this allowance reduce where the income is above the income limit for age-related allowances by £1 for every £2 of income above the limit so us oldies can revert to the standard personal allowance.

I'm not sure that it's against the law to declare you're non-resident in the UK, but what is against the law is to claim the increases, and various other benefits, when you are not entitled as you are living in Thailand, which I assume is what you meant.

As a matter of interest the Thai tax rules can be found by opening this link. http://www.rd.go.th/publish/6045.0.html

[wordchild]

If you live in certain countries it is true that it is possible to have your pension paid gross (no tax deducted) from the UK and the tax then becomes due in the country where you reside . It depends on the taxation treaty that applys between the UK and the country where you are resident. These treaties are bilateral and vary from country to country.

Sadly the OP was misinformed by whomever he spoke with at the revenue, as the current double taxation agreement between the UK and Thailand does not cover pensions, though it does cover other types of income.

much of the discussion above is therefore irrelevant. If you live in Thailand it is not possible to have your UK pension paid without (UK) tax being deducted.

Edited December 1, 2011 by wordchild

[citizen33]

As stated earlier, paying income tax does not bring an entitlement to NHS treatment, but it might be useful if one ever needed to establish intention to resume permanent residence in the UK. The statement in a post above that one needs to have been in the UK for six months before becoming eligible for hospital care is not correct. This is what the DoH says:

Are you taking up or resuming permanent residence in the UK?

What if I should need hospital treatment?

Under the current Regulations, anyone who is taking up or resuming permanent residence in the UK is entitled to free National Health Service (NHS) hospital treatment in England. If your intention is to live permanently in the UK you will be exempt from hospital charges from the date of your arrival in the country but you should expect to be asked to prove your intention and that you are legally entitled to live here. This exemption applies to your spouse, civil partner and children (under the age of 16, or 19 if in further education) if they are living here with you on a permanent basis.

http://www.dh.gov.uk/en/Healthcare/Entitlementsandcharges/OverseasVisitors/Browsable/DH_074376

[chiang mai]

As stated earlier, paying income tax does not bring an entitlement to NHS treatment, but it might be useful if one ever needed to establish intention to resume permanent residence in the UK. The statement in a post above that one needs to have been in the UK for six months before becoming eligible for hospital care is not correct. This is what the DoH says:

Are you taking up or resuming permanent residence in the UK?

What if I should need hospital treatment?

Under the current Regulations, anyone who is taking up or resuming permanent residence in the UK is entitled to free National Health Service (NHS) hospital treatment in England. If your intention is to live permanently in the UK you will be exempt from hospital charges from the date of your arrival in the country but you should expect to be asked to prove your intention and that you are legally entitled to live here. This exemption applies to your spouse, civil partner and children (under the age of 16, or 19 if in further education) if they are living here with you on a permanent basis.

http://www.dh.gov.uk...sable/DH_074376

Is the correct answer.