Taxing Question

[tonika]

I am a UK citizen living in Thailand. At present I receive 3 (UK) Local Government pensions that are paid into my UK bank account, which have tax deducted at source. In June I am entitled to the State pension ( again liable to UK tax ).

Can anyone tell me whether it's possible to have the pensions taxed here in Thailand rather than the UK. The reason being that I feel I get little benefit now from the UK, in the form off help. For instance, once you've left the UK for 6 months, you are not entitled to use the NHS. My Sate pension is frozen, due to living abroad. And they also stop your Winter Fuel Payment allowance.

While I suppose I would still be liable for the same amount of tax deduction in Thailand from my pensions income, I am using the facilities here, and feel I should make a contribution. Whether the tax can be deducted here rather than the UK, is another matter.

[wordchild]

short answer is no. the double taxation treaty between thailand and the uk specifically excludes pensions. for personal pensions (not in payment) there is the option to switch the fund into a qrop but ,from what you say, this would not be relevant in your situation.

Edited February 5, 2013 by wordchild

[breadbin]

I am no tax expert.

Why would you pay tax in the UK if you are not domiciled there? Why is it not tax free?

Sorry if it obvious but I don't understand.

Thanks.

[Gulfsailor]

I am no tax expert.

Why would you pay tax in the UK if you are not domiciled there? Why is it not tax free?

Sorry if it obvious but I don't understand.

Thanks.

I don't know specifics of pensions in the UK, but generally you save up for pension tax free, meaning you pay onto the plan with gross income. Then when receiving the pension you pay the tax, often at a much lower rate due to certain premiums not being applicable anymore, and being in a lower tax bracket. A pension delays your tax liability to a later date.

[manarak]

I am no tax expert.

Why would you pay tax in the UK if you are not domiciled there? Why is it not tax free?

Sorry if it obvious but I don't understand.

Thanks.

It's not tax free because the government needs money and first decided to tax the pensions, and then decided to also tax the pensions of citizens living abroad. It's all done for filling the tax coffers, there is no other reason.

[meatboy]

you just have to grin and bare it,at least when you reach state pension age[soon] your personel allowance in the uk goes up quite considerably.if you plan to live here permantly you can have savings accounts that are paying better interest rates more than what you get in the uk.and you can claim any tax you pay up to 20,000bht.dont forget those 3 pensions you have at the moment you got tax relief on them.so if you feel that moving to thailand doesnt allow you to get the benefits you think your entitled tooooooooooooo stay where you are.it is hot here mind

[wordchild]

I am no tax expert.

Why would you pay tax in the UK if you are not domiciled there? Why is it not tax free?

Sorry if it obvious but I don't understand.

Thanks.

It's not tax free because the government needs money and first decided to tax the pensions, and then decided to also tax the pensions of citizens living abroad. It's all done for filling the tax coffers, there is no other reason.

This is not really the case, if you reside in certain countries (eg New Zealand) it is possible to have your pension paid from the UK without tax first being deducted. The Uk wants to be sure you are paying tax somewhere hence gross payments are only allowed to countries where the govt to govt tax treaty covers pensions and provides for you to be taxed on your pension in the country where you reside. The Thailand/UK tax treaty does not cover pensions so not possible if you live in Thailand. Edited February 5, 2013 by wordchild

[gdhm]

I had not appreciated that UK pensions fell outside double taxation treaties between UK and Thailand but have not looked into it anyway as am taxed at source in the UK.

The last Post by Wordchild has raised an uncertainlty in my mind with regard to my wife's future pension if I predecease her (likely as I am 12 years older) .

When I die my Thai wife (permanently resident in Thailand) will get around 50% of my UK Company Pension Group Scheme. Am I correct in assuming that as she is NOT a UK citizen that HER pension will be paid Gross of UK tax irrespective of the Thailand/UK tax treaty OR will she have to pay UK tax as the pension is from a UK Pension Scheme (I hope not as I do not understand how she would get a Tax Code as a Non UK Citizen and Non UK resident)

Thanks

[wordchild]

I had not appreciated that UK pensions fell outside double taxation treaties between UK and Thailand but have not looked into it anyway as am taxed at source in the UK.

The last Post by Wordchild has raised an uncertainlty in my mind with regard to my wife's future pension if I predecease her (likely as I am 12 years older) .

When I die my Thai wife (permanently resident in Thailand) will get around 50% of my UK Company Pension Group Scheme. Am I correct in assuming that as she is NOT a UK citizen that HER pension will be paid Gross of UK tax irrespective of the Thailand/UK tax treaty OR will she have to pay UK tax as the pension is from a UK Pension Scheme (I hope not as I do not understand how she would get a Tax Code as a Non UK Citizen and Non UK resident)

Thanks

getting a bit complex here !

i am afraid my feeling would be that she would not be able to get it paid gross if she was a resident of Thailand at the time, however i am not a pensions expert and you need to get some proper advice on this. why not start by asking your pension administrator. BTW there is supposed to be a new UK/Thailand taxation treaty in the works, nothing published so far ,that i have seen, but you never know it may cover pensions this time. try to hang on till then!

Edited February 6, 2013 by wordchild

[davejones]

If your state pension is your only income from the UK, then you won't pay tax because the total annual pension is way below the personal allowance. So even if you were living in the UK you won't pay any tax.

[breadbin]

If your state pension is your only income from the UK, then you won't pay tax because the total annual pension is way below the personal allowance. So even if you were living in the UK you won't pay any tax.

I think this is correct, my mother does not need to pay tax on her pension as its below a certain threshold.

So again why pay tax if you live outside UK?

Just interested as I'm nowhere near retirement age.

[wordchild]

If your state pension is your only income from the UK, then you won't pay tax because the total annual pension is way below the personal allowance. So even if you were living in the UK you won't pay any tax.

you are right to point this out. gdhm does say its a company scheme (rather than state) and does not say how large it is; but i would have thought that his wife would be able to make use of her uk personal allowance if she became a UK taxpayer.

[meatboy]

I had not appreciated that UK pensions fell outside double taxation treaties between UK and Thailand but have not looked into it anyway as am taxed at source in the UK.

The last Post by Wordchild has raised an uncertainlty in my mind with regard to my wife's future pension if I predecease her (likely as I am 12 years older) .

When I die my Thai wife (permanently resident in Thailand) will get around 50% of my UK Company Pension Group Scheme. Am I correct in assuming that as she is NOT a UK citizen that HER pension will be paid Gross of UK tax irrespective of the Thailand/UK tax treaty OR will she have to pay UK tax as the pension is from a UK Pension Scheme (I hope not as I do not understand how she would get a Tax Code as a Non UK Citizen and Non UK resident)

Thanks

did your wf.ever work in the uk.if so she would have a ni.no.my wf worked 19yrs so she gets a state pension when 66 but i to have a company pension and on my passing away she will get 50% for life.as she has no other income now in the uk she will not be taxed.one thing you must do is make sure the company has her name and address and your pension is stated in your will so when you pass away your exacutor or lawyer will help her get it.we have done all ours so try and get a good lawyer.if you live in isaan pm me and i will recomend a good one.

[gdhm]

I had not appreciated that UK pensions fell outside double taxation treaties between UK and Thailand but have not looked into it anyway as am taxed at source in the UK.

The last Post by Wordchild has raised an uncertainlty in my mind with regard to my wife's future pension if I predecease her (likely as I am 12 years older) .

When I die my Thai wife (permanently resident in Thailand) will get around 50% of my UK Company Pension Group Scheme. Am I correct in assuming that as she is NOT a UK citizen that HER pension will be paid Gross of UK tax irrespective of the Thailand/UK tax treaty OR will she have to pay UK tax as the pension is from a UK Pension Scheme (I hope not as I do not understand how she would get a Tax Code as a Non UK Citizen and Non UK resident)

Thanks

did your wf.ever work in the uk.if so she would have a ni.no.my wf worked 19yrs so she gets a state pension when 66 but i to have a company pension and on my passing away she will get 50% for life.as she has no other income now in the uk she will not be taxed.one thing you must do is make sure the company has her name and address and your pension is stated in your will so when you pass away your exacutor or lawyer will help her get it.we have done all ours so try and get a good lawyer.if you live in isaan pm me and i will recomend a good one.

Thanks for the replies

Maneater in answer to your question. My wife has always lived in Thailand. She is not eliglible for a UK State pension after my death (unlike many of my EU friends wives with their Countries State Pensions).

It would appear that her pension form my UK Company Group Scheme pension will fall just under the UK Personal tax free allowance so she would be OK. UNLESS the UK Govt(s) do ANOTHER number on us non EU Expats and change rules to not allow a Tax free allowance allowances for Non UK /EU Expats (or our foreign resident spouses).

UK Govts seem obsessed with treating us Non EU expats (and a few minor exceptions) like 3rd class UK citizens these days using any flimsy excuse to devalue our benefits, Healthcare & State Pensons earned with decades of tax and NI payments.

Dave

Edited February 7, 2013 by gdhm