Tax liablity

[colinchaffers]

I have a Isle of Man pension and wondered if due to the DTA between Thailand the UK I'm free of tax if I move the money to Thailand?

[orientalist]

The way I understand the DTA wording is that a civil service pension is completely exempt from tax but other pensions are treated according to a tax credit system. This means tax paid on the pension in the UK would be used as a tax credit against tax due on the pension in Thailand. If you pay no tax in the UK, there's no credit applied. What the Thai tax people do in practice is another matter. It's safer to move your pension deposits to Thailand the year after you receive them.

Apparently, folks on a retirement visa don't get hassled to pay tax in Thailand - but that could change in the future.

[colinchaffers]

Many thanks for that, I think the key thing I will do is to move the funds the year after they are reliased and therefore do not fall into the current tax year and keep my ears and eyes open to any new information.

[SantiSuk]

If you mean that you have a pension fund that is not yet in payment then their may well be benefits in moving your fund offshore into a QROPS. You do not have to 'bring it to Thailand' to take it outside the UK tax net. I had a QROPS set up for me in Gibraltar, managed by a reputable well-known pension administration outfit based in Haywards Heath.

The main benefits are that there will be very little restriction (ie tax downside) on the amount I can take as a lump sum should I choose/when I choose to take value out of the fund. The downsides are that you lose some of the regulatory protections of (probably) the most advanced and stable financial/financial regulatory system in the world and that you have to be very careful in the choice of adviser - reputedly there are rogues out there! There are also costs which mean that it is probably only worth while if your fund is worth several hundred thou pounds.

There is no way that one would set up a QROPS in Thailand itself (not even sure that is on offer!) or otherwise "move the money to Thailand". You are probably gaining little on taxation. Thailand is not a particularly low tax regime and it is certainly far less secure than many other developed financial systems. That's not to say that there is no merit in moving part of your assets to Thailand if you are confident you will live here a long time - there are clearly currency certainty benefits of doing so and geographic diversification has merits in its own rights.

If you subsequently choose to convert the fund into an annuity that pays you a regular income then I'm guessing that you will have choices where to plonk that annuity but I'm less au fait with that side of things.

If you have a UK annuity it can pay a pension to you wherever you want but you would be taxable on it in the UK. If you are tax resident in Thailand your pension/annuity income would be taxable in Thailand no matter where the cheques actually go if you use the money you receive in the same tax year of receipt. If all you do is save a years income and spend here out of prior year's income there is no Thai tax liability. If you do use the money and have already paid tax in the UK there is a Double Tax Agreement which means that any UK tax would go to reduce your Thai tax liability.

If you put your retirement pot into another nation's regime and take income from it, then again there would likely be some local tax to pay, no matter where the cheques go (Gibraltar is a matter of a few percent) and similar principles would apply in relation to whether or not Thai taxation is also payable. Whether you can offset the local tax paid would depend on the existence of DTAs with Thailand.

Pension planning needs professional tailored advice. I have always advised myself on my financial, tax and investment planning (I am a retired Chartered Accountant) but there was no way in hell I would do my own pension planning on the back of self-research or website advice! It's way too complicated a subject and very dependent on personal intentions about the future.

"Apparently folks don't get hassled on retirement visas, but that may change in the future" per Orientalist. May be true if you are a standard state pensioner who keeps his head down and his future caution reference is well placed. All I know is that this folk on a retirement visa has certainly been "hassled" (in the nicest possible way) by Thai tax authorities after he made a reasonably substantial (successful in itself) tax refund claim for Thai tax deducted against 2014 Thai bank interest income! I don't spend out of current year income so it was no problem. It's no way to plan your financial future to assume you might avoid any lawful tax liability anyway.

[colinchaffers]

Many thanks for this, I have a retirement and Annuity Trust Scheme QROPS scheme, I moved my pension from England to the Isle of man Feb 2014 and starting taking the pension in Feb 2015, but in fact I was entitled to start taking it 4 years ago, I take it as a lump sum so this years payment was growth from 2015 and therefore last year tax year.

As stated my pension is in the Isle of Man which is not part of the United Kingdon but is a self-governing "Crown dependency", so i doubt its part of the DTA.

With kind regards

[colinchaffers]

Dear Santisuk, just one question when you talk about not using the pension in the current tax year, does it run from Jan to Jan?