Pensions and tax, for expats.

[AtomKraft]

Hi.
As we all know, soon you will be able to cash in your pension entirely, and spend the money on whatever you want.

The kicker is, you, as a UK taxpayer will be taxed on the money as if it was income. Therefore, if you are earning enough to be paying 40%, as most pilots are, you'll have to hand over 40% of the lolly to HMRC.

What if you are an expat, and not eligible to pay UK tax though?

Can you just drop the lot out your pension fund and stick it in your pocket, tax free?

No doubt you can't (nothing is ever that good), but what are the facts?

[cavortingcheetah]

Even had HMRC previously agreed that you were a non resident I suspect that the pension would be deemed to have arisen in the UK and thus liable to UK tax.

[AtomKraft]

Cavorting.

Could be?

But does anybody know? I can't seem to find it anywhere.

Or maybe it could be transferred somewhere, from where the lolly could be grasped without legalised theft.....

[Ancient Observer]

When I was an expat, the Inland revenue made it clear that any income arising in the UK would be subject to tax. I rented out my UK house and paid tax on the net rental. They will want to treat Pension pay-outs as Income in the same way.

[JaxofMarlow]

If you are a UK resident you will pay tax on your pension just like every one else does. And, so you should.

[Sygyzy]

JAX

Next time simply RTFQ and save the bandwidth. OP says right at the start that he's an EXPAT. (Google is your friend if you don't understand the terminology!)

[JaxofMarlow]

And Mr Rude Sygyzy if I am wrong then OK, I will hold my hands up and beg forgiveness, but could really do without the unnecessary sarcasm and rudeness in your post.
I had read it that his earnings were as an expat (away from UK) and that as a UK citizen upon retirement (either now or in the future) would he pay tax. If he earned his money in a sandpit and then chose to live in same sandpit after retirement then he is not a UK tax payer. If he returns to use the infrastructure of the UK then he would. It would be treated as income at the time payment(s) were made and it is not relevant that you didn't pay uk tax on the income from which the pension was derived.
As it transpires (I assume) he is a foreign expat in UK so it will depend where he is resident and under which states tax regime he pays tax at that time. So, as an expat in the UK he will be treated as an individual with significant UK connections and taxed by uk authorities accordingly. If he lives away from UK by the time he can withdraw his pension funds (over 55 at the moment) then it is more complicated and will likely depend on wether he took advantage of the tax free status of pension contributions at the time funds were paid in.

[AtomKraft]

Jax, et al.

Not in the sandpit, thank goodness, but I am an expat- in India in my own case.

I pay tax In India, so I'm not some sort of tax evader!

The UK has a 'dual taxation' agreement with India, but as I'm full time here, I'm not eligible to pay UK tax, even if for some weird reason I wanted to......

Understand about income arising in the UK being taxed, but I still don't want to pay UK tax when I don't live there. I have a SIPP that I could maybe use.

One kind ppruner has pm'd me the details of a decent tax advisor.

I thought the thread topic might be useful for others in the same boat too. The UK pension changes are quite significant for many if us.

The chance to get your sticky paws on your own money, maybe to pay down debt, like in my case, is such a big improvement from the old days of 'buy an annuity'.

Very significant stuff for expats and UK residents, both.

[8che]

I hope you know that you cannot contribute to a UK pension while you are an expat.


If you have been putting money in a UK pension or a SIPP while declared as a non-resident (expat) then you have broken the law.

[AtomKraft]

8.
Thanks, didn't know that. Only money I've put into my SIPP pension is money that was in another pension already.
Sounds like that might not be ok though?

I'll need to get some proper advice, on how to never give another penny to HMRC.

[Enecosse]

As an expat the usual move is to shift your UK pension offshore in what is known as a QROPS. The recent changes has possibly made this less worthwhile. Frankly it is quite a difficult subject to grasp and good advice is really required.

I have started making enquiries as to the possibility of drawing down the full amount and the tax implications. If your pension,SIPP, is UK based I suspect you will have to pay tax.
If it is offshore well that is the question I am trying to find the answer too. (my pension is offshore).

[Scallywag]

If you live in Portugal, you can apply for Non Habitual Tax Regime (NHR) . If you qualify, it allows expats to have both state pension and private pensions Tax Free for 10 years.