Are we entitled to a tax-free pension if we live abroad?
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If you live and work abroad, you should check the dual taxation agreements between your overseas country of residence and the UK. I have been living and working outside UK for the last 7 1/2 years and I pay no UK tax. My RAF pension is paid into a UK bank account and I draw it by cashing a cheque for pounds sterling at my local bank where I have my overseas account. I will shortly be drawing my OAP and the same will apply. However, I am living in one of the commonwealth countries that is subject of the current court battle with HMG through the European Court of Human Rights. Until that problem is resolved, hopefully in the ex-pat's favour, my OAP will be frozen at the rate at which I first draw it; however, my RAF pension continues to be indexed.
Sounds good, but there is a twist that I expect will apply almost anywhere and that is that one must declare one's "world income" in the country of residence, where it becomes subject to local tax as part of the overall income. In order to stop paying the UK income tax I had to complete some paperwork that was submitted through my local tax authorities to the UK tax people. Furthermore, I did not have the choice of where I pay tax; I must pay here. If I were not to declare my world income, I would be laying myself open to being charged with tax evasion even if I continued to pay UK tax on the UK income. Basically not worth the potential for a criminal record.
My RAF pension could be paid direct to my local bank but I prefer to retain my UK account as I can then take advantage of the fluctuations in the exchange rate. In addition, the arrangement I have with my local bank is particularly attractive and not subject to any fees; instead I get a very slightly reduced exchange rate. The tax on my UK income is calculated on an average exchange rate for the tax year in question.
Sounds good, but there is a twist that I expect will apply almost anywhere and that is that one must declare one's "world income" in the country of residence, where it becomes subject to local tax as part of the overall income. In order to stop paying the UK income tax I had to complete some paperwork that was submitted through my local tax authorities to the UK tax people. Furthermore, I did not have the choice of where I pay tax; I must pay here. If I were not to declare my world income, I would be laying myself open to being charged with tax evasion even if I continued to pay UK tax on the UK income. Basically not worth the potential for a criminal record.
My RAF pension could be paid direct to my local bank but I prefer to retain my UK account as I can then take advantage of the fluctuations in the exchange rate. In addition, the arrangement I have with my local bank is particularly attractive and not subject to any fees; instead I get a very slightly reduced exchange rate. The tax on my UK income is calculated on an average exchange rate for the tax year in question.
I don't own this space under my name. I should have leased it while I still could
I still pay UK tax at source on my pension but as I live in NZ I have to declare it to the IRD here and they tax me on the difference between the two countries, am looking into getting it tax free in the UK as it makes it easier sorting the tax out here ie only paying the one tax sum.
fergineer,
Its extremely straightforward. Just write to HMRC saying what you would like to do. They will send you a form to complete, it then has to be routed via the IRD back to HMRC.
At the end of the next tax year you will end up paying the tax on your pension in 3 installments, July, November and March and it all gets reconciled through your end of year tax return.
Cheers
Its extremely straightforward. Just write to HMRC saying what you would like to do. They will send you a form to complete, it then has to be routed via the IRD back to HMRC.
At the end of the next tax year you will end up paying the tax on your pension in 3 installments, July, November and March and it all gets reconciled through your end of year tax return.
Cheers
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Pension
I have never heard such twaddle peddled on these pages re finance. For example, you dont have to declare your world income. It depends which country you are living in. And some ought to check - the pension is paid NET of tax, It is already taken!
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navibrator,
If you read HMRC's own explanation: http://www.hmrc.gov.uk/cnr/uk_gov_pensions.htm
and/or talk to the helpful ladies on (+44) 029 2032 5058,
you will discover that the answer can easily be a yes.
If you read HMRC's own explanation: http://www.hmrc.gov.uk/cnr/uk_gov_pensions.htm
and/or talk to the helpful ladies on (+44) 029 2032 5058,
you will discover that the answer can easily be a yes.
Its up to you how it's taxed. When I first got mine, it came gross. I asked for 40% tax to be deducted at source so that I didn't get a shock at the end of the year. Then when I moved overseas, I got it paid at the basic rate less personal allowance.
And yes, any UK derived income is taxable.
And yes, any UK derived income is taxable.
I don't own this space under my name. I should have leased it while I still could
Dan, you remind me, the tax man wrote to me and suggested how I would like my pension taxed. We agreed, I think, that my allowance would go to my salary and my pension would be paid net.
Not sure how it works but I usually owe the tax man a few hundred each year.
Not sure how it works but I usually owe the tax man a few hundred each year.
I don't own this space under my name. I should have leased it while I still could
Huey, the ones next door but not that one. You are of course talking of your State pension and not the others.
Last edited by Pontius Navigator; 6th Sep 2013 at 16:42.
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Military Disability Pension taxable in UK?
I've been receiving an RAF disability pension since age 53 due to injuries received in the Middle East on secondment. My question is whether or not I should have been paying tax on that pension for the last 14 years - whilst living in OZ? .......obviously because I have been paying UK tax. Maybe I should ask PAYMASTER?
I know that Vets Affairs disability pensions are NOT taxable in OZ.... but inconsistency is evident everywhere.
Anybody cluey on that aspect of UK military pensions?
I know that Vets Affairs disability pensions are NOT taxable in OZ.... but inconsistency is evident everywhere.
Anybody cluey on that aspect of UK military pensions?
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War disability pension & UK tax
Right! - angry head on - I went through this quite recently. Diligently filled in HMRC tax return figures for mil pension and, since it asked for "all other income" I diligently filled in disability pension figures and nil tax paid along with explanatory notes citing relevant legislation authorising such. I was very grumpy to receive a large tax demand with indecent haste and so dispatched a snottergram. I received a reply correcting the figures (no tax) but explaining that your return is read by machine so please do not include income that does not attract tax! In other words declare everything but not everything!!! Also I am involved with Veterans in NZ who mistakenly believed tax was payable on disability pensions. I have the legislation references for UK and NZ which state that it is not. Re many other posts check with your own country of residence and ask for the relevant ref..... and relax
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Having investigated the matter thoroughly, I have decided to change my name to Google Starbuck. It is a simple thing to do: my cousin recently changed his name to YV07 TZW because this was cheaper than buying a personalised number plate for his car.
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Thanks Hubstrasse
a. Any chance of getting a citation of those regs re disability pensions not being taxable (in UK or overseas)?
b. I am loathe to debate with HMRC because each time I've done so it's cost me more
c. And any correspondence with Paymaster would seem to be futile - as they simply apply HMRC tax-codes with gay abandon.
d. And if "gay abandon" leaves you feeling a little queer, remember that now that little queer can be your legally accredited spouse.
b. I am loathe to debate with HMRC because each time I've done so it's cost me more
c. And any correspondence with Paymaster would seem to be futile - as they simply apply HMRC tax-codes with gay abandon.
d. And if "gay abandon" leaves you feeling a little queer, remember that now that little queer can be your legally accredited spouse.