returning to UK to retire - any financial traps ?

JezR

HappyMJ wrote: »

There's no credit for having worked in Australia. There is no social security agreement..

There was an agreement in place until 1 March 2001. The UK Government announced in December 2000 the pension position of people who have periods of residence in Australia prior to 5 April 2001 will be protected. You would need to consult the DWP to find out how to establish anything you have under that arrangement.

atush

The IOM now requires Work permits (if you werent bprn there or havent been resident for a number of years), but they arent hard to get. If you want to work that is.

And yes, if you sign on for jobseekers, you get credit for NI.

jamesd

just_looking_here wrote: »

I don't think that you get any NI credits if you sign on as unemployed.

Anyone who is eligible for unemployment benefits gets NI credits.

just_looking_here wrote: »

I think that if you work past your retirement date your employer still pays into the system but you don't or you can elect not to pay after that date.

You don't get any benefit for paying after you reach state pension age but you do need to present a certificate to your employer to stop them taking the employee NI payments that gain you nothing.

just_looking_here wrote: »

as a non worker you can either put in 3000GBP per year and HMRC contributes 20% to make it up to 3600 or you (and wife) can work and put in to 100% of your (gross?) salary or 40,000GBP (whichever is the smaller) and get HMRC to contribute according to your tax code.

The limit for non-workers is 2880 net, 3600 gross. For personal pensions the pension scheme adds 25% to the amount paid in to deliver the 20% basic rate tax relief. HMRC pays the remaining part as a refund to the individual if a person is liable to 40% or 45% instead of 20% income tax, once they are told about the contributions. It's 100% of gross capped at £40k but the unused part of the 40k for the past three years can be carried forward provided the person was a member of any UK pension scheme other than the state pension. Earnings from past years can't be used, it's always the current tax year only.

just_looking_here wrote: »

From memory you can carry on contributing to a SIPP or other private pension even after your Statutory Retirement Age, but you will need to check on whether you can contribute and draw down at the same time.

You can until age 75, at which point you stop being eligible for any tax relief.

just_looking_here wrote: »

Also note that if you are taking out the 25% lump sum you are allowed to take tax free from your pension, HMRC take a very dim view about you contributing this to another pension and expecting their 20% contribution!

HMRC do not take a dim view of it, they are never known to have acted against any individual exceeding the limits, which are mainly designed to prevent the establishment of organised commercial schemes. It's still sensible to plan to stay within the limits.

just_looking_here wrote: »

I also seem to remember that age 75 was important, but it may have been a reminder to check whether the Stakeholder Pension I paid into for 5 years after I left the UK makes me take an annuity at this age, rather than the age limit you are allowed to contribute to a pension and still get HMRC to contribute.

Until 2006 when Alternatively Secured Pensions were introduced to allow drawdown instead it was required to buy an annuity at age 75. That's ancient history now but it is still the age at which you stop getting any tax relief for pension contributions.

Malthusian

jamesd wrote: »

HMRC do not take a dim view of it, they have never acted against any individual exceeding the limits, which are mainly designed to prevent the establishment of organised commercial schemes. It's still sensible to plan to stay within the limits.

The original source for your assertion that nobody has ever been penalised under recycling rules seems to be a Daily Mail article which actually says "HMRC is not believed to have punished anyone since it introduced the current rules in 2006. However, it would not answer this question directly, only saying: 'HMRC will consider each case as they arise and it will depend on the facts of that case.'"

I think it is perfectly possible that a small handful of people have been penalised for breaking recycling rules, but HMRC refuses to be specific about the number in case anyone thinks that as only a small number have been penalised they're likely to get away with it.

I have no doubt that it would only be a small number (because the rules are actually quite difficult to break, and because breaking them would be fairly high risk and low reward). But I wouldn't go so far as to assert that we know it is zero.

just_looking_here

Thanks for the feedback...

I'll update my notes on contributions etc. nice to hear that HMRC put in more than my estimates!:T

jamesd

Malthusian wrote: »

The original source for your assertion that nobody has ever been penalised under recycling rules seems to be a Daily Mail article which actually says "HMRC is not believed to have punished anyone since it introduced the current rules in 2006. However, it would not answer this question directly, only saying: 'HMRC will consider each case as they arise and it will depend on the facts of that case.'"

I think it is perfectly possible that a small handful of people have been penalised for breaking recycling rules, but HMRC refuses to be specific about the number in case anyone thinks that as only a small number have been penalised they're likely to get away with it.

HMRC's reply is one that they would give just in case some day they encountered a situation where they wanted to use the rule. If you haven't read it yet you might have a look at srcandas' posting of the summary of a discussion with a HMRC expert on this subject:

" We (HMRC) don't focus on recycling legislation. It was bought in by a government more to prevent the finance industry creating products to exploit a loop hole.
It would be up to us (HMRC) to prove you had recycled based on you meeting all 6 conditions stated on the HMRC website."

Malthusian wrote: »

I have no doubt that it would only be a small number (because the rules are actually quite difficult to break, and because breaking them would be fairly high risk and low reward). But I wouldn't go so far as to assert that we know it is zero.

I'm content to go with the views of pension pros that the actual count is zero at present. If that ever seems to change I'll definitely mention it.

Still, I've adjusted the wording of my post a little.

fatbeetle

Hi Bill, I'm in a pretty similar position as you, so any advice you get here will be more than welcomed!

One big difference is I made enough NI contributions before emigrating out here, luckily!