UK employment pension, but living abroad

jamesd

TBC15 wrote: »

Just got off the phone with HMRC, as I would not be subject to tax on my pension in Oman I would be subject to UK tax.

Just what did you tell HMRC when asking that question:

1. That the income is not subject to tax
2. That the income is subject to tax and the rate is currently 0%

Given your previous post asserting that it wasn't subject to tax and the quote saying you told HMRC you would not be subject to tax I think you may have misled HMRC by saying 1 instead of 2. And they get different answers.

There's a scheme that you can opt in to in Portugal that has the Portugese income tax rate for foreign earnings set to zero. It's well established that since it's subject to tax, even if at 0%, you can take the pension income, including the 75% taxable, at once with nil tax due.

Joey_Soap

If I remember, sure I will. It's a no lose situation.

Draw the SIPP income, SIPP provider pays the tax, you get the net income paid to your off shore bank, complete your usual self assessment including SA109 and HS304.

Two possible outcomes - HMRC accepts the tax return and refunds the tax paid OR HMRC rejects the return but you already paid the tax anyway. Took me about 30 minutes to my own tax return for 16/17 using TaxCalc. 17/18 will take me maybe 5 minutes longer to fill in the HS304 as well.

TBC15

jamesd wrote: »

Just what did you tell HMRC when asking that question:

1. That the income is not subject to tax
2. That the income is subject to tax and the rate is currently 0%

Given your previous post asserting that it wasn't subject to tax and the quote saying you told HMRC you would not be subject to tax I think you may have misled HMRC by saying 1 instead of 2. And they get different answers.

There's a scheme that you can opt in to in Portugal that has the Portugese income tax rate for foreign earnings set to zero. It's well established that since it's subject to tax, even if at 0%, you can take the pension income, including the 75% taxable, at once with nil tax due.

I went through scenario no1 and scenario No2 in that order and the answer from the lady was the same, don’t pay tax no relief.

An expat in Portugal is fortunate in that he gets full relief as there is no (ST) requirement.

I don’t know if the UAE gets the (ST) requirement as the HMRC guidance document was printed in 2016.

bostonerimus

TBC15 wrote: »

I went through scenario no1 and scenario No2 in that order and the answer from the lady was the same, don’t pay tax no relief.

An expat in Portugal is fortunate in that he gets full relief as there is no (ST) requirement.

I don’t know if the UAE gets the (ST) requirement as the HMRC guidance document was printed in 2016.

I think the distinction here is whether or not a country generally taxes income. If the country has an income tax then the UK will give full tax relief and there is no ST note in the pensions column of the DTA document. If that country has a domestic policy to tax foreign pensions at 0% then you would pay no tax there. If the country has no income tax at all then the UK will require you to pay UK tax on the pension.

In some circumstances tax authorities will require that you pay at least the amount of tax you would have paid under their rules. So you are required to claim a foreign tax credit for any foreign tax paid and pay any balance.