Withdrawing from UK pension but living abroad

d4006

Oh wow. Way more responses than I'd expected. It's good to see that despite being a non-resident Brit, but still being a passport holder, I'll get a tax-free allowance. I even hit one of the other qualifying bullet points since I gained German citizenship too because of Brexit.

I assume that taking advantage of this allowance means that even if I get less than the allowance number, e.g. I take out £1,000 a month which won't reach the 12,500 allowance, I might have to still complete a UK tax return because it's counted as resident income somehow. Based on what I've read from the links in this thread, it sounds like Germany won't be interested in it as it's a pension payment.

In response to nigelbb's comment about keeping up my NI payments, I didn't do that. Besides, I've got things in place anyway. Also, I'm about 22 years unpaid, so that'd be quite the amount to make up. Mathematically it might make sense to contribute the 150 per year to gain 250 per year but I'm not highly confident I'll live beyond 67 (which I think is the current UK retirement age). so I don't expect to get anything from that.

[Deleted User]

TBC15 said:

Deleted_User said:

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

This has nothing to do with his passport and everything to do with  taxation rules in the country where OP resides. 

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance

Yes, but I am not a resident of the UK for tax purposes. I have to submit a tax return where I reside. UK government will take what it takes, there will be no double taxation because of the treaty, but I will be taxed entirely based on the rules in the country of residence. British allowances become irrelevant. 

What it means in practice is that if British tax owed on British pension is higher than in my country of residence then I get money back after I submit a tax return. If its lower then I have to pay extra. Just treated as income. 

nigelbb

d4006 said:

Oh wow. Way more responses than I'd expected. It's good to see that despite being a non-resident Brit, but still being a passport holder, I'll get a tax-free allowance. I even hit one of the other qualifying bullet points since I gained German citizenship too because of Brexit.

I assume that taking advantage of this allowance means that even if I get less than the allowance number, e.g. I take out £1,000 a month which won't reach the 12,500 allowance, I might have to still complete a UK tax return because it's counted as resident income somehow. Based on what I've read from the links in this thread, it sounds like Germany won't be interested in it as it's a pension payment.

In response to nigelbb's comment about keeping up my NI payments, I didn't do that. Besides, I've got things in place anyway. Also, I'm about 22 years unpaid, so that'd be quite the amount to make up. Mathematically it might make sense to contribute the 150 per year to gain 250 per year but I'm not highly confident I'll live beyond 67 (which I think is the current UK retirement age). so I don't expect to get anything from that.

Payback time is about 7 months. It's a pretty good bet unless you know for certain you have a life limiting illness.

mikeydread

Hi. i am living in spain for the last 11 years and i  applied to buy  11 missing years of N.I.contributions in may 2023, according to the information that i have recently recieved it is still being processed, That is 16 months i have been waiting to be authorized to pay for this and i have know been told that i should have a response by January 2025.
I cant understand why its taking so long to sort out,on the mse website they make it sound so easy.
Has anybody else had a similar problem??

dunstonh

Care: 2020 thread revival.....

Hi. i am living in spain for the last 11 years and i  applied to buy  11 missing years of N.I.contributions in may 2023, according to the information that i have recently recieved it is still being processed, That is 16 months i have been waiting to be authorized to pay for this and i have know been told that i should have a response by January 2025.
I cant understand why its taking so long to sort out,on the mse website they make it sound so easy.
Has anybody else had a similar problem??

You should really post on your own thread and not tag onto an old thread on an unrelated subject.   Maybe a board admin will see this and separate it for you.

pinnks

Sorry to come and burst your bubble but as you live in Germany, it is probable that the workplace pension will be taxable, in full, in Germany and that access to the UK personal allowance will not be relevant until you get your UK state pension.

The starting point is that your workplace pension will be taxable in full (lump sum and monthly payments) only in Germany in accordance with Article 17(1) of the UK / Germany double tax treaty.  There is a theoretical "get out" in that if you have paid into the pension for at least 15 years, got tax relief on your contributions and that tax relief has not been withdrawn then Article 17(3) gives taxing rights back to the UK, BUT, only if the pension is "effectively taxed", i.e. subject to tax in the UK.  Conventional wisdom from German tax advisers is that because any lump sum is tax exempt in the UK, you fall foul of the effectively taxed clause if you take the lump sum.  Absent a lump sum, you would remain covered by 17(3).

So, depending on the facts and what you do the pension could be taxable only in the UK but is more likely to be taxable only in Germany.   If it does end up being taxable only in the UK by virtue of Article 17(3) AND you do not take the lump sum but instead opt for a higher monthly pension, the UK personal allowance would of course be available BUT that income, by reference to the German tax year, will also still feed into the rate at which you pay tax on your German taxable income because of Article 23(1)(d). This is called Progressionsvorbehalt in S32b of the EStG (Income Tax Act) and means your tax rate is set by reference to your worldwide income even if Germany has given up its right to actually tax some of it.  The same principle applies, for instance, if you have rental income from a UK property but live in Germany.  You can find plenty of online calculators to help you work out the consequences.  In this case you would put the UK pension on Anlage R-AUS and not the main body of the tax return.

Your UK state pension once it starts is taxable only in the UK by virtue of Article 17(2) but once again it feeds into Progressionsvorbehalt to set your tax rate on your other income and also goes on Anlage R-AUS.

NoMore

See this what happens when you ask a question on a old thread that isn't really anything to do with the original subject. The poster above has responded to the original FOUR year old thread as if its a new thread and has not responded at all to the new post that brought this thread back to life.