Tax on Hong Kong pension contributions returned to UK as cash

VXman

Just wondered if anyone knows the answer to this.
Been working in Hong Kong for a few years. Earnings in Hong Kong are not taxable in the UK as they are all taxed in Hong Kong. However,whilst in employment in Hong Kong you have to pay into something called the Mandatory Provident Fund (MPF) which is a kind of pension saving scheme run by various banks and other financial organisations. You contribute up to  a maximum of £150 per month (depending on your income - most expats will pay the maximum) and employers also contribute the same. So that's £300 per month. This is tax exempt in Hong Kong.
So when you leave you can withdraw this as cash (and any profits made, depending on the performance of the funds you selected to put it into).
So the question is:
Will this sum of money but subject to Tax in the UK or is it treated like all the other earnings in Hong Kong? i.e. Non taxable?

Jeremy535897

Article 17 of the UK Hong Kong DTA may assist. See
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/498359/hong-kong-uk-dta_-_in_force.pdf
"Pensions and other similar remuneration (including a lump sum payment) arising in a Contracting Party and paid to a resident of the other Contracting Party in consideration of past employment or self-employment and social security pensions shall be taxable only in the first-mentioned Party."

VXman

Thanks. I had looked at that document but got lost in the jargon! What’s a ‘contracting party’? I guess UK and Hong Kong are contracting parties?

Jeremy535897

VXman said:

Thanks. I had looked at that document but got lost in the jargon! What’s a ‘contracting party’? I guess UK and Hong Kong are contracting parties?

Yes. See article 3.1(e).