Tax on SIPP overseas

Dazed_and_C0nfused

I don't think it's quite that clear cut.

https://www.expertsforexpats.com/expat-pensions/sipp-for-british-expats/

Dead_keen

I am right. 

The pension tax rules are in Part 9 ITEPA 2003 - https://www.legislation.gov.uk/ukpga/2003/1/part/9 and do not distinguish between the recipient being resident in the UK or not.  Instead it looks at the person who pays the pension - s569 ITEPA 2003:

(1)This section applies to any pension paid by or on behalf of a person who is in the United Kingdom.

  
There are no specific exemptions for non-resident individuals who receive pensions.

Another piece of evidence to show that I am right is the temporary non-residence rule.  One of the conditions for it to apply is s572A(3)(a) and (b) ITEPA 2003.  As written, these rules could never apply if a non-resident was not taxed on a UK pension.

(d) ignoring this section—

(i) it is not chargeable to tax under this Chapter, but
(ii) it would be so chargeable if the existence of any double taxation relief arrangements were disregarded.

In terms of HMRC guidance, have a look at the last part of this: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim74003 which makes clear that "payment to people who live abroad" are taxed (absent a DTA):

Payments to residents of another country

The charge includes payments to people who live abroad as well as payments within the United Kingdom. Examine carefully claims for double taxation exemption or relief. These payments may be in respect of government service and the United Kingdom usually retains primary taxing rights. See DT1926, DT1927 and EIM74403.

Dead_keen

Dazed_and_C0nfused said:

I don't think it's quite that clear cut.

https://www.expertsforexpats.com/expat-pensions/sipp-for-british-expats

Can you explain more? That article says:

Thirdly, when drawing an income from your SIPP, while you will be subject to the UK personal allowance and the 25% pension commencement lump sum, you will still be subject to UK income tax when drawing funds from your pension. As previously mentioned, if you no longer live in the UK, your income may also be subject to tax in your country of residence as well so it’s important to understand the local tax rules, as well as those in the UK before making a decision about how to draw an income from a SIPP.

Dazed_and_C0nfused

Dead_keen said:

Dazed_and_C0nfused said:

I don't think it's quite that clear cut.

https://www.expertsforexpats.com/expat-pensions/sipp-for-british-expats

Can you explain more? That article says:

Thirdly, when drawing an income from your SIPP, while you will be subject to the UK personal allowance and the 25% pension commencement lump sum, you will still be subject to UK income tax when drawing funds from your pension. As previously mentioned, if you no longer live in the UK, your income may also be subject to tax in your country of residence as well so it’s important to understand the local tax rules, as well as those in the UK before making a decision about how to draw an income from a SIPP.

It was in response to the op's post at 18:38.

AIUI some pensions may not be taxable by virtue of Double Taxation Agreements (presumably if a DTA claim is made by the individual)

And some will be taxable but the individual could be entitled to the Personal Allowance meaning no tax is a actually payable.

And some will be taxable and not covered by the Personal Allowance resulting in some tax being payable.

As others have said the country the op will be resident in seems relevant.

bostonerimus

Dead_keen said:

Payments to residents of another country

The charge includes payments to people who live abroad as well as payments within the United Kingdom. Examine carefully claims for double taxation exemption or relief. These payments may be in respect of government service and the United Kingdom usually retains primary taxing rights. See DT1926, DT1927 and EIM74403.

"Primary taxing rights" is an important phrase above. If you have to pay tax in the UK and it is a lesser amount than what you'd pay in your country of residence you might still have to pay the difference to your local tax authorities. The treaty wording is important eg for State Pensions the primary taxing authority is usually reserved to the country where you reside ie no UK tax would be due, but you have to make HMRC aware of that by filing this form.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/926590/DT-Individual.pdf

Dead_keen

Dazed_and_C0nfused said:

It was in response to the op's post at 18:38.

Thanks, I understand.

[Deleted User]

If you are a tax resident in Canada then you are not taxed in the UK and don’t get the 25% allowance.  

You are taxed in Canada as if it were Canadian income.  Someone leaving UK at a suitable age could consider withdrawing 25% tax free allowance before the move. 

bostonerimus

gravlax said:

xylophone said:

Would you not need to check the tax situation in the new country of residence?
Below seems relevant?

https://www.myexpatsipp.com/mesinsights/4-things-to-know-about-drawing-your-uk-pension-from-overseas

No tax due overseas.

But UK tax might still be due depending on the tax treaty. I looked at the situation for Thailand as it is a popular retirement place and does not tax foreign income if you are on a retirement visa. On a couple of forums I searched it was stated that the treaty gives Thailand the taxing authority over UK pensions if you are a Thailand resident - I don't think that's right. Looking at the treaty it only mentions Government pensions and there is no general pension article. So my reading is that the UK maintains tax authority over the UK pensions. Of course if you are a UK national you still get the personal allowance so depending on your UK income you might pay no tax. This is an example of how tricky cross-border tax can be and that information on the web can be confusing and contradictory often because of a superficial reading of the regulations. It's an area where professional advice is usually worth getting.