Pension

cococlown

OK here goes. I am now living in Bulgaria and have done for the last 4 years. I have recently reached the pension age of 66 so I get my state pension. I have a private pension (which I have not contributed to for over 10 years) and a few months ago I informed said pension company I now resided abroad. Sent proof that I know live in Bulgaria, at the beginning of informing them of my change of address months ago i was told my pension could be taken here the same as it could be in the UK. Today I find out that is not the case, I cant withdraw any monies without paying 25% tax on it, I was led to believe I could take 25% of the pot tax free. I have not taken anything from the UK in the last 4 years as I have lived off savings. I feel pretty aggrieved that I cant even get a monthly pension from it. Any useful ideas please. 

Thank you from a very Irate person

eskbanker

cococlown said:

Today I find out that is not the case, I cant withdraw any monies without paying 25% tax on it

Is that a Bulgarian income tax rate (it's not one of the UK bands)?

p00hsticks

cococlown said:

 I have a private pension (which I have not contributed to for over 10 years) and a few months ago I informed said pension company I now resided abroad. 

Can you clarify what sort of pension that is and who it is with ?

Brie

Have you read the gov.uk site about tax when resident outside the UK?
Tax on your UK income if you live abroad: Overview - GOV.UK

It may be that they need to deduct more to ensure all your UK income is included, like SP.  But then you might get a refund when you file a self assessment.  Make sure also that you check if Bulgaria won't charge you tax as well or if it does how/if you can reclaim it.

An alternative might be to transfer the pension abroad to a QROPS.  
What is a QROPS & how can I transfer to one? | Unbiased
Please do ensure you pick a registered QROPS as not doing so can be very very expensive.

dunstonh

at the beginning of informing them of my change of address months ago i was told my pension could be taken here the same as it could be in the UK. 

That needs to be taken in context.  The UK pension provider has told you what they can do, and they are correct.  you can still take 25% tax free of UK taxes.   They won't have a clue what Bulgarian tax laws are.

Today I find out that is not the case, I cant withdraw any monies without paying 25% tax on it, I was led to believe I could take 25% of the pot tax free.

The tax treaty between UK and Bulgaria is that the UK will recognise the 25% TFC as tax free of UK taxes but Bulgaria does not recognise it as tax free.

What 25% tax rate are you referring to?  I thought Bulgaria was a flat 10%.

 I feel pretty aggrieved that I cant even get a monthly pension from it. 

Why cant you get a monthly income from it?

pinnks

The private pension is taxable only in your country of residence Bulgaria, so the UK's tax law that provides for 25% tax free lump sum is wholly irrelevant.  However, until you have submitted form DT Individual to HMRC, so they can issue an NT tax code to the UK pension payer, PAYE will be operated.  You will need to return the full amount of any private pension receipts in your Bulgarian tax return.  The same goes for bank interest, including interest on ISAs as, once again, the tax exempt nature of such interest in the UK thing is a UK tax law thing, not a Bulgarian one.

Your UK state pension is taxable only in the UK but would currently is likely to be covered by the personal allowance.  

cococlown

That's the English rate I believe, I do not earn income in Bulgaria to pay tax

jimjames

cococlown said:

That's the English rate I believe, I do not earn income in Bulgaria to pay tax

There is no UK 25% income tax rate (it's 20/40/45) so either you've been given the wrong number or it's referring to something else

DRS1

You say you can't get a monthly pension from the UK scheme.  Has anyone explained why that is the case?  Is it because you don't have a bank account that will accept pounds?

poseidon1

cococlown said:

OK here goes. I am now living in Bulgaria and have done for the last 4 years. I have recently reached the pension age of 66 so I get my state pension. I have a private pension (which I have not contributed to for over 10 years) and a few months ago I informed said pension company I now resided abroad. Sent proof that I know live in Bulgaria, at the beginning of informing them of my change of address months ago i was told my pension could be taken here the same as it could be in the UK. Today I find out that is not the case, I cant withdraw any monies without paying 25% tax on it, I was led to believe I could take 25% of the pot tax free. I have not taken anything from the UK in the last 4 years as I have lived off savings. I feel pretty aggrieved that I cant even get a monthly pension from it. Any useful ideas please. 

Thank you from a very Irate person

Always surprised how few people ever think to either take UK exit tax advice when deciding to make a permanent move abroad, or familiarise themselves with the tax compliance system for the countries they are moving to.

Just to correct your misconception, if you are present in Bulgaria for more than 183 days each year you are tax resident.  As such, you are generally taxable on worldwide income and gains mostly at a 10% rate ( which includes ISAs if you still retain one).  As a tax resident you should have registered for a tax residency certificate to formally establish your tax status in the country as set out below - 

https://armenian-lawyer.com/business-immigration/bulgaria-tax-residency-strategies/

However fortunately for you Bulgaria exempts income from voluntary pensions arrangements as set out in the article below - 

https://taxsummaries.pwc.com/bulgaria/individual/income-determination

Therefore, as regards access to your DC pension pot whatever tax  issues now arise in relation to that are UK centric.

However I do not recognise the 25% tax rate you quote unless something has been lost in translation, and the QROPs 25% tax rate somehow  entered into your discussions with your pension company per article below

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/moving-your-uk-pension-overseas#:~:text=You might still have to pay 25%,based outside the country you live in.

cococlown

Thank you all Royal London had made a mistake and I can now do what I was Originally told. Thank you to all that took the time to reply. Thank you.