UK pension - can you claim tax back

[Bazoo]

Anybody up on the rules about having a UK pension and being able to claim back tax due to living abroad?

[Frank Hovis]

Do mean a straightforward pension or a retirement annuity or life annuity ?

Straightforward pensions are paid for with untaxed income (or are automatically assigned a basic rate top up). If you were a higher rate taxpayer you should already have claimed back the overpayment of tax when purchasing the pension via a standard tax return.

Retirement annuity and life annuities taxation depends on your situation.

This information is pretty redundant though, you will need to ask HMRC directly as individual cases are always individually different.

[Bazoo]

I will have a Defined Benefits pension (Company scheme). Tax is deducted at source

[benmo]

Paid in UK, taxed in UK

[Frank Hovis]

The payments in to the pension would have been made on untaxed income so the return from the pension is taxed at source at the basic rate (minus a small allowance which I think is currently 3600 pounds).

You can't have both ways, pay in untaxed and take out untaxed. Investments that you made with taxed income would not be liable for taxation on their returns if you can meet the non-res/non-dom/NT tax code requirements.

It is always worth taking up the matter with HMRC, they are as slow as continental drift but generally fair.

If your pension return would be taxed at the higher rate and you declare non-res/non-dom/NT ... well, err, that's up to you to decide.

You will probably get much better 'lay' knowledge on a finance/pension forum and maybe even some professional advice, but for a basic pension (not state pension) paid for with untaxed income you cannot 'avoid' the taxation at source and remain totally above board.

[Dannie Boy]

I looked into this a few years ago and what I recollect is that a UK derived pension remains subject to UK tax irrespective of your UK tax residency status, however if you could prove that your UK pension was subject to tax in another tax jurisdiction (e.g. Thailand) then you may be able to get a refund of your UK tax, but unless you are in the relatively unusual position of being subject to Thai tax, that won't apply.

[Frank Hovis]

You can also look into QROPS (if you haven't yet started claiming your pension) but I understand there has been some adjustments to the rules recently that make them less favourable (if they ever were particularly favourable).

I'm not quite sure what tax burden Thailand places on income from pensions but as an example, if your income is 1M THB per annum (20,000GBP roughly) you would be taxed at 20%, anything over that would be 25% and up. 750,000THB and above is taxed at 15%. In the UK you will pay 20% (at source) on any non-state pension.

As residency status is almost impossible to get in Thailand you can be asked to leave at any time which means you'd need to transfer back into a UK pension scheme (and that's not free) and you might have to pay tax again depending on how long you have been non-resident and how much you have drawn from your pension.

In my non-professional opinion, accept that you've only paid tax once on your pension (and that's the best you can hope for with money) and have an easy time by leaving it in the hands of HMRC and your provider. Enjoy your retirement here knowing that you can always go back to the UK and your pension will continue without any disturbance instead of worrying whether you've been had by a dodgy pension transfer or that you'll need to pay another 20% of your pot to get it transferred back to the UK if you need it.

Death and taxes ...

[PJG]

My understanding of the QROPS scheme is that the scheme can be run from any recognised qualifiying jurisdiction (i.e. Isle of Man, Jersey, Gibralter,Singapore) and the pot is then taxed at the local tax rate. Also you do not have to buy an annuity and can drawdown from the pot at the HMRC max rate subject again to local tax not UK tax. Believe the Gibralter tax rate is 5%.

This is of interest to me as am planning retiring in 2 years time with a UK private pension pot.

Would appreciate any advice from those with more knowledge.

[lomuamart]

I've looked into this a bit myself although I'm no expert and can only tell you what I've been told myself.
Seems like the plus side consists of tax advantages and flexibility as to where your pot is invested. The draw down was also a positive but the UK laws on annuities have changed recently so how much of an advantage that now is under a QROPS scheme, I'm not sure.
Downside consists of the fees chargeable to transfer to a QROPS scheme and to move monies around. These can be quite high and may, in fact, end up not being much different to what you'd pay in UK tax. Also, how many people can say, with absolute certainty, that they'll never return to the UK? Maybe for health reasons, financial reasons, personal reasons? If you do return at some stage, HMRC is going to want to talk to you and you'll be facing a large tax bill on, I believe, all the savings you've made under the QROPS scheme (or something like that - a large tax liability anyway). QROPS, first and foremost, seem to be for those who know they won't be going back (other than the 90 days in any tax year).
I'm still 4 odd years away from my pension so I don't have to make any quick decisions but, as things stand at the moment, I'd be inclined to leave the pot in the UK and put up with tax.
As I said at the beginning, I'm no expert but have had some friendly advice from friends who know more than me. You really need to sit down with an advisor and hear what they have to say.