Do British ex-Pats pay income tax on their UK Pension.

[BurnitBlue]

British residents in Sweden must pay 30% of their UK pension to the Swedish tax office even if the amount is below the UK allowance. This is according to the LOCAL (actual name of English language newspaper). Their forums debate this subject with much confusion but the bottom line is that according to EU a resident must pay tax on their "income" salary or pension to the country that they are resident in.

The LOCAL is also printed as a local newspaper in Sweden and maybe Greece so has anyone come across this.

 

[Tranona]

that is broadly correct. You pay tax in the country in which you are resident for tax purposes.

The term "ex patriate" is misleading in this context as it does not have any meaning for tax purposes - simply means citizen of one country not living in that country. S/he may or may not be resident for tax purposes in the country in which they live.

 

[TQA]

I live on a boat in the Eastern Carib moving around a fair bit so am not resident anywhere for tax purposes.

I have to pay UK tax at source on both my pensions.

 

[lpdsn]

Talk to a suitable accountant. There are EU rules, there's also the national rules and the rules of the double taxation treaties between the two countries. You're not going to get that sort of advice from a sailing forum. You're probably not even going to get reliable advice from the tax authorities as the sort of people who build up the specialist expertise often resign to go independent.

If that's going to cost too much or be too complicated, make sure you don't spend 183 days in Sweden.

 

[Kukri]

If I don't spend 183 days anywhere, I assume that I remain UK tax resident?

 

[lpdsn]

If I don't spend 183 days anywhere, I assume that I remain UK tax resident?

UK (and RoI) has the concept of domicile.

 

[macd]

There's no hard and fast rule. There's not even a specific answer to the pension issue raised: some types of pension are deemed 'portable', some not and some in-between. And although many countries state that a resident's world wide income is taxable in their domain, there are many exceptions under treaty. (It's also widely true that rental income is taxable in the country where earned rather than where the beneficiary lives.)

The UK has double taxation treaties with over 100 countries. They differ considerably in detail. A summary can be found here: https://www.google.com/url?sa=t&rct...ril_2018.pdf&usg=AOvVaw1HfRM7xbNcWFBAvx3tEpRk

Do not expect your tax office to be aware of these niceties. Do expect them to make up fiscal law on the hoof.

 

[BurnitBlue]

Thanks for the replies. I was advised not to approach the Swedish tax office for an answer to my own situation. Keep your head below the parapet. Some ex-pats who posted on the forum did in fact contact he tax office and got conflicting replies depending on which district and which inspector handled the query. It was always prefaced with "why do you want to know", which answer would put a person smack dead centre in the bullseye. That is why I asked on this forum rather than the tax office.
Macd, thanks for the link I will study later. Removing 30% from a low UK pension would mean I could not afford to live in Sweden without applying for benefits which is probably why they have not chased me down already. That I will not do. I would suffer being constantly monitored. I will see if I can legally arrange to be 183 days out of Sweden and still own a house here.

 

[KellysEye]

>I live on a boat in the Eastern Carib moving around a fair bit so am not resident anywhere for tax purposes.

Agree. After four years away you can apply for non-resident and non-ordinarily resident. Before returning we used that when selling a house and flat that had ben rented for over six years to avoid capital gains tax.

 

[Graham376]

If I don't spend 183 days anywhere, I assume that I remain UK tax resident?

As far as UK is concerned we are resident there, having house and paying council tax and income tax on pensions and savings. I also have permanent residence here in Portugal and, in common with my wife who is dual nationality, we have fiscal numbers (tax ref) but have never filled in a tax return or been asked to.

P.S. Situation may of course change after Brexit IF we return to the old system of passports being stamped on entry & exit to EU states. There will then be evidence of time in/out of UK.

 

[BurnitBlue]

As far as UK is concerned we are resident there, having house and paying council tax and income tax on pensions and savings. I also have permanent residence here in Portugal and, in common with my wife who is dual nationality, we have fiscal numbers (tax ref) but have never filled in a tax return or been asked to.

P.S. Situation may of course change after Brexit IF we return to the old system of passports being stamped on entry & exit to EU states. There will then be evidence of time in/out of UK.

Brexit is a concern for me and other Brits here. It seems according to EU rules that those resident for four years can apply for dual citizenship (along with a £100 fee). I think LOCAL also mentioned the same deal for most other EU Brit residents. Anyway, for me, tempting but no thanks. At least not yet, until I see the other options.

 

[nortada]

As far as UK is concerned we are resident there, having house and paying council tax and income tax on pensions and savings. I also have permanent residence here in Portugal and, in common with my wife who is dual nationality, we have fiscal numbers (tax ref) but have never filled in a tax return or been asked to.

P.S. Situation may of course change after Brexit IF we return to the old system of passports being stamped on entry & exit to EU states. There will then be evidence of time in/out of UK.

Same here but no house in Portugal - just the boat which we use for upto 182 days per calander year.

Oh yes, being Welsh, the wife has dual nationality. Especially at 6 Nation time️

 

[nortada]

My understanding of expat is somebody who has left the UK to reside in a foreign country and embraced the rules and regulations of their new residency or somebody trying to avoid taxes by living ‘between’ two sets of regulations (in this digital age (increasingly risky and becoming rarer).

Just to confirm that many Liveaboards (and motor home owners) in foreign countries are not expat and are still British Tax payers.

 

[alant]

Same here but no house in Portugal - just the boat which we use for upto 182 days per calander year.

Oh yes, being Welsh, the wife has dual nationality. Especially at 6 Nation time️

I can already feel the bruises from her tongue lashing.

 

[nortada]

I can already feel the bruises from her tongue lashing.

Well at least England beat Wales. :encouragement:

 

[steveej]

As a non UK resident, you are still liable to UK tax on UK sourced income, subject to the tax free personal allowance (assuming your are a UK citizen).

If you are resident in another country, then this income may be taxable in that country but it depends on what the local rules are. If it is taxable there, then provided there is a treaty in place, one of the countries should grant a credit for the other countries tax in order to eliminate the double taxation. Tax returns will be required to make this happen.

 

[charles_reed]

Tax-planners would have no chance of making a living if there was one simple answer to the question.
Assuming the pensioner is "resident for tax purposes" in the UK, pension income is taxed at source.
In my case with 3 pension streams, tax is charged on the two private ones and my NI pension tax is additionally deducted from one of these but paid by the UK government with no tax deduction.
This involves me in having to produce a self-assessment form annually (adding insult to injury). There is a 50% chance of me being landed with an additional tax bill or of receiving a rebate.
It's all a very wearisome form of unamusing roulette, especially as the IRS site is ramshackle, slow and requires a 3 level login of fiendish complexity and inefficiency.

 

[Kukri]

Tax-planners would have no chance of making a living if there was one simple answer to the question.
Assuming the pensioner is "resident for tax purposes" in the UK, pension income is taxed at source.
In my case with 3 pension streams, tax is charged on the two private ones and my NI pension tax is additionally deducted from one of these but paid by the UK government with no tax deduction.
This involves me in having to produce a self-assessment form annually (adding insult to injury). There is a 50% chance of me being landed with an additional tax bill or of receiving a rebate.
It's all a very wearisome form of unamusing roulette, especially as the IRS site is ramshackle, slow and requires a 3 level login of fiendish complexity and inefficiency.

Thank you Charles; that is an explanation that I can understand!

 

[Tranona]

Thank you Charles; that is an explanation that I can understand!

Actually what he says is confusing. The state pension is taxable, but the single person's allowance is greater than the pension so is applied first to that, so the pension is paid free of tax. You then get a code to reflect the allowance from the state pension up to your allowance. This is then applied to your other income.

Like Charles I have state pension plus 3 other pensions so my unused allowance is set against the income from one which is always greater than the allowance. The other two are then taxed at the standard rate.

Unless you have additional income from other sources such as dividends, or interest that exceed the tax free amounts or any self employed income you do not have to fill in a self assessment form. When I retired from the uni and drew all my pensions I carried on consultancy , training and examining for some time and therefore filled in self assessment (and the dreaded VAT!) every year. All this stopped 4 years ago and I rely just in pensions and modest investments, no more self assessment.

 

[nortada]

If you are in receipt of a British Government occupational pension, you will alwys be liable to income tax in the UK. However, the state pension, private pensions and non-government pensions will be taxed by your country residence.

If your country of residence has a bi-lateral agreement with the UK, pensions taxed by the UK will not be taxed by your country of residence.

It follows, as any income tax allowance in both countries will be applicable to those pensions it is possible to have more of your income tax free. For example, former members of the armed forces, with a state pension could get upto £16,000 before tax.