NON RESIDENT PENSIONER

NON RESIDENT PENSIONER

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My client is currently living in Thailand. When he became 65 he received a notification of his state pension together with a small amount of additional state pension and a small amount of graduated retirement benefit. He was informed that since he was living outside the UK that pension would remain at that level. Indeed he receives the same amount every 4 weeks as originally informed.

However the PAYE codings raised by HMRC each tax year 12-13,13-14 and 14-15 make restriction for state pension firstly for a lesser amount and secondly increasing (£100-£150) each year. I understood that HMRC were informed by Pensions of the amount to adjust PAYE codings?

Why is this and what figure should have been/should be included on his tax return for state pension? He receives  3 private pensions as well as the state pension..

Replies (5)

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By Montrose
06th Aug 2014 13:14

Pensions payable to Thai resident

 

Curiously the UK/Thailand DTA does not address taxing rights concerning pensions, so that UK pensions receivable by a Thai resident remain subject to UK tax.

 

If his total pensions exceed the basic rate band, then the coding notice will have to reflect the reduction in the basic rate band which follows from the increases in personal allowance. That may be the answer, as each pension will be below the basic rate band level.

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Replying to Lone_Wolf:
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By MILLY1
06th Aug 2014 14:01

My apologies but please could you explain further? State pension received each year  plus private pensions over marginally basic rate band before deduction of personal allowances.

 

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By Montrose
06th Aug 2014 14:17

Thai Pensions

I may have missed something even more basic-although the same theme. Just one further question-are the non state pensions fixed or increasing? 

There must be three coding notices, one for each non state pension- you do refer to PAYE codings

The coding system incorporates the personal allowance and the basic rate band, so is changed each year. What you have to calculate is whether the application of the amended code numbers and the resultant tax deducted from the non state pensions gives the correct answer for each year. Just looking at the code number applied to one pension is missing the point.

 

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By MILLY1
06th Aug 2014 14:28


Two of the 3 non state pensions are small and a BR code applied. Thus the PAYE code to which I refer is for the main pension. So we have state pension no tax deducted, 2 small non state pensions taxed at 20% and large non state pension utilising the balance of personal allowances  after the deduction for state pension which does not agree to pension actually received by my client.

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By Marion Hayes
06th Aug 2014 16:19

Automatic uplift

HMRC is told when someone begins to receive state pension. The computer automatically applies an average increase each year to a code restriction which is why it has changed. All non- residents are in the same position of receiving a fixed state pension, and not all elements of the state pension increase at the same rate so virtually all codes issued are actually incorrect.

Now that the two computers can talk to each other I would have expected that to stop but it obviously hasn't.

The tax returns should reflect the actual amounts received for all pensions.

It may be that if you ring HMRC they can set a flag on his record to stop it in the future or you will need to ring each year to correct the code number.

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