Income tax on expat military pensions

#2
Has anyone ever heard of a situation whereby somebody who was in receipt of a mil pension, was non uk resident for tax purposes managed to avoid being taxed at source?

Very interested in this.
 
#3
greenbaggyskin said:
Has anyone ever heard of a situation whereby somebody who was in receipt of a mil pension, was non uk resident for tax purposes managed to avoid being taxed at source?

Very interested in this.
Having been handed a tax bill for the usa (having paid through paye) I looked into this. If you are not domiciled in the UK then you need to contact the HMRC office and get a non resident decision. You can then get the tax back. However HRMC will rass you up to the resident country and you will pay tax there. Check the tax rate before doing this. You may well be worse of.
 
#4
fingers_1661 said:
1. I’m aware of a case in which a former career soldier challenged a decision by HMRC to deny child benefit on the grounds of;

a) (Non) residency &

b) Not being in the service of the crown, despite working for HMG in a country outside the EU.

2. The appeal accepted that his duties constitute service to the crown & referred the matter back to a fresh tribunal to rule on his tax status prior to accepting his current role.

3. The appeal commissioner’s findings were potentially of great interest to expat military personnel. If he wins his appeal he’ll receive child benefit backdated from the date he applied however if he loses it seems there are grounds to reclaim the income tax paid on his pension, given the appeal commissioners view that HMRC used one set of rules to tax him & another set to stop him benefiting from those taxes.

I’ll update this in due course, but I cannot sign off without a bit of a rant. This guy has 30 years of NI contributions but had to fight for 2 years to get to this stage. I wonder how long it takes to process a claim for any form of benefit from the arrivals hall @Dover, Harwich, Felixstowe, Heathrow…
Pliss? I thinking 10 second,maybe 12! :roll:
 
#6
Hi

I live in Denark which has the highest tax in the world!

Now for me, my 22 yr pension is taxed in the UK, despite me not living there and getting nothing back from the UK, HOWEVER, due to the double taxation agreement this salary can only be taxed once and the tax I pay in UK is tiny compared to if the Danes taxed me, which in my case is nearly 45% (this is the equivelent of our higher rate)

So yes I do begrudge paying UK tax it does work in my favour.
 
#7
I had been given to understand that if you declared "non-domiciled" status to HMRC, then the pension was no longer protected against inflation [i.e. no further pension increments]. That seemed sort of logical, on the basis that an inflation adjustment relating to a country you don't live in would be inappropriate.

Anybody know the answer?
 
#8
blue_sophist said:
I had been given to understand that if you declared "non-domiciled" status to HMRC, then the pension was no longer protected against inflation [i.e. no further pension increments]. That seemed sort of logical, on the basis that an inflation adjustment relating to a country you don't live in would be inappropriate.

Anybody know the answer?
You're confusing Military pensions with state pensions.
 
#9
fingers_1661 said:
blue_sophist said:
I had been given to understand that if you declared "non-domiciled" status to HMRC, then the pension was no longer protected against inflation [i.e. no further pension increments]. That seemed sort of logical, on the basis that an inflation adjustment relating to a country you don't live in would be inappropriate.

Anybody know the answer?
You're confusing Military pensions with state pensions.
So which continues to be proof against [UK] inflation?

Military or State?
 
#10
I have several expat friends in Cyprus. They have a double taxation agreement with the UK, 185 days after arriving there you fill out a Form X at the local tax office and send it off to Newcastle. You then stop paying UK tax on your pension and the Cypriots take 5% of it.

I'm off.

Edited to add:

When someone buys My House
 

oldbaldy

LE
Moderator
#12
blue_sophist said:
fingers_1661 said:
blue_sophist said:
I had been given to understand that if you declared "non-domiciled" status to HMRC, then the pension was no longer protected against inflation [i.e. no further pension increments]. That seemed sort of logical, on the basis that an inflation adjustment relating to a country you don't live in would be inappropriate.

Anybody know the answer?
You're confusing Military pensions with state pensions.
So which continues to be proof against [UK] inflation?

Military or State?
Military.

It is only the state pension which does not get the annual inflation uplift.

Have a read of this:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/MoneyInRetirement/DG_10014855
 
#13
Only slightly off topic. Am I right in saying that pension payments are currently taxed at 22%? If so is this going to be reduced to 20% on Apr 6 08 when the base rate changes?

Anyone know ?
 
#14
oldbaldy said:
blue_sophist said:
fingers_1661 said:
blue_sophist said:
I had been given to understand that if you declared "non-domiciled" status to HMRC, then the pension was no longer protected against inflation [i.e. no further pension increments]. That seemed sort of logical, on the basis that an inflation adjustment relating to a country you don't live in would be inappropriate.
Anybody know the answer?
You're confusing Military pensions with state pensions.
So which continues to be proof against [UK] inflation?
Military or State?
Military.
It is only the state pension which does not get the annual inflation uplift.
Have a read of this:
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/MoneyInRetirement/DG_10014855
Thanks for the reading material, OB.
I'll be back in a week or so!! :lol:
 

oldbaldy

LE
Moderator
#15
Pocoyo said:
Only slightly off topic. Am I right in saying that pension payments are currently taxed at 22%? If so is this going to be reduced to 20% on Apr 6 08 when the base rate changes?

Anyone know ?
Well sort of!

The 10% rate is going & the 22% goes down to 20%.
So whether you win or lose depends on your personal circumstances.

http://www.telegraph.co.uk/money/graphics/2008/03/13/taxfax.pdf
 
#16
I'm now resident in Oz and have applied for my mil pension to be paid tax free into my UK bank account.

Oz law states you HAVE to pay tax on any foreign income (including mil pensions) in Australia if you are a permanent resident, so even if you pay it in the UK, they'll take it off you here too! Hence why the UK and Oz have a double taxation agreement allowing you to get your mil pension paid tax free in the UK!

Mil pensions are definitely still indexed to the Retail Price Index (RPI) (for when you reach your state pensionable age and your mil pension goes up to the pension+RPI adjustment rate) and is inflation proof.
 
#17
blocksweat said:
greenbaggyskin said:
Has anyone ever heard of a situation whereby somebody who was in receipt of a mil pension, was non uk resident for tax purposes managed to avoid being taxed at source?

Very interested in this.
Having been handed a tax bill for the usa (having paid through paye) I looked into this. If you are not domiciled in the UK then you need to contact the HMRC office and get a non resident decision. You can then get the tax back. However HRMC will rass you up to the resident country and you will pay tax there. Check the tax rate before doing this. You may well be worse of.
There is a world of difference between non-resident and non-domiciled. Non -resident simply means you don't live there. Non-domiciled means not only non-resident but als NO CONNECTIONS to the county in question. One connection would be a pension.

I find it much better to pay tax in UK (very little) as opposed to much more here in Germany.
 
#18
As you say, it all depends where you live.

Jersey has double-taxation agreement with UK, and UK's 20% = Jersey's 20% [with no upper limit] anyway, so no big deal.
 
#19
Gary_K said:
I'm now resident in Oz and have applied for my mil pension to be paid tax free into my UK bank account.

Oz law states you HAVE to pay tax on any foreign income (including mil pensions) in Australia if you are a permanent resident, so even if you pay it in the UK, they'll take it off you here too! Hence why the UK and Oz have a double taxation agreement allowing you to get your mil pension paid tax free in the UK!

Mil pensions are definitely still indexed to the Retail Price Index (RPI) (for when you reach your state pensionable age and your mil pension goes up to the pension+RPI adjustment rate) and is inflation proof.
Doh! A double taxation agreement means that you won't be taxed twice. Either the UK or Oz will tax your pension, there is no way tht you can have it paid in the UK and not pay UK income tax on it. Numpty.
 
#20
Minnesota_Viking said:
Gary_K said:
I'm now resident in Oz and have applied for my mil pension to be paid tax free into my UK bank account.

Oz law states you HAVE to pay tax on any foreign income (including mil pensions) in Australia if you are a permanent resident, so even if you pay it in the UK, they'll take it off you here too! Hence why the UK and Oz have a double taxation agreement allowing you to get your mil pension paid tax free in the UK!

Mil pensions are definitely still indexed to the Retail Price Index (RPI) (for when you reach your state pensionable age and your mil pension goes up to the pension+RPI adjustment rate) and is inflation proof.
Doh! A double taxation agreement means that you won't be taxed twice. Either the UK or Oz will tax your pension, there is no way tht you can have it paid in the UK and not pay UK income tax on it. Numpty.
Have you been on the IR website?

I think you'll find, if you do some research, that you'll turn out to be the numpty my friend, as that is exactly what is happening. My 22 year military pension will be paid into my UK account TAX FREE and I'll pay tax over here in Oz on the pension as an unearned income. :roll: :roll: :D :wink:

Oz law says, as a permanent resident, you have to pay tax on our foreign income in Australia, and not in the country of source.

The double taxation agreement is primarily mean't to make sure you do not pay tax twice, but it also allows for being paid a military pension tax free in the UK.

It's all on the IR website anyway, so DYOR folks!

In fact, check it out here numpty :D :D :D :

http://www.hmrc.gov.uk/cnr/form_aust2003.htm and http://www.hmrc.gov.uk/cnr/aust-indiv2003.pdf

Happy Easter by the way!
 

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