cashing in a uk pension and claiming back uk tax

Finance, Taxes, Banking, Insurance and Retirement
1
I have a few old pension pots in the UK that I'm getting close to cashing in.

If I was in the uk there would be uk tax implications. But I'm not UK tax resident and according to this... I don't have to pay uk tax on the pay out

https://www.gov.uk/tax-on-pension/ta...ou-live-abroad

I was just talking to one pension pot holder and they said they have to deduct the tax at source before paying out the pension and then I have to claim that amount back from HMRC.

Anyone done this ? The above link doesn't say anything about it.

2
I believe if you are not, or no longer, a UK taxpayer, you should have moved your pension pot offshore. If not, you can take a % tax-free then the balance, if taken as a lump, is paid with withholding tax deducted.

You should consult the pension company directly...

3
Like you, I am not a professional tax person but I believe that Article 18 of the CH/UK Double Taxation Convention is what you need:

"Article 18

Pensions

(1) Subject to the provisions of paragraph 2 of Article 19, pensions and other

similar remuneration paid to an individual who is a resident of a Contracting State, shall be

taxable only in that State.

(2) Notwithstanding the provisions of paragraph 1, a lump sum payment derived

from a pension scheme established in a Contracting State and beneficially owned by a

resident of the other Contracting State shall be taxable only in the first-mentioned State."

My interpretation is that the effect of the second paragraph is that any lump sum you take is taxed only in the UK. Provided this does not exceed the tax-free lump sum you will not incur tax. I suspect that you will further incur UK tax if the combined size of your pension pots exceeds the lifetime allowance when you start drawing and at various points in the future.

Any pension income other than lump sums (first paragraph above) is only taxable in CH (if you are resident there). In my case my pension provider does deduct UK income tax but I claim this back through my return and I am trying to get HMRC to change my coding to stop this happening in future.

Article 19 referred to above concerns civil service type pensions for which different rules apply.

I don't know of any reasons to take the pension pot offshore although I'm ready to learn! I suspect it's expensive.

4
Ive just had the same happen to me , one company paid out with no tax deducted, and processed it within 2 weeks. The next company flatly refuse to acknowledge the fact that I do not pay tax in the UK and say I have to deal with te tax office to get it back .... and i started the process in Dec and they still have still not sent me a penny !

5
Thanks Joolie ! Having done a bit more research I'm pretty sure this is about the pension holder not wanting to have a separate process for expats. Seems they do not have to withhold tax for non residents.