tax on UK pensions in North Cyprus

keving


Joined: 16/01/2012
Posts: 4

Message Posted:
16/01/2012 20:20

Hi,



can anyone help me with two tax questions?



I intend to take early retirement and become resident in TRNC:



1. after I become resident, can I elect for my UK company pension to be paid without deduction of UK income tax, so that I receive it gross. What is the procedure to do this?



2. in a few years time when I draw the state pension, what is the situation regarding my UK state pension? Can this be paid gross?





Thanks

CarrieRBag



Joined: 23/12/2008
Posts: 1374

Message Posted:
16/01/2012 20:52

Suggest on both you go the Pension Agency site... you will have to pay tax somewhere.. my husband pays UK tax on his pension so is not taxed here. Hope this helps.

tomsteel


Joined: 22/06/2009
Posts: 482

Message Posted:
16/01/2012 20:54

Will you get residency here???

Jovial_John


Joined: 31/01/2009
Posts: 1024

Message Posted:
16/01/2012 21:23

Before you buy an annuity with your private pension it is possible to move the lump sum to another EU country. However, the process is complicated and subject to rules so you must seek the advice of a professional. Once offshore you will be subject to the tax rules of your chosen country - South Cyprus for example charges a flat 5% income tax on pensions.

sharpknife


Joined: 11/01/2012
Posts: 30

Message Posted:
16/01/2012 21:35

I asked the UK tax office this question last year.

They advised that only countries with a reciprocal agreement could be taxed locally.

Cyprus has this agreement, Turkey dues not.

The form to claim this and stop the deduction of UK tax needs an authorising stamp from the local tax office to show that you have "signed up" (enrolled) to be taxed in that country.

To get into the tax system in the south you need either a residential address, proof of living there,

or you live North and work South, register with the South tax office and declare earnings (it was) if equal to or over 18K E / year. They told me I did not qualify on either count.

Ocam

Karmels


Joined: 20/12/2011
Posts: 58

Message Posted:
16/01/2012 21:43

Having just filled all the forms for my UK pension, I can say you will pay tax at source in the UK, but you will receive the full increase in pension rights that the Uk gives to OAPs in the UK.



If you receive an additional pension, ie Military, fire service, police. private. ect that will be taken into account against your yearly allowance, then you will pay tax on the outstanding amount.



There is no way you can say you are an expat out side the UK with no property in the UK to be exempt from this tax.



This information is from the forms sent to me from HM tax office.



I hope this helps people here to understand how they are effected by UK Tax.

waddo


Joined: 29/11/2008
Posts: 1966

Message Posted:
16/01/2012 21:50

Karmels,



You have it dead to rights. Live outside the UK and pay tax on State or any other Government pension even though you will never again be able to benefit from your tax's. That is the way it is with the UK, like it or not.



However, if the TRNC should ever gain full EU rights then you would be treated (with any luck) as being resident in Cyprus, this as the whole Island is already within the EU, then you may just be able to claim on the reciprocal agreement and just pay 5%. Or, you could move to Turkey as they also have a reciprocal agreement with the UK but the rate is not as good.



Look on the bright side, by living here and paying UK tax you are helping to support any Cypriot in the UK who is claiming benefits themselves - lol. You could not write a more biased law if you wanted to, just keep smiling and paying your income tax mate.

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
16/01/2012 21:54

Answer to question one…



As a resident in the TRNC with no double tax agreement with the UK you will be obliged to pay tax in the UK on your pension income.



You could move your pension in to Qualifying Recognised Overseas Pension Scheme QROPs and then you would be able to receive your pension income free of tax. You would need to work out if the extra cost involved with setting up a (QROPS) would be worth the taxed saved. If your pension fund is more than £50,000 it would be worth exploring.



Answer to question two…



No this cannot be paid gross and it will be liable to tax in the UK.



More information can be found at http://www.ncmoneyguide.info

Karmels


Joined: 20/12/2011
Posts: 58

Message Posted:
16/01/2012 21:54

Ref Msg5



Turkey IS in a full reciprocal agreement with the UK, the problem we have is we are in Mersin 10.



Expats living in Turkey enjoy the increase in their pensions just as if they lived in the UK.



To get the full reciprocal benefits you have to have a true Turkish address or a true Cyprus address, as in the South.



To pay this reciprocal tax in Turkey you would be paying more in tax than the UK.

Karmels


Joined: 20/12/2011
Posts: 58

Message Posted:
16/01/2012 22:00

Waddo.



I could not agree more with your post.



I have lived in Cyprus for 20ys and payed the tax man every month to keep my pension.



If and when we join the EU I am on the next banana boat out, but have room for a few passengers.

BizziLizzi


Joined: 02/08/2011
Posts: 855

Message Posted:
16/01/2012 23:47

Karmels - banana boat to where?

keving


Joined: 16/01/2012
Posts: 4

Message Posted:
17/01/2012 04:27

Thanks everyone for your answers.



My company pension is final salary related, so I dont want to take the risk of transferring its value into some overseas scheme and take the risk of losing money because of poor investment returns.



It sounds like those of you who are resident in TRNC and receiving a UK company pension are paying UK tax on that pension before it arrives in your bank account? Are you then paying TRNC tax on top of UK tax?



It seems that the only tax efficient way to receive my pension is to become resident of the south (selling my house in UK etc) and this will allow me to receive my pension gross but just be taxed at 5% on it?



Either that, or wait for one of two things (1) Turkey to join the EU or (2) Cyprus to be unified? This way in TRNC I might get taxed at 5% on the pension?

Agobard


Joined: 20/08/2008
Posts: 271

Message Posted:
17/01/2012 08:59

You could consider moving from the UK to RoC and renting there for perhaps a year to give you time to get your residency sorted out. Having done that and got your paperwork stamped at the local tax office you can then pay RoC taxes which are, of course, substantially less than UK. At this point move to the north, leave a post office box in the south for communications and you're home and dry. The other benefit of doing this is that you will also be entitled to a health card in the south which may come in handy at some point.

Geoff


Joined: 25/06/2008
Posts: 1370

Message Posted:
17/01/2012 11:01

TRNC is just like France, no double taxation agreement, sio you pa\y tax on it all in UK.

Geoff

Famagusta City.

harita


Joined: 14/08/2008
Posts: 1343

Message Posted:
17/01/2012 13:29

No tax is taken out of your STATE pension .. But !

Tax is paid when all income is added together & is over your tax free allowance ..

Shoot me down in flames !

colly


Joined: 31/07/2008
Posts: 297

Message Posted:
17/01/2012 13:39

Now I hate tax, but we have to remember that the whatever pension you have it has been built up from income that was not taxed at the time. Is it then logical to expect to receive it free of tax when drawn if it takes you into the tax bracket?

Agobard


Joined: 20/08/2008
Posts: 271

Message Posted:
17/01/2012 14:19

Message 14: this is complete nonsense with regard to France as there is a very long standing double taxation agreement between UK and France. The treaty has, in fact, very recently been updated. The reason for double taxation treaties is to ensure that you don't end up paying tax on the same income in both countries, not that you don't pay any tax at all. The situation in the TRNC is that there is no DT treaty because the TRNC is an unrecognised country. The TRNC authorities will not, however, seek to tax you on UK derived income/pensions so at worst you will pay tax in UK.

davpat


Joined: 23/08/2011
Posts: 225

Message Posted:
17/01/2012 16:24

Nice one message 13!!

sharpknife


Joined: 11/01/2012
Posts: 30

Message Posted:
17/01/2012 17:02

Message 9, apologies, you are correct, Turkey does... I should have written the TRNC does not have the necessary agreements.



http://www.hmrc.gov.uk/taxtreaties/in-force/turkey-dtc.pdf



Ocam

kaiserphil


Joined: 14/12/2008
Posts: 1096

Message Posted:
17/01/2012 17:43

Mess 15, harita - nobody can shoot you down, you are spot on. You receive a tax-free allowance against any other income, but your state retirement pension is deducted from that, giving you a lower tax code.

scruff


Joined: 15/07/2008
Posts: 1070

Message Posted:
17/01/2012 18:14

To sum up. Effectively your Income tax situation if you live in the TRNC is identical to that that would apply if you lived in the UK.

Currently there is no income tax on UK. pensions payable to the TRNC. Please note that this could conceivably change, but it's unlikely to happen.