More bad news for UK pensioners

Post by **arjay** » March 23, 2012, 9:41 am

Trubrit wrote:I was merely clarifying the likelihood that the top up to the pension would be considered as a social security payment, subject to a means test and not a reinstatement of his full pension, therefore can be withdrawn when the circumstances change, as in leaving the UK again .Once a pension has been upgraded there is no provision in law to lower it again.

Val, His letter definitely made no reference to the situation you describe above, - i.e. involving means testing or social security payments. It said if he visited and notified them of his visit he would receive the increased pension amount. When he left it would return to the previous amount. I'll try and get him to scan and email me the relevant part.

Post by **arjay** » March 23, 2012, 9:45 am

Thank you for your comments and input Read.

I think I may well be deferring claiming at least until the "spoken of" £140 comes in effect.

What frustrates me is that whilst acquiring non UK Resident status for tax purposes means that one isn't normally taxed back in the UK on income earned overseas, it doesn't exclude one from being taxed in the UK on pension income earned and paid in the UK. The recent Government consultative document on Non Residency status seems to preoccupy and confine itself to those working abroad. It makes no reference to those who may wish to retire abroad, (perhaps to live out their days quietly in warmer climate!). Indeed in the many examples in the document non refer to retired people.

It seems that the UK subject choosing to live abroad loses out on all the things that he worked for and thought he was qualifying for.

Post by **trubrit** » March 23, 2012, 9:50 am

arjay wrote:[

Val, His letter definitely made no reference to the situation you describe above, - i.e. involving means testing or social security payments. It said if he visited and notified them of his visit he would receive the increased pension amount. When he left it would return to the previous amount. I'll try and get him to scan and email me the relevant part.

That would be very interesting to see, thanks . Of course the implication of that is that our own holidays back home could be partly state subsidised.

Post by **arjay** » March 23, 2012, 9:56 am

There is a related question that I would like to ask of anyone who has their UK state pension paid into a bank account in Thailand. Do you get a good exchange rate?

The Pension people in the UK say that by having ones' pension paid directly into their overseas bank account, they will benefit from a better exchange rate. Does anyone have any experience of what rate that is currently?

Post by **jackspratt** » March 23, 2012, 10:00 am

You can find the current rates that Thai banks are paying for GBP here:

http://bankexchangerates.daytodaydata.net/default.aspx

It will vary from bank to bank, and day to day (or hour to hour).

Post by **BobHelm** » March 23, 2012, 10:02 am

arjay wrote:it doesn't exclude one from being taxed in the UK on pension income earned and paid in the UK.

I absolutely agree that pensioners in general & 'retired abroad' pensioners get an atrocious deal from the UK Government. That is, undoubtedly, due in some part to the limit on the amount of pressure that the group, as a whole, can bring to bear. In the case of retired abroad pensioners I would think, in the main, that is minuscule. Probably very few bother to exercise their right to vote & that is their only real weapon in the armoury so the Government have little to worry about upsetting them.

I have some sympathy with the Government view on pension taxation.
It is that Income Tax was not paid on the contributions that the individual paid in accumulating the pension, nor on the extra 'income' that the employer provided at that time by their contributions. It is only fair, runs the argument, that taxation should be liable on the income generated.
I don't like it either, but have to acknowledge that it is a valid point.

Post by **trubrit** » March 23, 2012, 10:06 am

arjay wrote:There is a related question that I would like to ask of anyone who has their UK state pension paid into a bank account in Thailand. Do you get a good exchange rate?

The Pension people in the UK say that by having ones' pension paid directly into their overseas bank account, they will benefit from a better exchange rate. Does anyone have any experience of what rate that is currently?

Yes.My govt pension is sent here every 28 days, payable on a Friday and always credited to my account by midday on the following Monday. It is sent in sterling and changed here by Bangkok Bank at the full telex transfer rate, minus a fixed sum of 200bht service charge .

Post by **Tafia** » March 23, 2012, 10:12 am

I believe to qualify and keep the increase you would need to visit and stay for 6 months.

If you opt to have your pension paid directly into a Thai Bank it will be sent in Baht and not sterling so as to what rate you get isn't clear.

Post by **trubrit** » March 23, 2012, 10:13 am

This week in the Lords a private members question was answered on just this subject. Apparently there are over 1/2 million pensioners living abroad outside the catchment zones, effected by this.
http://www.telegraph.co.uk/finance/pers ... nsion.html
There has been an appeal to the European courts which was turned down in favour of the UK government .Guess really we have to consider it the price to be paid for living in the sun . :-"

Post by **arjay** » March 23, 2012, 10:50 am

Yes, I was trying to establish if the money transferred by the British Government's Pension Dept was transferred in baht or sterling (there's seems to be a difference of experiences there); and because it is transferred in bulk whether the exchange rate is more favourable than me accumulating it in my UK bank account and transferring amounts periodically in sterling by TT.

It's shameful, - over half a million retired Brits living abroad who don't get pension increases!

There's no justification or excuse for it. Those people have contributed just the same as the next person, and pay UK tax on it where appropriate. I note the petition, if anyone wants to sign it.

http://epetitions.direct.gov.uk/petitions/16387

Post by **arjay** » March 23, 2012, 11:03 am

This is a copy of the extract from the Pension Dept letter:

: The extract from the Pensions Dept letter

Post by **trubrit** » March 23, 2012, 11:13 am

This is a link to the downloadable claim form for payment of pension overseas
http://www.direct.gov.uk/prod_consum_dg ... 181245.pdf
In itself it's a bit ambiguous as to where the currency transfer takes place , just saying locally, which could be local to who? However I have had mine paid this way ever since Thailand was added to the list of countries where it could be paid and upon receipt here the bank sends me a SMS detailing its arrival and the exchange rate used in crediting it to my account, minus the standing charge. As the rate is always the published telex rate on the day, I presume they mean local to me , not them .I have three pensions monthly and the govt one is by far the most efficient of them all , both in time and exchange rate .

Post by **rick** » March 23, 2012, 9:47 pm

One point that maybe could be clarified: at what point are you considered 'not resident' for pension purposes?

For example, all your income is pension/investments from the UK, you visit UK annually (or maybe better to say Thailand annually) so i consider that i have not given up UK residence and i am considered resident for tax purposes. But i cannot find a clear indication of how this will be decided. Typically i spend about 3-4 months in the UK. Don't really want to have to increase that to 6 months.

Post by **arjay** » March 24, 2012, 12:04 am

Fury as full scale of Chancellors Granny Tax emerges:

http://www.dailymail.co.uk/money/pensio ... erges.html

Post by **arjay** » March 24, 2012, 12:14 am

Rick, I've copied below an email I received from HM Treasury, which provides a link to a draft of the document that they are planning to pass into law next year, to make it easier for people to determine their UK residency for tax purposes:

This note provides an update on the non-domicile reforms and statutory residence test following today’s Budget statement.

Non-domicile reforms

The Government has confirmed that the reforms to the taxation of non-domiciled individuals, announced at Budget 2011, will be implemented from 6 April 2012 as planned. Legislation will be introduced in Finance Bill 2012. As you will be aware, the Government published draft legislation on 6 December 2011 for a period of technical consultation. It has considered the representations made during that consultation and any changes that Ministers have decided to make will be contained in the Finance Bill, which will be published on 29 March.

As indicated in the Government response document published in December, the Government will consider extending the new incentive for business investment to partnerships. It will also consider the further simplifications to the remittance basis rules described in paragraph 3.5 of the response document (http://www.hm-treasury.gov.uk/d/condoc_ ... reform.pdf). Any changes in these areas will be considered for possible legislation in Finance Bill 2013.

Statutory residence test

The Government has reaffirmed its commitment to implementing the statutory residence test in Finance Bill 2013 to take effect from 6 April 2013. This was announced in a Written Ministerial Statement made by David Gauke MP, the Exchequer Secretary to the Treasury, on 6 December 2011 (http://www.hmrc.gov.uk/budget-updates/0 ... on-dom.pdf). A formal response to the 2011 consultation will be published, together with draft legislation, after Budget. This will allow taxpayers and advisors to scrutinise the legislation and detail of the policy well in advance of implementation in 2013. We will notify you when we have a firm publication date.

Ordinary residence

The Government has announced today that it will abolish ordinary residence for tax purposes but retain Overseas Workdays Relief and put it on a statutory footing. This was one of the options included in last summer’s consultation document (http://www.hm-treasury.gov.uk/d/consult ... idence.pdf). This change will be implemented from 6 April 2013, as indicated in the Written Ministerial Statement of 6 December. Further details and draft legislation will be included in the Government’s forthcoming publication on the statutory residence test (see above).

Statement of Practice 1/09

The Government has confirmed that Statement of Practice 1/09 will be put on a statutory footing from 6 April 2013. Further details and draft legislation will be included in the Government’s forthcoming publication on the statutory residence test. The existing Statement of Practice will remain in force for the 2012-13 tax year.

The Budget text on all these measures can be found on page 60 of the Budget document at: http://cdn.hm-treasury.gov.uk/budget2012_chapter2.pdf

Post by **rick** » March 24, 2012, 4:19 pm

Thanks RJ, I see residence is considered a murky issue. However, as all my income is UK based (mainly pensions) it is taxed anyway (unless the personal allowance continues it's meteoric rise, in which case i will stop paying tax). I did look at the documents above but it does say it applies to Income tax only; also I am sure i will be considered resident because i spend more than 90 days in UK a year. How does the UK decide if you are non-resident for pension purposes? That also seems to be ill defined. I assume (maybe wrongly) that it would be similar for State Pension; i.e.I will get it uprated every year but couldn't find a definition on the pensions website.

Post by **arjay** » March 25, 2012, 8:51 pm

Rick, I believe the criteria are the same for NI/state pensions as for Income Tax. Though perhaps someone else could confirm that is so.

It looks like there is something of a backlash over the situation of the Age Allowances being withdrawn:

http://www.dailymail.co.uk/news/article ... ead_module

Note: "The hardest hit are those turning 65 next year, who will lose £323 annually".

.... and a petition is underway that may force a full parliamentary debate:

http://www.dailymail.co.uk/money/pensio ... -raid.html

I've signed already!

Post by **rick** » March 26, 2012, 1:17 pm

Thanks Arjay,
I just made my assumption based on the links to the consultative documents, which specifically said that the changes did not apply to NI and other benefits. But it is probably just a get out clause in case they change differently (e.g., certain benefits such as family or child credit do not just depend on residence, but actual presence).

I must admit i was looking forward to the higher tax allowances when i retire - now it looks like they are being used to fund the £140 flat rate pension - nothing is ever free!

Anyway, planning, planning and maybe i can find a few loopholes before i get the pension in 5 years time.

Post by **mykthemin** » March 26, 2012, 5:58 pm

Just to make everyones day!! if you are non resident you do not get any tax free allowance and pay tax on every penny you receive in the uk!!!

Post by **davecryan** » March 26, 2012, 6:17 pm

mykthemin wrote:Just to make everyones day!! if you are non resident you do not get any tax free allowance and pay tax on every penny you receive in the uk!!!

Nonsense !!!

I have been drawing a State Pension for the past 6 years and have received the full tax allowance to date. I am aware that the tax free allowance of 150 gbp, that I have now, is frozen until 2016.

However when I applied for, and got, an extra 46 gbp per week for my wife, I was declared Non Resident on the grounds of cohabitation and my Pension was frozen.