As An Expat, Why Do I Pay Tax On My UK Pension?

Are you tax resident in the UK?

I have lived in Thailand for 12 years and am now 74. I have only been back to the UK once in that time so I consider myself non-resident in the UK. I have been paying UK tax on a private pension since the age of 66 though I have not set foot in the UK in that time. Surely that makes me a non-resident, so why am I paying tax?

You are non-UK tax resident, and Thailand tax resident. This means you would only have a liability in the UK on certain UK sources of income, such as a government pension (e.g. a teacher’s pension, and not the state pension), rental income, and investment income in certain scenarios.

It is possible you have not told the private pension company of your change in residence status, and they have not been advised by the UK taxman, HMRC.

According to Jason Porter, director of expat financial advisers Blevins Franks, you should advise both immediately. “You might need to prove it with some documentary proof of your status, perhaps a Thai tax return, or other evidence,” says Porter. “I suspect they have been deducting 20% tax, and you are still able to recover this. You are also able to change the treatment in the future to a zero tax code on the payments.

“If the reason you overpaid tax was your fault – i.e. if you did not let HMRC know you were non-resident it is your fault, but if you told them and can prove it, it is likely to be their fault – then the deadline for claiming is four years after the end of the tax year you’re claiming for.  However, if HMRC made a mistake, you might be able to claim further back than this.

“You will need to submit UK tax returns for the previous years, showing you are non-UK tax resident, and a tax resident of Thailand. This will include the gross UK pension in the year and the tax paid, plus any other UK sources of income. As the tax treaty gives Thailand the taxing rights on the pension, the UK tax paid can be recovered. You will need to declare the private pension on your Thai tax return.”