akiralx Posted September 13 Share Posted September 13 I have just started receiving a small pension from my old Local Government Pension Scheme, I have been a tax resident of Australia since 2009 (citizen since 2014). The pension is UKP 6,927 per year so well under the UK personal allowance of UKP 12,570 - my tax code is 1257L M1. The M1 is an emergency code which I understand means 'Calculate your employee’s tax only on what they are paid in the current pay period, not the whole year'. Is it likely HMRC will amend the code? The first pension payment (which includes 2 months of arrears) has been taxed at around 7.8% - am I right in thinking that at the end of the UK tax year 2024/5 the pension fund will repay me the tax as it is under the allowance, or do I need to submit an 'application for relief at source from UK Income Tax' form? My hope is to only pay tax on it here. Many thanks Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 13 Share Posted September 13 7 minutes ago, akiralx said: am I right in thinking that at the end of the UK tax year 2024/5 the pension fund will repay me the tax as it is under the allowance, or do I need to submit an 'application for relief at source from UK Income Tax' form? My hope is to only pay tax on it here. How would the pension fund know you are under the allowance, since they don't know what other income you have? Quote Link to comment Share on other sites More sharing options...
akiralx Posted September 13 Author Share Posted September 13 (edited) 2 hours ago, Marisawright said: How would the pension fund know you are under the allowance, since they don't know what other income you have? They don't, I agree - I suppose I'm asking why they are deducting anything when they know the pension they are paying is below 12,570 p.a.? Edited September 13 by akiralx Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 13 Share Posted September 13 46 minutes ago, akiralx said: They don't, I agree - I suppose I'm asking why they are deducting anything when they know the pension they are paying is below 12,570 p.a.? Because they are obligated to do so, due to the fact that they're not able to judge your total income. Quote Link to comment Share on other sites More sharing options...
lothar Posted September 13 Share Posted September 13 I'm no tax expert but I assume you are not a uk tax resident as you've mentioned your a tax resident in aus. I think as a non uk tax resident you need to claim your allowance at the end of the year. Quote Link to comment Share on other sites More sharing options...
rammygirl Posted September 13 Share Posted September 13 You should be taxed on the pension by the ATO. You need to declare it on your tax return. However to stop tax being deducted at source there is a form to fill in sorry I can’t remember exactly but I found it online. You send it to the ATO who then endorse it and send it to HMRC, who then tell the pension company to stop deducting at source. It can take a while….. any tax paid to HMRC can be reclaimed . Did you also get a lump sum? This should be taxed in Aus too even though it may be tax free in UK. You should again report it. Note that only the gain since moving to Aus is taxed not the entire sum. I asked for the historic value from the scheme to help with this. If you need help get an accountant who understands overseas pensions to help. I had to do this when I got my local government pension a while back. Quote Link to comment Share on other sites More sharing options...
akiralx Posted Saturday at 00:49 Author Share Posted Saturday at 00:49 17 hours ago, rammygirl said: You should be taxed on the pension by the ATO. You need to declare it on your tax return. However to stop tax being deducted at source there is a form to fill in sorry I can’t remember exactly but I found it online. You send it to the ATO who then endorse it and send it to HMRC, who then tell the pension company to stop deducting at source. It can take a while….. any tax paid to HMRC can be reclaimed . Did you also get a lump sum? This should be taxed in Aus too even though it may be tax free in UK. You should again report it. Note that only the gain since moving to Aus is taxed not the entire sum. I asked for the historic value from the scheme to help with this. If you need help get an accountant who understands overseas pensions to help. I had to do this when I got my local government pension a while back. Yes, thank you - I found the form. As you say I will also declare the gain on the lump sum, I already know the base figure (quite high as the exchange rate was better then). 1 Quote Link to comment Share on other sites More sharing options...
Ken Posted Saturday at 07:01 Share Posted Saturday at 07:01 On 13/09/2024 at 12:46, akiralx said: I have just started receiving a small pension from my old Local Government Pension Scheme, I have been a tax resident of Australia since 2009 (citizen since 2014). The pension is UKP 6,927 per year so well under the UK personal allowance of UKP 12,570 - my tax code is 1257L M1. The M1 is an emergency code which I understand means 'Calculate your employee’s tax only on what they are paid in the current pay period, not the whole year'. Is it likely HMRC will amend the code? The first pension payment (which includes 2 months of arrears) has been taxed at around 7.8% - am I right in thinking that at the end of the UK tax year 2024/5 the pension fund will repay me the tax as it is under the allowance, or do I need to submit an 'application for relief at source from UK Income Tax' form? My hope is to only pay tax on it here. Many thanks The only circumstances in which the pension fund will repay you is if your tax code is changed to one with a non-Month 1 basis before the end of the tax year. While it remains on a month-1 basis they will only look at the current month (and in that first month you were obviously over the allowance for that month). You need to get HMRC to change the tax code (it should be NT as pensions are only taxed where you reside under the terms of the UK-Australia Double Taxation Agreement so the tax-free allowance is irrelevant anyway) the scheme can't change the tax code even if they know it's wrong as they don't have that authority. Tax refunds after the end of the tax year can only be paid by HMRC not the scheme. I see you've found the form needed. Hopefully you will get the form processed quickly enough to get the tax code changed this year. Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted Saturday at 09:06 Share Posted Saturday at 09:06 8 hours ago, akiralx said: Yes, thank you - I found the form. As you say I will also declare the gain on the lump sum, I already know the base figure (quite high as the exchange rate was better then). You need to do more than just complete the form ... a requirement to obtain a Certificate of Residency has been added in recent times. Note also that the way you calculate the Applicable Fund Earnings is not the same as capital gains on the disposal of assets held at the time of commencing residency. You calculate the GBP difference and translate that using the exchange rate at the date you receive the pension lump sum. See ATO Interpretative Decision 2015/7. For some light reading ... https://www.ato.gov.au/law/view/document?docid=AID/AID20157/00001 You know where I am if you need help with all of this. Best regards. Quote Link to comment Share on other sites More sharing options...
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