U.K. Pension and Irish tax

hi all

Posting for my sister as she is really struggling to pay the correct tax on her uk pension and finding it difficult to get it sorted with the tax office.

She is an Irish resident having moved back from the uk 5 years ago. She doesn't work in Ireland and has 2 uk pensions. One is the government state pension which she thinks is not taxable. The other is a Pe nsion from her work in a university. The annual amount of the latter is stg12056 and up to April 2016 she paid stg289 tax on this. Up to 2 years ago she had no interaction with the Irish tax offices as she thought because she was paying tax at source she had no tax liability in Ireland. She now realises this is incorrect and wants to get all her tax affairs in order. She has had many many phone calls and correspondence with our revenue dept and no one can tell her what she owes. One of the latest letters recommends that she submits a form IRL/individual to the uk tax authorities and gets all her uk tax on her pension refunded and then pay Irish tax on this .... If she does this will she then have to pay 5 years back tax here??? Will this leave her with a bigger liability or how does the uk pension tax work in Ireland. it doesn't seem to be clearcut but in reality she thinks it can't be that complicated!

She is jointly taxed with her husband who has a pension from the Irish defence of €15242. He pays no tax on this except use - is this correct?

Any advice welcome. Thanks for reading. Couldn't find this query posted before so apologies if it was.

A bit messy.
Find a recommended local accountant , check what he/she will charge you and leave accountant to sort.

On balance , as long as you have paid (as you thought ) tax due ,the worst is that you will owe some tax, to either uk or Ireland , but in fairness revenue will stretch this sensibly.

You have joint tax so you are taxed on all income ie pensions uk & Ire.There are age allowances etc.

A good local accountant will sort and importantly give your head peace !

Double Taxation Agreements
Double Taxation Agreements generally make a distinction between pensions payable by governments to former employees and pensions payable by private employers. There are some variations between the agreements and not all agreements make this distinction and they vary in other ways so you would need to check how exactly you are affected.

Most of them provide that pensions for non-governmental employees are taxed in the country of residence. So, if you are living in Ireland and getting an occupational pension from another country, you should generally receive it gross and then pay Irish tax on it.

The opposite is the case for pensions for former Government employees - generally they are taxable only in the country where they are paid.


In my experience, UK University pensions are treated under this rule and therefore the pension should only be subject to tax in the UK

The UK state pension is definitely taxable. Your sister may not have paid any UK tax on this as her tax credits might have covered it.
Again, the husband is not paying tax on his Irish pension as that is covered by his tax credits here.
It sounds as though each is somehow being taxed separately.

My husband has a UK university pension and UK state pension. He applied to the UK Revenue to be coded NT, non taxable there. We make a joint tax return to the Irish Revenue.
The Irish exemption for a couple (with one at least) aged over 65 is €36000. If their joint income is below this, it could be more beneficial to be taxed jointly in Ireland.

My hubby has a UK state pension and also a UK private pension. Because we are resident in Ireland we must pay tax here for all world wide income.
My hubby sought a tax exemption from the UK revenue for both his UK pensions by filling in the form below UK/Double Taxation. He returned the form to our local Tax Office and they completed the necessary details and forwarded it to the UK revenue. About 3 weeks later he received a tax exemption cert from Revenue UK stating that he
was tax exempt on earnings in the UK. The UK/Double Taxation form will need to be filled in again in 5 years time I believe. My hubby did this when his UK pensions were about to start so no tax was ever taken at source from his UK pensions but your sister will probably get a tax rebate from the UK when they issue her with the UK tax exemption cert. You might want to check that out as she may have to apply for the tax refund....I'm not sure about this detail.

As far as the Irish Tax goes....we did a self assessment this year for the first time....Form 11. It is very straight forward and the tax exemption of €36,000 for retired
couples is very generous. Also USC is not payable on state pensions and only payable on private income in excess of about €12,000 euro....i.e. 2015 tax return

Hope this helps.....also the UK revenue staff were very helpful with any queries we had....our own tax guys were pretty good also...


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/453005/irl_ind.pdf

Your sister definitely needs an accountant, as advised above. Just to add to what has gone before, a UK university pension is classed as non government and would normally be taxable in Ireland, along with the UK state pension. Buried away in the UK HMRC website is a very handy document which indicates, for each type of pension payment for former UK state employment, whether it is classed as government or non government under double taxation agreements. (Watch for the exceptions in the notes). Irritatingly, I can't post links, but if you access the UK HMRC website and put "INTM343040" in the search box, you will find the list. Universities' Superannuation Scheme Ltd pensions are "non government" for all treaties, assuming this is your sister's scheme.

One other subtlety in the UK/Ireland DTA concerns taxation of government pensions for nationals of the "other state". In general, "government" pensions are taxed in the issuing state (e.g., resident in Ireland, in receipt of UK government pension, pay tax in UK). This is overturned in the case of someone who is also a national of the other state as well as a resident (e.g. resident in Ireland and an Irish national, in receipt of UK government pension, pay tax in Ireland on that pension). See article 18, 2(b) of the UK/Ireland DTA. This shouldn't apply in any event in your sister's case assuming her university pension is non government, as above.

I think PM9999 is right but just to show how complex this can be.

We had a client facing a revenue audit in Ireland who was awarded a €25k tax refund because Irish revenue didn't believe that they should be taxing their UK university pension.

Big thank you for the sister to all who replied. She took the advice offered and has already been to see an accountant. Your advice was much appreciated.

To add belatedly to Ann1 posting
In this discussion there is no mention of non domicile and remittance basis of taxation in ireland and there possible consequences to uk pensions .
Furthermore the " tax exemption of €36,000 for retired couples is very generous" is incorrect it is not a tax exemption, it is the level up to which 20% tax is applied before the higher level kicks in and is therefore less than generous.

john carnie said:

To add belatedly to Ann1 posting
In this discussion there is no mention of non domicile and remittance basis of taxation in ireland and there possible consequences to uk pensions .
Furthermore the " tax exemption of €36,000 for retired couples is very generous" is incorrect it is not a tax exemption, it is the level up to which 20% tax is applied before the higher level kicks in and is therefore less than generous.

Click to expand...

The initial poster's sister was almost certainly Irish domiciled (having "moved back from the UK"). For Ann1, the remittance basis probably isn't relevant on the basis that they're living on the income and therefore remitting it.

The €36,000 IS a tax exemption.

john carnie said:

Furthermore the " tax exemption of €36,000 for retired couples is very generous" is incorrect it is not a tax exemption, it is the level up to which 20% tax is applied before the higher level kicks in and is therefore less than generous.

Click to expand...

Please note that a couple over 65 can earn up to 36k tax free, and it is an exemption.

Couples don't pay tax up to k36 , they are only caught for about k1 on other levies etc.

SBarrett said:

Thanks Dan

Found a good post https://www.askaboutmoney.com/threads/u-k-pension-and-irish-tax.200382/ (Ann1) about it.

Click to expand...

hi im reading about pensions and im trying to find out ,there is a double taxation between england and ireland ,i have saved a lump sum of 17,000 from my pension in the uk ,but had to retire at 40 due to illness and landed on incapitiy esa in uk and its topped up with means test disability, ive been told that i would only recieve 13,000 of the money as it is taxable but if i send a form irl and get it stamped in ireland they then will give back the money to me but only when they recieve this then its up to ireland what they do but would this 4,000 be taxable if im on disability and incapacity if im not working also would this effect my money ,are you allowed to have this as savings to live on ,or does it effect the whole system ,its all so confusing

Might be a bit late, but this guide on tax that has to be paid if domiciled in Ireland could be useful