What would be the tax implications of pulling down 100% of UK pension pot

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CuriousCork

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My 57 year old sister has just returned from the UK. She currently has no Irish income and is considering pulling down 100% of her UK pension pot which has a cash in value of Stg£35,000. She has no other UK income. What UK and Irish tax would she have to pay?
 
I'm assuming your sister's UK pension does not arise from a UK public sector employment.

If so, under the Ireland/UK Double Taxation Agreement, if she is a resident of Ireland and not of the UK, anything she receives from her UK pension is taxable only in Ireland.

I think that as a matter of UK law only 25% of the pension could be taken as a tax-free lump sum, so UK income tax may be withheld from the other 75%. But, if so, I think your sister should be able to claim that back from the UK revenue, by pointing to the provisions of the UK/IRL DTA.

As a matter of Irish law, your sister can receive a maximum of €200,000 tax-free in retirement lump sums from all sources, including foreign sources. GBP 35,000 is about €41,500 so, assuming she hasn't already received other lump sums, she will be well within that limit. But the payment she receives from the UK will reduce the amount she can receive tax-free from any other pension arrangements that she may have.
 
Hi,
Accepting I don't know the actual position (and am keen to know) but I would have assumed that as Irish tax law also permits only 25% tax free lump sums then even if originating from a UK fund any receipt greater than 25% of the fund would incur Irish tax?
 
It's a good question. I'm not 100% certain of the answer, but I think it's this: Irish law forbids an Irish occupational pension scheme from paying out a lump sum in excess of 25% of value, or 1.5 times final remuneration, depending on the type of scheme. But this is not an Irish pension scheme, and whether it can pay out a larger lump sum or not is a matter for the UK authorities. If it does pay out a larger lump sum then Irish law applies to determine what Irish tax that will suffer in the hands of the recipient, and it's the €200k limit that determines this.
 
Thanks for that snippet, I will have to look into it further. I have only had an initial look around but have yet to come across an advisor qualified in both jurisdictions to give any advice ref drawing down a UK pension as an Irish tax resident. Not sure if there might be anyone up North?
I may consider posing such a question directly to Revenue here in the first instance.
 
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