INTM343120 - DT applications and claims - Types of income: Pensions and Annuities

Merchant Navy pension

When a seafarer retires, the treatment of their pension should follow the established treatment of their wages. If their wages were subject to PAYE (because they worked for a UK employer performing duties in the UK) their pension is also liable to UK tax.

Sometimes a seafarer receives a Merchant Navy pension and is resident in a country that either does not have a Double Taxation Agreement (DTA) with the UK, or where the treaty does not have a pensions article.

Where there is no pension article in a DTA or no double taxation treaty at all, you have to consider

• The location of previous employment duties.
• The person’s residence status whilst carrying out these duties.
• And the provisions of PAYE81750

in order to decide if the pension is exempt from the operation of PAYE.