RFIG30750 - Residence for tax years before 2013-14: liability to UK tax: Scope of liability to income tax on pensions
This chapter only applies to tax years up to and including 2012-2013. From 6 April 2013 the Statutory Residence Test (SRT) applies. For guidance on the SRT please see RFIG20000 onwards
Table 2 - Scope of liability on pensions
Your UK domicile status |
Your UK residence status |
Arising Basis (AB) or Remittance Basis claimed (RB) |
UK Pension |
Non UK (overseas) Pension |
|---|---|---|---|---|
Domiciled within UK |
1. Resident and Ordinarily Resident |
AB |
Liable |
Liable |
Domiciled within UK |
2. Resident and Not Ordinarily Resident |
2(a) AB |
Liable |
Liable |
Domiciled within UK |
2. Resident and Not Ordinarily Resident |
2(b) RB |
Liable |
Liable on remittance |
Domiciled within UK |
3. Not Resident |
AB |
Liable |
Not Liable |
Domiciled outside UK |
4. Resident and Ordinarily Resident |
4(a) AB |
Liable |
Liable |
Domiciled outside UK |
4. Resident and Ordinarily Resident |
4(b) RB |
Liable |
Liable on remittance |
Domiciled outside UK |
5. Resident and Not Ordinarily Resident |
5(a) AB |
Liable |
Liable |
Domiciled outside UK |
5. Resident and Not Ordinarily Resident |
5(b) RB |
Liable |
Liable on remittance |
Domiciled outside UK |
6. Not Resident |
AB |
Liable |
Not Liable |
Note: Use of this table is subject to any different treatment provided for under the terms of the relevant article in a Double Taxation Agreement.
Some UK social security benefits are liable to UK tax. These include the National Insurance Retirement Pension and Widows payments. You should remember to include any taxable benefits when calculating the individual’s taxable income for a tax year.
Pensions
Resident: When an individual is liable to UK tax on the arising basis (AB) they are taxed in the UK on most pensions whether they are from the UK or abroad. If they receive pension payments from outside the UK (an overseas pension) they might be entitled to a 10% deduction from the amount chargeable. From 6 April 2017 the 10% reduction has been abolished, the individual will pay tax on 100% of any foreign pension.
If the individual is liable to UK tax on the remittance basis (RB), they will pay UK tax on any UK pensions they receive but any overseas pension will only be taxed if they are remitted here. The individual is not entitled to the 10% deduction for overseas pension when they use the remittance basis.
Not Resident: Although an individual is not resident in the UK they will still pay UK tax on most pensions from sources in the UK.
An individual will not pay tax on pensions from sources outside the UK.