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Old Aug 28th 2016, 4:13 am   #16
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Default Re: Pensions - escaping UK taxation

Thanks Neon. I'm just building myself up to tackling the form. I will do it.
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Old Aug 28th 2016, 4:16 am   #17
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Default Re: Pensions - escaping UK taxation

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At last 183 days served in Malaysia and ready to do battle with HMRC.

Anyone following this thread, will need to do the following preparations.


Step 6, sit back and wait to see what HMRC say. I will report back on this at a later date.
I haven't received the letter yet, it must still be in the post. But I noticed today that a considerable sum of money has been placed in my UK bank a count by HMRC. I estimate it to equate to the tax paid since 1 January this year. Not quite back to when I left but 8/10th is not too bad.
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Old Aug 28th 2016, 4:20 am   #18
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Default Re: Pensions - escaping UK taxation

Ah that is inspiring me on, Neon next week for sure I will do it.
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Old Aug 28th 2016, 7:31 am   #19
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Default Re: Pensions - escaping UK taxation

Is this about UK private / public pensions that have already been taken?

Or is this about pension funds .

As I thought the UK were cracking down about qrops or is that not to do with this?
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Old Aug 28th 2016, 9:02 am   #20
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Default Re: Pensions - escaping UK taxation

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Is this about UK private / public pensions that have already been taken?

Or is this about pension funds .

As I thought the UK were cracking down about qrops or is that not to do with this?
It's about any pensions, BEVS, though State Pension and any Government type pensions will always be taxed at source in the UK I believe. No escape from that. They have us by the short and curlies.

What most of us think about here is to get Malaysian Tax Residency. Have to do some form filling, then get the Tax Office here to stamp up and declare us as Tax Residents. That gets sent off to HMRC in the UK and, bingo, we are officially tax residents here in Malaysia. Why do we want to do that? Because Malaysia does not tax any income sourced from outside Malaysia i.e. private UK pensions and, by virtue of that fact, the UK pensions will then be paid gross
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Old Aug 28th 2016, 9:09 am   #21
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Default Re: Pensions - escaping UK taxation

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As I thought the UK were cracking down about qrops or is that not to do with this?
Is that right? I didn't know that.

I didn't do QROPs in the end as

(a) I foolishly thought it might be handy to have some UK private pensions in case of a Plan B move to some mediterranean place within the EU. Haha...of course that no longer applicable with Brexit I guess.

and

(b) I had deemed that my paltry UK private pensions would fall under the UK tax radar, which they would have if I hadn't got an unexpected Widow's pension from one of Mr bb's policies. Couldn't plan that one
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Old Aug 31st 2016, 12:22 pm   #22
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Default Re: Pensions - escaping UK taxation

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If you have a UK private pension (i.e not a state or government one) you can transfer this into an international structure in order to avoid paying UK income tax.
We can already avoid paying Uk income tax just by being Malaysian tax residents. No need for any transfer.

Last edited by christmasoompa; Aug 31st 2016 at 4:36 pm. Reason: Quoted sales blurb removed
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Old Aug 31st 2016, 12:47 pm   #23
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Default Re: Pensions - escaping UK taxation

And then pay tax in Malaysia instead? Are you then having to exchange the UK payments out of sterling? Why wouldn't you look into the options you have now your not residing in the UK?
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Old Aug 31st 2016, 1:00 pm   #24
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Default Re: Pensions - escaping UK taxation

Yes come under Malaysian tax which is.......zero for any income derived from outside Malaysia. So nothing to pay.
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Old Aug 31st 2016, 1:05 pm   #25
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Default Re: Pensions - escaping UK taxation

Ahh okay would be the same as a QROPS then, so your only cost is exchanging the money and the fees associated with that? have you ever looked into your international options regarding a UK pension?
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Old Aug 31st 2016, 11:12 pm   #26
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Default Re: Pensions - escaping UK taxation

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Ahh okay would be the same as a QROPS then, so your only cost is exchanging the money and the fees associated with that? have you ever looked into your international options regarding a UK pension?
No not the same as QROPs. Much simpler. I looked into that. It's expensive to do QROPs if you have only a small pot of money to transfer. And there can be problems associated with that. HMRC getting picky. Singapore (the option I would've been interested in) got booted out of QROPs!

Yes of course I have looked at other options. I have been out of the UK more than 11 years.

There will always be exchange conundrums to consider unless one is going to convert all savings etc into ringgits. Maybe not a good idea But the monetary costs of exchanging pale into insignificance compared with the savings in Cost of Living in Malaysia. And you can hedge your bets a bit by holding different currencies.

Talking of UK, and somewhat off topic, I had the misfortune to have to speak to someone at a UK bank fraud department the other day. My sole UK card got flagged up. And what a stroppy, sarky, miserable old bag I got at the other end of the phone. Is that how it is these days in ol' Blighty? And, as I pointed out to her at the end of the conversation, and since they insist on recording the phonecall, I pointed out that generally speaking we don't get this attitude in Malaysia and thank God I don't have to live in UK now!!
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Old Sep 5th 2016, 2:35 am   #27
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Default Re: Pensions - escaping UK taxation

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.

Step 2 is preparing the paperwork for the Malaysian Revenue Department. You will need to complete form STM1 which can be downloaded here http://www.hasil.gov.my/pdf/pdfborang/STM1_2.pdf. You will also need photocopies of every page of your passport and a record of entry and exit from Malaysia. A sample spreadsheet for this purpose is available here MM2H, residency and tax. In addition you should fill the HMRC application for double taxation relief available for download here https://www.gov.uk/government/upload...individual.pdf.

I note that form STM1 asks a few things like:
Type of Income received
Period of Payment
Amount of Payment received
Foreign Payer

and I presume, as MM2Hers not receiving income here, we should leave these blank?


Also a note for others: there's a box to fill: Income Tax Reference Number. If you've bought a property in Malaysia, you will find that you probably already have a tax number so a rummage through any property docs might help you out finding that. I've found mine!!

This is such great information on here Neon. It says you've had too much karma so I'll send you a big virtual hug
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Old Sep 5th 2016, 7:41 am   #28
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Default Re: Pensions - escaping UK taxation

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I note that form STM1 asks a few things like:
Type of Income received
Period of Payment
Amount of Payment received
Foreign Payer

and I presume, as MM2Hers not receiving income here, we should leave these blank?


Also a note for others: there's a box to fill: Income Tax Reference Number. If you've bought a property in Malaysia, you will find that you probably already have a tax number so a rummage through any property docs might help you out finding that. I've found mine!!

This is such great information on here Neon. It says you've had too much karma so I'll send you a big virtual hug
Your virtual hugs always welcome bb.

On the question of income I claimed what I get from my pension and for poor Mrs N wrote in 'nil'. Both seemed to work. Coincidentally I left the Tax Reference Number blank on both of our applications and later noticed that the letter I received when I tried applying for a COR earlier in the year included a TRN. THis same number appeared in the CoR that I received so if you have bought a property and mislaid your TRN I think if you leave this blank they will find it for you.

Also coincidently, today I got my letter from HMRC.I was hoping for some kind of explanation of how they worked out the tax rebate as I couldn't quite relate it to the amount of tax I think I have paid. The letter states however that I am deemed to be tax exempt from the date that I left the UK. The letter confusingly implies that HMRC are paying a refund for over taxation "up to 2015 to 2016" which I take to mean the tax year that I left the UK. And for the current tax year "Your pension payer will repay you any tax we owe you in the current tax year when they use the amended tax code." And rather confusingly "your pension provider will then give you back any tax we owe you (for the current tax year) by taking off less tax from your pension."

As I am not paying any tax it will take a long time to pay back the overpayment!? Watch this space I will report what happens when I get my next pension payment.
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Old Sep 14th 2016, 5:01 am   #29
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Default Re: Pensions - escaping UK taxation

UPDATE:
I now have the calculation from HMRC on how they worked out my tax rebate. What they have done has exceeded my expectations. To recap, I left the UK after slightly more than half a year in the K so I was automatically tax resident for the 2015-2016 tax year. I was able to establish residency in MY after staying for more than 182 days in the 2016 tax year which starts 1/1/2016.

So I anticipated that HMRC might only start applying relief after the end of the 2015-2016 tax year which ends 05/04/2016 and was stealing myself to argue that I should get relief from 01/01/2016 which was when I became a tax resident of MY.

But to add spice,there is an often overlooked ruling that when a person leaves the UK to work overseas they can apply for split year taxation such that they only pay UK tax for the income earned in the UK and pay tax in the new country on income they earn in that country. Now my pension is earned in the UK not in MY but every time that I communicated with HMRC I asked the direct question 'Can my pension be considered for split year taxation?'

HMRC have agreed to split year taxation which means that any money payed after I left the UK is removed from my UK income thus I not only get tax relief on my pension from when I left, but only the income paid before I left is treated as UK income which means I have earned less than expected against my (full year) tax free allowance and I get a further refund.

So any one following this thread and wishing to maximise their tax refund should make sure that in all communications with HMRC they set the expectation that they wish to get split year tax assessment.

On a similar but slightly different topic, a friend has asked me to explain Domicile. Domicile has no effect on income tax but can become very important if your total wealth exceeds the Inheritance Tax (IHT) threshold. Simply put, if you are domiciled in the UK then no matter where you actually live or die you will be liable to IHT in the UK. There are three types of Domicile, Domicile of Origin, Domicile of Choice and Domicile of Dependence.

Taking Domicile of origin first, if you are born in the UK (England, Scotland or Wales have slightly differing rules from each other) and your father was also born in the UK then you are domiciled in the UK by origin. Domicile of Dependence would apply if (as a UK citizen) you were born in another country and your father was British. Your domicile status remains that of your father until you reach an age (varies with country) where you can make a choice for yourself. You can chose to stay with your father's domicile or chose to be domiciled in the country of your birth.

Now the interesting one is the somewhat misnamed Domicile of Choice. This occurs when you leave your domicile of origin and wish to be domiciled in your new country of residence. I say it is misnamed because you cannot simply choose a new domicile. You have to demonstrate that you have left the UK indefinitely, live a lifestyle suggestive that you have cut ties with the UK and that you have no intention to go back.

The key here is to demonstrate no intention to return. If you tell someone that you want to live in MY until you get sick and then return to the UK for free health care but die suddenly of a heart attack you will be deemed to be domiciled in the UK by HMRC no matter how long you have been out of the country and had no intention to return in the near future. One famous case was a multi-millionaire living in Monaco. He had no intention of ever returning to the UK in his lifetime but had put in his will that he wished to be buried in the UK upon his death. That wish was sufficient for HMRC to argue that during his lifetime he harboured a wish to return to the UK!!
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Old Sep 14th 2016, 7:42 am   #30
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Default Re: Pensions - escaping UK taxation

That's very interesting, neon.

So it's the intention "not to return" which is the most important. So.... should one actually write to explain to HMRC that one does not wish to return under any circumstances? and say to them....like...Just for Your Information regarding Domicile (hint)

It's an interesting one, isn't it, because you cannot really sort it out as one will be hobnobbing with the angels by the time it is relevant.

I may be writing to HMRC in the near future, so maybe I should put it as a PS hehe.

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