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Paying tax on a private pension

Paying tax on a private pension

Old Sep 14th 2023, 5:42 am
  #31  
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Default Re: Paying tax on a private pension

Originally Posted by Finknottle
Thanks Sachina! Unfortunately I have an inbuilt aversion to dealing with HMRC / DWP etc so will need a stiff drink (or 3) before embarking on this!
I wrote to HMRC to enquire about Capital Gains tax on the property I sold in UK. Took them a while to respond. The answer was zilch as it was my main residence.

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Old Sep 14th 2023, 5:50 am
  #32  
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Default Re: Paying tax on a private pension

I'm going to double check my own situation as I have a NHS pension + very small private pension. When I'm 65 I will get another work related pension, then when 66.5 the UK state pension. I know roughly what I will get and it will take me beyond the personal tax allowance. I've still got three years to go before I get my UK state pension. I might call them via their free sign language interpreting relay service! I do need to call them about Additional Voluntary Contributions as I need a N.I. Reference number, not the usual one, but one starting with '6'.

You should be able to check your tax allowance via the UK Government Gateway. HMRC have an app for mobiles and you can check everything, including N.I. Contributions on it. The HMRC website lists various scenarios for your circumstances so you should be able to click on each one to get the answer but sometimes the answer is in a bit of a grey area, whereby you need to check with HMRC. So best option is to telephone or write.

Last edited by FenTiger; Sep 14th 2023 at 5:55 am.
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Old Sep 14th 2023, 10:57 am
  #33  
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Default Re: Paying tax on a private pension

Originally Posted by PaulinEger
Having spoken to my pension provider yesterday, they insist on taxing me and me having to claim the tax back from HMRC
I also spoke to HMRC, and after an hour on hold, was told I needed to speak to one of their specialist...who wasn't available, so I'll get a call back back NEXT WEEK!
I would write to your pension provider rather than speak to them. Tell them you are resident in Hungary and your pension comes under Hungarian tax regulations and not HMRC regulations so you want your pension paid gross into your Hungarian bank account. My private pension is paid into my Hungarian bank as is my state pension. Both are paid gross. (Pension provider is Standard Life)
The only down side is that the Hungarian bank converts the GBP into HUF at their rate rather than using a money transfer firm so I get a slightly worse exchange rate OTOH there are no transfer fees to pay - I haven't worked out if the worse exchange rate with no fees is the same as a better rate with transfer fees.
I have always found it is better to write than to phone as writing has mote chance of getting the right answer because people are more careful when going to print.
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Old Sep 15th 2023, 10:29 am
  #34  
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Default Re: Paying tax on a private pension

Just another thought
Are you asking for your pension(s) to be paid into a UK account or a Hungarian account? I can see issues if you are asking for the funds to be paid into a UK account where HMRC might want the tax deducted at source a bit like PAYE but paid into a foreign account should be gross.
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Old Sep 15th 2023, 10:35 am
  #35  
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Default Re: Paying tax on a private pension

Originally Posted by Peter_in_Hungary
Just another thought
Are you asking for your pension(s) to be paid into a UK account or a Hungarian account? I can see issues if you are asking for the funds to be paid into a UK account where HMRC might want the tax deducted at source a bit like PAYE but paid into a foreign account should be gross.
That's a good point.
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Old Sep 15th 2023, 12:10 pm
  #36  
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Default Re: Paying tax on a private pension

It doesn't matter where the account the pension is paid to is located, they won't pay gross until you have gone through the correct process with HMRC, who will then instruct them to do so.

I already mentioned this form, DT Individual, above. Worth following the link and reading the form and the notes in full, but here's the crucial part as far as this discussion is concerned :


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Old Sep 15th 2023, 1:00 pm
  #37  
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Default Re: Paying tax on a private pension

Originally Posted by Red Eric
It doesn't matter where the account the pension is paid to is located, they won't pay gross until you have gone through the correct process with HMRC, who will then instruct them to do so.

I already mentioned this form, DT Individual, above. Worth following the link and reading the form and the notes in full, but here's the crucial part as far as this discussion is concerned :
Basically this means for a UK public sector and private pension tax has to be deducted in UK. Is this correct?
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Old Sep 15th 2023, 1:56 pm
  #38  
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Default Re: Paying tax on a private pension

Originally Posted by FenTiger
Basically this means for a UK public sector and private pension tax has to be deducted in UK. Is this correct?
No
I get my state OAP and my private pension both paid gross into my Hungarian bank account.

UK public sector pensions are different as these are liable to UK tax even if you are resident elsewhere. These will be deducted at source but if your country of residence taxes pensions then there is (usually) an agreement to make an allowance up to the amount of tax deducted by the UK so you don't get taxed twice.
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Old Sep 15th 2023, 2:27 pm
  #39  
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Default Re: Paying tax on a private pension

Originally Posted by Peter_in_Hungary
No
I get my state OAP and my private pension both paid gross into my Hungarian bank account.

UK public sector pensions are different as these are liable to UK tax even if you are resident elsewhere. These will be deducted at source but if your country of residence taxes pensions then there is (usually) an agreement to make an allowance up to the amount of tax deducted by the UK so you don't get taxed twice.
My private pension is paid into my UK bank account. HMRC know I live in Hungary. I'll have to check my HMRC tax code is correct because it has changed since it was being paid. It's minimal so probably not worth the hassle. No harm in writing. Any saving for the gross amount being paid into my Hungarian bank account will probably get swallowed up by Hungarian bank charges! We are with ERSTE.
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Old Sep 15th 2023, 3:27 pm
  #40  
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Default Re: Paying tax on a private pension

Originally Posted by FenTiger
My private pension is paid into my UK bank account. HMRC know I live in Hungary. I'll have to check my HMRC tax code is correct because it has changed since it was being paid. It's minimal so probably not worth the hassle. No harm in writing. Any saving for the gross amount being paid into my Hungarian bank account will probably get swallowed up by Hungarian bank charges! We are with ERSTE.
When you bring the money in to Hungary there will be a transfer fee to pay and a cost for exchanging to funds
When I bring money into Hungary I use a transfer company and they have a transfer fee and a exchange rate cost.
When my pension comes into Hungary the OTP exchange the funds at their rate.but there is no transfer fee.
So one gives a better exchange rate but has a transfer fee the other has a worse rate but no transfer fee. - I haven't bothered to work out which is better. (Bringing funds in (other than pension) is from a UK bank so a transfer company is defiantly cheaper)

So the worst thing to do is to get paid net and not claim back the tax
After that I don't think there would be much difference between a worse exchange rate and no transfer fee vs. better rate + transfer fee.
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Old Sep 15th 2023, 3:31 pm
  #41  
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Default Re: Paying tax on a private pension

Originally Posted by Peter_in_Hungary
When you bring the money in to Hungary there will be a transfer fee to pay and a cost for exchanging to funds
When I bring money into Hungary I use a transfer company and they have a transfer fee and a exchange rate cost.
When my pension comes into Hungary the OTP exchange the funds at their rate.but there is no transfer fee.
So one gives a better exchange rate but has a transfer fee the other has a worse rate but no transfer fee. - I haven't bothered to work out which is better. (Bringing funds in (other than pension) is from a UK bank so a transfer company is defiantly cheaper)

So the worst thing to do is to get paid net and not claim back the tax
After that I don't think there would be much difference between a worse exchange rate and no transfer fee vs. better rate + transfer fee.
What's your view of OTP bank? We are with ESTE and chose them because Sister-in-law and rest of family are with them but the bank charges seem excessive.
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Old Sep 15th 2023, 3:40 pm
  #42  
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Default Re: Paying tax on a private pension

Originally Posted by FenTiger
What's your view of OTP bank? We are with ESTE and chose them because Sister-in-law and rest of family are with them but the bank charges seem excessive.
Been with OTP for years now, seem fine, never had any issues.
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Old Sep 15th 2023, 3:45 pm
  #43  
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Default Re: Paying tax on a private pension

When looking at charges don't forget to allow for the transaction taxes!

The general tax rate is 0.3% of the amount of transaction but capped at HUF 10,000 (approx. €25) per transaction. This cap is not applicable to cash withdrawals, for which the tax rate is 0.6% without any cap.
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Old Sep 16th 2023, 4:54 am
  #44  
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Default Re: Paying tax on a private pension

Originally Posted by Peter_in_Hungary
Just another thought
Are you asking for your pension(s) to be paid into a UK account or a Hungarian account? I can see issues if you are asking for the funds to be paid into a UK account where HMRC might want the tax deducted at source a bit like PAYE but paid into a foreign account should be gross.
It doesn't make any difference. My state pension and private pension were both paid into my South African Nedbank account in GBP and then exchanged into ZAR. Since I've moved to Hungary both pensions are paid into my UK Bank account and I transfer money to either my Hungarian GBP or HUF bank accounts as and when needed.
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Old Sep 16th 2023, 6:14 am
  #45  
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Default Re: Paying tax on a private pension

Originally Posted by FenTiger
My private pension is paid into my UK bank account. HMRC know I live in Hungary. I'll have to check my HMRC tax code is correct because it has changed since it was being paid. It's minimal so probably not worth the hassle. No harm in writing. Any saving for the gross amount being paid into my Hungarian bank account will probably get swallowed up by Hungarian bank charges! We are with ERSTE.
HMRC may know you live in Hungary but they won't instruct your pension provider to pay gross until you have presented them with the completed form DT Individual together with the correct attestation from the Hungarian tax office.

When you have completed the procedure correctly, HMRC will assign the code "NT" to your private pension, which means that income is tax free in the UK. If the code isn't "NT" then that process hasn't been followed and you need to action it to avoid needlessly paying UK tax.

Looking at a previous post of yours on this thread, the importance of getting this sorted in your case shouldn't be underestimated, as other pensions becoming due in future will increase the tax taken by the UK if it's not done.

Last edited by Red Eric; Sep 16th 2023 at 6:37 am.
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