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PAYE tax on non-UK pension / Social Security payments

PAYE tax on non-UK pension / Social Security payments

Old Apr 29th 2021, 7:42 am
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Default PAYE tax on non-UK pension / Social Security payments

It is my understanding that no tax (PAYE) is taken from UK state pension payments.
It is also my understanding that any UK based work/private pension payments will have tax (PAYE) automatically taken out and it is our responsibility to check that the correct PAYE code is being used.

Assuming you are a UK resident and tax payer:
1. Will USA Social Security payments made to UK citizen/resident have PAYE tax automatically deducted?
2. Will non-UK based pension payments have tax (PAYE) automatically deducted? (I assume not)
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Old Apr 30th 2021, 10:05 am
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Default Re: PAYE tax on non-UK pension / Social Security payments

Originally Posted by austin_d_powers
It is my understanding that no tax (PAYE) is taken from UK state pension payments.
It is also my understanding that any UK based work/private pension payments will have tax (PAYE) automatically taken out and it is our responsibility to check that the correct PAYE code is being used.

Assuming you are a UK resident and tax payer:
1. Will USA Social Security payments made to UK citizen/resident have PAYE tax automatically deducted?
2. Will non-UK based pension payments have tax (PAYE) automatically deducted? (I assume not)
Correct on all points. I am living in England and receiving OAP, and US private pensions. No UK taxes are deducted through PAYE. I'm sure that the same applies to US SS once I start to take it.

When I do a UK self assessment each year I am given the HMRC estimated amount I should pay for the upcoming year. These 2 estimated payments are due by end of January and July, which I pay online and then when I next file a self assessment I either pay the difference or apply the overpayment to the following year's estimated taxes.
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Old Apr 30th 2021, 4:53 pm
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Question Re: PAYE tax on non-UK pension / Social Security payments

Originally Posted by durham_lad
Correct on all points. I am living in England and receiving OAP, and US private pensions. No UK taxes are deducted through PAYE. I'm sure that the same applies to US SS once I start to take it.
Not sure how much direct contact USA Social Security and HMRC have. Reading about applying for USA SS on an official USA SS site it implied that they would automatically get your UK NI record from HMRC (re WEP calculation), but other posts here seem to suggest that you have to provide a copy of your NI record to the US embassy yourself.

Originally Posted by durham_lad
When I do a UK self assessment each year I am given the HMRC estimated amount I should pay for the upcoming year. These 2 estimated payments are due by end of January and July, which I pay online and then when I next file a self assessment I either pay the difference or apply the overpayment to the following year's estimated taxes.
Just looked up self assessment on the gov site. Now I am confused because quote "you fill it in after the end of the tax year (5 April) it applies to". Is self assessment to pay last years taxes or upcoming year taxes. Or is the first time for both?
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Old Apr 30th 2021, 6:01 pm
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Default Re: PAYE tax on non-UK pension / Social Security payments

Originally Posted by austin_d_powers
Not sure how much direct contact USA Social Security and HMRC have. Reading about applying for USA SS on an official USA SS site it implied that they would automatically get your UK NI record from HMRC (re WEP calculation), but other posts here seem to suggest that you have to provide a copy of your NI record to the US embassy yourself.


Just looked up self assessment on the gov site. Now I am confused because quote "you fill it in after the end of the tax year (5 April) it applies to". Is self assessment to pay last years taxes or upcoming year taxes. Or is the first time for both?
My wife just contacted the Federal Benefits Unit at the US Embassy in London to apply for her SS which is where we each applied and got our Medicare Part A cards last year. For SS they told us to have our NI record ready to pass on for WEP calculations. I have created a PDF of our records from the HMRC portal where we have our on line accounts. From the portal you can do your taxes, see your benefits including NI contributions and it clearly indicates which contributions are from paid work and which are from voluntary contributions which is important for the WEP calculation.

You file your self assessment return for the previous year, so first year back means a hefty tax bill, but you then pay estimated taxes for the coming year so that the following year when you do a tax return you will only have a small amount to pay or perhaps get a refund. It very much depends on the exchange rates for me as most of my income is from my US pensions.
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Old Apr 30th 2021, 9:19 pm
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Default Re: PAYE tax on non-UK pension / Social Security payments

Originally Posted by durham_lad
You file your self assessment return for the previous year, so first year back means a hefty tax bill, but you then pay estimated taxes for the coming year so that the following year when you do a tax return you will only have a small amount to pay or perhaps get a refund. It very much depends on the exchange rates for me as most of my income is from my US pensions.
Just to clarify the above answer for everyone:
The first time you file your self assessment tax return you will be paying tax for the previous year (paying taxes in arrears for that first prior year), but this will then start the estimated taxes process for all following years (you will pay estimated taxes in advance for all future years).
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Old Apr 30th 2021, 10:02 pm
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Default Re: PAYE tax on non-UK pension / Social Security payments

Originally Posted by austin_d_powers
Just to clarify the above answer for everyone:
The first time you file your self assessment tax return you will be paying tax for the previous year (paying taxes in arrears for that first prior year), but this will then start the estimated taxes process for all following years (you will pay estimated taxes in advance for all future years).
Exactly.
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Old May 28th 2021, 2:00 pm
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Default Re: PAYE tax on non-UK pension / Social Security payments

Originally Posted by durham_lad
My wife just contacted the Federal Benefits Unit at the US Embassy in London to apply for her SS which is where we each applied and got our Medicare Part A cards last year. For SS they told us to have our NI record ready to pass on for WEP calculations. I have created a PDF of our records from the HMRC portal where we have our on line accounts. From the portal you can do your taxes, see your benefits including NI contributions and it clearly indicates which contributions are from paid work and which are from voluntary contributions which is important for the WEP calculation.
Someone from the FBU called my wife yesterday to ask some initial questions and set up a telephone appointment date for SSA to call her. Initially he suggested June 14 but we will be on holiday (SHOCK) that week so instead she has a date of July 1st. I have PDFs from the UK gov portal ready to provide to show that of the 30 qualifying years, 9 years are from paid employment, 6 years credited for being a stay at home mom, and 15 years of voluntary contributions.

It will be "interesting" to see what they make of it but 9 years only provides £46.18/week. Her total pension from 30 years is £153.95/week and that is due to start in November this year.

By the time I apply in 3 years time at age 70 WEP won't be as much of an issue as I will have 28 years of SS credits so the WEP hit will be much less. I have UK private pensions which will "WEP" me to the max, but the WEP hit starts declining after 20 years of SS credits and goes to zero after 30 years of credits.
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