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-   -   British retirement pension (https://britishexpats.com/forum/new-zealand-83/british-retirement-pension-419072/)

tom's mum Jan 15th 2007 12:53 am

British retirement pension
 
Help please, my parents are seriously contemplating emigrating to New Zealand. We have been here three years and their chance of gaining residency is not an issue. However they are rightly concerned about whether their pension will be taxed. I have searched the threads here and some say they wont get taxed and some dont say anything. The IRD website has stated they will be taxed at a rate of 19.5%. This seems very unfair when they dont get taxed in the UK. After all dad worked very hard and paid tax all his life. Can someone please tell me how they stand?

JAJ Jan 15th 2007 2:39 am

Re: British retirement pension
 

Originally Posted by tom's mum (Post 4284678)
. I have searched the threads here and some say they wont get taxed and some dont say anything. The IRD website has stated they will be taxed at a rate of 19.5%. This seems very unfair when they dont get taxed in the UK. After all dad worked very hard and paid tax all his life.

Are you sure they "don't get taxed" in the UK? Is it their only source of income?

tom's mum Jan 15th 2007 4:24 am

Re: British retirement pension
 
No the pension from the government is not taxed, he does have a very small private pension which is taxed but the state benefit pension is not taxed at all.

lapsed kiwi Jan 15th 2007 4:39 am

Re: British retirement pension
 
The difference is, there's a personal tax-free allowance in UK but not in NZ, so when you're a NZ taxpayer, you pay tax on all income. One of the factors to consider when considering a move, and a reason to vote for a lower tax government once you're a citizen.

Apple12 Jan 15th 2007 5:03 am

Re: British retirement pension
 

Originally Posted by tom's mum (Post 4284678)
After all dad worked very hard and paid tax all his life.

But not in NZ he didn't ;)

tom's mum Jan 15th 2007 5:14 am

Re: British retirement pension
 
True, he hasnt done a days work here or he would be paying with even more taxes like i do now. However it obviously impacts on their decision to come over when he will lose a lot of his pension to the tax man.

ukkiwi Jan 15th 2007 8:18 am

Re: British retirement pension
 
My grandfather had his old age pension and forces pension wired to NZ - not sure if it was taxed or not. I'd ask him but he died 6 months ago.

thebears Jan 15th 2007 7:55 pm

Re: British retirement pension
 

Originally Posted by tom's mum (Post 4284678)
Help please, my parents are seriously contemplating emigrating to New Zealand. We have been here three years and their chance of gaining residency is not an issue. However they are rightly concerned about whether their pension will be taxed. I have searched the threads here and some say they wont get taxed and some dont say anything. The IRD website has stated they will be taxed at a rate of 19.5%. This seems very unfair when they dont get taxed in the UK. After all dad worked very hard and paid tax all his life. Can someone please tell me how they stand?

If the pension is sufficient to attract a high level of tax then you can afford to get sufficient tax planning advice.

If its not - it should not be attracting enough tax to be worried about.

Steve Horrell Jan 16th 2007 7:21 am

Re: British retirement pension
 

Originally Posted by tom's mum (Post 4284678)
Help please, my parents are seriously contemplating emigrating to New Zealand. We have been here three years and their chance of gaining residency is not an issue. However they are rightly concerned about whether their pension will be taxed. I have searched the threads here and some say they wont get taxed and some dont say anything. The IRD website has stated they will be taxed at a rate of 19.5%. This seems very unfair when they dont get taxed in the UK. After all dad worked very hard and paid tax all his life. Can someone please tell me how they stand?

My military pension from the UK is taxed at 39% yet it is paid by the UK Govt for time served in the forces, but NZ take the tax from it. I spent 8 months fighting the IRD but at the end of the day, the simple rule is that ALL overseas income must be declared and you cannot chose where your income will be taxed given that you are resident in NZ, and are subsequently liable under NZ taxation laws. You can still have a UK tax code allocated against your pension but if there is a difference on what you are taxed in UK (if any) and what is taxable in NZ then the NZ govt will take their share. Bloody unfair I say as they are taxing money paid out by another country but I dread to think of the consequences if I simply ignore the IRD and get found out some years down the line!!!!

helinuk Jan 16th 2007 8:27 am

Re: British retirement pension
 
Is there any way you can keep the pension in a uk or off shore account and use a UK credit card in NZ- to avoid NZ tax on pension?

tom's mum Jan 18th 2007 1:27 am

Re: British retirement pension
 

Originally Posted by helinuk (Post 4289178)
Is there any way you can keep the pension in a uk or off shore account and use a UK credit card in NZ- to avoid NZ tax on pension?

We did think about this but wonder about the consequences. Has anyone else tried it and either got away with it or didn't :(

JAJ Jan 18th 2007 1:34 am

Re: British retirement pension
 

Originally Posted by helinuk (Post 4289178)
Is there any way you can keep the pension in a uk or off shore account and use a UK credit card in NZ- to avoid NZ tax on pension?

If you live in a country that taxes worldwide income, that is illegal tax evasion.

tom's mum Jan 18th 2007 1:42 am

Re: British retirement pension
 

Originally Posted by JAJ (Post 4296283)
If you live in a country that taxes worldwide income, that is illegal tax evasion.


We did think that keeping your pension overseas would be seen as fraud of some kind. Having said that i do know of some who keep their UK bank account.

JAJ Jan 18th 2007 1:44 am

Re: British retirement pension
 

Originally Posted by tom's mum (Post 4296298)
We did think that keeping your pension overseas would be seen as fraud of some kind. Having said that i do know of some who keep their UK bank account.

It's not illegal or even fraudulent to leave funds overseas. There are no exchange controls in New Zealand.

However, income tax obligations must be complied with regardless.

Steve Horrell Jan 18th 2007 5:33 am

Re: British retirement pension
 

Originally Posted by helinuk (Post 4289178)
Is there any way you can keep the pension in a uk or off shore account and use a UK credit card in NZ- to avoid NZ tax on pension?

Tried all that and got absolutely nowhere!! The answer is to either not declare and run the risk of the NZ and UK tax departments talking to each other (which they are quite entitled to do under the double taxation agreement) so as not to pay tax in NZ or, front up with the truth and pay the tax. I know I didn't want to get stung with a huge tax bill and a fine for tax evasion so did the latter!


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