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?

Re: British retirement pension
 

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

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.

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.

Re: British retirement pension
 

But not in NZ he didn't ;)

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.

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.

Re: British retirement pension
 

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.

Re: British retirement pension
 

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!!!!

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?

Re: British retirement 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 :(

Re: British retirement pension
 

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

Re: British retirement pension
 

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.

Re: British retirement pension
 

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.

Re: British retirement 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!

Re: British retirement pension
 

Are you saying that if he keeps his bank account and has his pension paid into the UK account would be ok. Would he still have to pay income tax to the NZ tax man if his money was banked in the UK?

Re: British retirement pension
 

Wouldn't it be best to call the IRD direct about this... when it is something this important, asking the opinions of random people may not give you the advice you require.

Re: British retirement pension
 

whoops don't do that then! LOL( I didn't knowing suggest you do something illegal)
Seems like you'll end up paying tax on uk pension

Re: British retirement pension
 

I'd speak to a tax expert and see what options you have for avoiding paying it without doing anything illegal. The rich get away with it so worth a try.

Re: British retirement pension
 

[QUOTE=helinuk;4297059]( I didn't knowing suggest you do something illegal)

- sometimes 'spell check' isn't enough- !:o 'I didn't knowingly suggest that you do something illegal'

Re: British retirement pension
 

Thankyou everyone for your advice. My parents are thinking hard about their options and may go to see an expert etc.

Re: British retirement pension
 

If New Zealand taxes worldwide income, then he must pay New Zealand tax. Where he chooses to leave the funds physically is up to him and no-one will care.

But you would need to check the Double Tax Agreement to see if there are special rules for pensions paid from the UK to a New Zealand resident.

Re: British retirement pension
 

Hi there Toms Mum.
The subject of pensions is a concern for many of us.

Here is a link to the New Zealand Inland Revenue. The link points to a download file about NZ Residents with Overseas Government Pensions i.e. the UK.

Have a read of this guide. Its IR258

NZ IRD LINK HERE

You may also want to look through this NZ IRD guide. Its about overseas private pensions. Its IR257

LINK LINK TO THE GUIDE IS HERE

Overseas ex-pat pensions are frozen. Eva Hubble leads the fight against this.

Read about it in the TELEGRAPH ARTICLE FROZEN PENSIONS

Look HERE to see what UK Inland Revenue has to say about having your UK pension abroad.

You may find it advisable to seek advice from a quality company here in NZ that specialise in transferring pensions. They will have the up to the minute rules re overseas pensions at their fingertips. I do know of a reputable one in Wellington but am not sure if I am allowed to mention the firm on the forum. If you require the name please PM me.

Perhaps also investigate Trust Funds and Offshore trust funds. Its not something I know anything about, but I do know that many older Kiwis set up trust funds , much more so than in the UK in fact.