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Being asked to pay UK taxes on UK State Pension

Being asked to pay UK taxes on UK State Pension

Old Aug 7th 2019, 6:40 pm
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Default Being asked to pay UK taxes on UK State Pension

I have been receiving my UK State Pension for past year. I have just received a tax demand from HRMC for tax to be paid on these payments.

I have been non resident for tax purposes in the UK for past 20 years ! I have declared these pension payments, and paid tax, on my US tax returns as per the tax treaty between UK and US.

We contacted the Inland Revenue in UK (phoned, as do not have UK Personal Account), and, eventually, contacted a specialist who said they would send a form to me, which I must complete, get notarised, and return to update my information.

Anyone else had this happen? Is completing this form a new procedure?

The form is US-Individual 2002

Last edited by SanDiegogirl; Aug 7th 2019 at 6:43 pm.
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Old Aug 7th 2019, 7:46 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

I assumed income in the UK means you pay UK taxes which can be offset against US taxes. Well that is how I have always thought of it.
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Old Aug 7th 2019, 7:46 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Nothing new involved from recent years, but I have no idea about changes 20 years back.

Form 2002 is a statement / proof to the Inland revenue that you are tax resident in the US and paying taxes on the income there. You complete 2002 and send it off to the IRS with their form 8802. They will process the 8802 which generates a certificate thing telling the Inland Revenue you are tax resident in the US. They then send that, with your stamped 2002, to the Inland Revenue.

I've been through this twice recently.

End result should be your UK tax code goes to "NT". Job done.

When you file the 2002 you also (forget which section) can claim back taxes already paid to the Inland Revenue - if they have taken any yet.

It costs about $85 (check to IRS) for them to process the form and, in my experience, will take between 2-4 months end to end.

You can google all this, download the forms and get on with it - no need to wait for a form to be sent from the UK.

Good luck - they are lovely, friendly forms
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Old Aug 7th 2019, 7:49 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by Boiler View Post
I assumed income in the UK means you pay UK taxes which can be offset against US taxes. Well that is how I have always thought of it.
Not in this case. Tax treaty takes care of it. Similar applies to other countries that have a similar treaty with the US.

I currently have 2 non-US pensions paying. One in the UK, so I used form 2002 etc. as per above. Second pension is in a country that does not have a tax treaty with the US and I get tax deducted overseas but then allow for that at tax return time.
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Old Aug 7th 2019, 7:58 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

As others have said, there is nothing new about this. Rather than waiting for snail mail you can get the form here: https://assets.publishing.service.go...idual_2002.pdf
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Old Aug 7th 2019, 8:23 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by celticgrid View Post
Nothing new involved from recent years, but I have no idea about changes 20 years back.

Form 2002 is a statement / proof to the Inland revenue that you are tax resident in the US and paying taxes on the income there. You complete 2002 and send it off to the IRS with their form 8802. They will process the 8802 which generates a certificate thing telling the Inland Revenue you are tax resident in the US. They then send that, with your stamped 2002, to the Inland Revenue.

I've been through this twice recently.

End result should be your UK tax code goes to "NT". Job done.

When you file the 2002 you also (forget which section) can claim back taxes already paid to the Inland Revenue - if they have taken any yet.

It costs about $85 (check to IRS) for them to process the form and, in my experience, will take between 2-4 months end to end.

You can google all this, download the forms and get on with it - no need to wait for a form to be sent from the UK.

Good luck - they are lovely, friendly forms

Thank you for this.

Does this process (sending in the forms, getting certification, paying the 85 USD) have to be repeated every year if you have a UK State Pension? Hopefully not......
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Old Aug 7th 2019, 9:08 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by SanDiegogirl View Post
Thank you for this.

Does this process (sending in the forms, getting certification, paying the 85 USD) have to be repeated every year if you have a UK State Pension? Hopefully not......
No, once you do it it carries forward. Did mine a few years back.
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Old Aug 7th 2019, 9:42 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by lansbury View Post
No, once you do it it carries forward. Did mine a few years back.

Many thanks.......
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Old Aug 7th 2019, 9:42 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by MidAtlantic View Post
As others have said, there is nothing new about this. Rather than waiting for snail mail you can get the form here: https://assets.publishing.service.go...idual_2002.pdf

Many thanks for the link.....
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Old Aug 9th 2019, 7:13 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by lansbury View Post
No, once you do it it carries forward. Did mine a few years back.
+1

I only had to do it once, 12 years ago now. (SHOCK)
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Old Aug 9th 2019, 7:32 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by durham_lad View Post

+1

I only had to do it once, 12 years ago now. (SHOCK)
Just off to the Post Office to post the relevant forms and the cheque for $85 USD to the IRS.

Process takes about 2 to 3 months I hear.

Thanks to all......
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Old Aug 9th 2019, 7:55 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by SanDiegogirl View Post
Just off to the Post Office to post the relevant forms and the cheque for $85 USD to the IRS.

Process takes about 2 to 3 months I hear.

Thanks to all......
Good luck.

With me it took a couple of months and then HMRC refunded the taxes through my pension payments so I got a nice surprise one month.
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Old Aug 9th 2019, 8:13 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

For UK State Pension, I did not file Form 2002 as this only appears to be necessary when, for example, receiving a Company Pension. I receive State Pension only, so I filed Self Assessment with Form SA109, ticked box 16 to claim personal allowance, filled out box 22 to claim pension relief under the Tax Treaty, and included Helpsheet 304 with section 3(a) (Full Relief for state pension) showing the same amount under DTA Article 17. HMRC have received the return and the HMRC website says I do not owe any tax.
Mind you, it would not surprise me if I had to do this again every year, so filing Form 2002 is probably the way to go.
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Old Aug 9th 2019, 9:10 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by SanDiegogirl View Post
I have been receiving my UK State Pension for past year. I have just received a tax demand from HRMC for tax to be paid on these payments.

I have been non resident for tax purposes in the UK for past 20 years ! I have declared these pension payments, and paid tax, on my US tax returns as per the tax treaty between UK and US.

We contacted the Inland Revenue in UK (phoned, as do not have UK Personal Account), and, eventually, contacted a specialist who said they would send a form to me, which I must complete, get notarised, and return to update my information.

Anyone else had this happen? Is completing this form a new procedure?

The form is US-Individual 2002
UK state pension is less than the personal allowance for any individual, mine is tax free, and I only pay tax on my NHS pension which takes me over the allowance.
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Old Aug 9th 2019, 11:07 pm
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Default Re: Being asked to pay UK taxes on UK State Pension

Originally Posted by mikelincs View Post
UK state pension is less than the personal allowance for any individual, mine is tax free, and I only pay tax on my NHS pension which takes me over the allowance.
Thanks for this.

My State pension is over the personal allowance ..... worked for over 35 years in the UK .....
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