SI 2002 versus R43
Dec 12th 2018, 2:02 am
#1
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SI 2002 versus R43
Getting to the point where I'm likely to be claiming my UK state pension and wondering which approach to take here. UK and US citizen, living in US. Only UK-sourced income will be state pension and a small amount of interest income. Clearly this income will be less than the current UK personal allowance of £11,850. Should I go the R43 route or simply pay my $80 and do an SI 2002 via the IRS? If I do the former, will I have to do this on a yearly basis and also do a self-assessment each year? In which case does a once off SI 2002 allow me to avoid self-assessment? Additionally, what would happen if I simply did nothing; would tax at 40% (or whatever) be deducted at source from my state pension?
Dec 12th 2018, 2:35 pm
#2
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Re: SI 2002 versus R43
The SI 2002 filing is a one-off deal. I did mine back in 2007. (I think it cost $35).
My suggestion would be to do nothing until your first payment is made and then see what tax code you have been given as it may well be a zero tax code "NT". In my case I didn't do anything until I received my first UK private pension payment and when I discovered PAYE tax being withheld I submitted my SI 2002 and the tax was refunded in my 3rd pension payment (it took a few weeks to process the forms), and the tax code set to "NT".
My suggestion would be to do nothing until your first payment is made and then see what tax code you have been given as it may well be a zero tax code "NT". In my case I didn't do anything until I received my first UK private pension payment and when I discovered PAYE tax being withheld I submitted my SI 2002 and the tax was refunded in my 3rd pension payment (it took a few weeks to process the forms), and the tax code set to "NT".
Dec 12th 2018, 2:43 pm
#3
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Re: SI 2002 versus R43
There is no tax withholding from the State pension...ever.
Dec 12th 2018, 3:07 pm
#4
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Location: Milwaukie, Oregon
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Re: SI 2002 versus R43
I did what durham_lad did but I did have a substantial occupational pension as well. As Cook County says there is no tax deducted from a UK State pension, so if it were me I’d do nothing. Why give the IRS $80 if you don’t need to.
Dec 12th 2018, 3:07 pm
#5
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Re: SI 2002 versus R43
Good to know.
Interestingly, even though I have been back 2 years now and done self assessment returns twice, the NT code has not changed on that UK private pension. In February 2017 I started drawing another UK private pension and that does have a non zero tax code and has PAYE tax paid each month. It doesn't really matter since I pay estimated taxes anyway in January and July but I would have thought they would have withheld tax from both pensions or neither.
Dec 12th 2018, 4:42 pm
#6
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Re: SI 2002 versus R43
If you complete the 2002/8802 paperwork too early, the UK will send you all the paperwork, including the certificate issued by the IRS, and say they cannot process it until after payments have started. This happened to me!
The occupational pension in question is below the personal limit, so no tax is being taken, but eventually other pensions will start paying and the total will be above the personal limit so shortly I will be submitting the 8802 etc. paperwork. Unfortunately the IRS want a second chunk of $85 fee.
So, even if you have all the necessary details, sending it in too soon can be a bad move.
The occupational pension in question is below the personal limit, so no tax is being taken, but eventually other pensions will start paying and the total will be above the personal limit so shortly I will be submitting the 8802 etc. paperwork. Unfortunately the IRS want a second chunk of $85 fee.
So, even if you have all the necessary details, sending it in too soon can be a bad move.
