AdmanD

Hi!

I'm a new poster/member.

Wondered if anyone can share advice on the "best" way to manage my stakeholder pension (UK) from the USA. I have income via property in the UK and also have a private stakeholder pension. I've lived in the USA for almost 10 years. I'm around 20 years from retirement age.

My understanding is that I can continue to contribute to the my UK stakeholder as long as I have income in the UK (which I do). However, if someone has a different perceptive on this please let me know. I'm concerned that I shouldn't be contributing to a stakeholder and getting the associated tax relief on contributions as I'm not a UK resident.

After searching FAQs around this, I'm none the wiser - I know you can not OPEN a UK Stakeholder if you aren't resident, but not sure about management/contributing if you are non-resident.

Advice sought!

Apologies if there has already been a discussion around this, but I searched this forum and couldn't find anything specifically on this subject.

Cheers!
AdmanD.

Pulaski

I thought only earned income could be used for UK pension contributions, so unless your "income from property" is from a "furnished holiday let", which is taxed as earned income, then I don't believe you have eligible earned income to contribute to a pension scheme.

MidAtlantic

Welcome! I have a stakeholder pension with Legal & General and when I left they said that I could continue to contribute and get tax relief for five full tax years after the year I left. It had to be paid from a UK bank account. That is what I did.

This is also stated in this link, which may be helpful:

Leaving the country - Have you considered your pension options?

AdmanD

Thanks Pulaski - I'll investigate further. Strange distinction around holiday vs. non-holiday letting. I rent out a furnished flat and have done for the last 10 years. I'd have thought that is earned income (it's not passive like income from trusts, funds, etc.) but I'll look into it.

Any idea where I can obtain chapter and verse on this? HMRC would be an obvious one but they are painful to communicate with.

Pulaski

What were you getting tax relief against? Did you have any earned income in the UK?

AdmanD

Thanks MidAtlantic - hhhhmmmm this is intersting.... My pension is also LandG (legacy Nationwide).

Well - tbh I've been "gone" for 10 years and have contributed every month. As I stated, I thought that I could continue to contribute to this product as I file a UK tax return as I have income from a furnished property I rent out in the UK.

What has been your experience? Have you "used up" your 5 years? What happens after the 5 years are up I wonder? (does it just "sit there" until you retire/move back to the UK)?

Thanks!!

MidAtlantic

You do not need earned income (see this from Aviva):

How much can your client contribute to their UK pension plans?

This means, your client may benefit from basic rate relief on their contributions for at least five tax years after the tax year in which they ceased to be UK resident. UK tax relief is only available if your non-UK resident client’s contributions are paid to a ‘relief at source’ pension scheme. As a general rule of thumb, personal pension schemes are usually run on a relief at source basis. Occupational pension schemes, buyout plans and retirement annuities are not. How much can your client contribute to their UK pension plans?

A ‘relevant UK individual’ is able to contribute up to a total of 100% of their relevant UK earnings or £3,600, if higher, to their UK pension plans each tax year.

MidAtlantic

Yes my 5 years are up. I just stopped contributing after 5 years. It now just "sits there".

AdmanD

OK - makes sense. Looks like I've a decision to make! Last question - do you file a tax return in the UK (do you need to - have any UK income)?

Pulaski

The wording you quoted says "earnings", not "income".

MidAtlantic

and it says OR $3,600 if higher

Pulaski

Agreed, it does. I am just puzzled as to how you can get tax relief if you aren't actually paying any (eligible) tax. ..... If that was the case it looks like the British government is just giving money away.

MidAtlantic

No I don't need to.

MidAtlantic

Exactly right! I believe there is a requirement that you have earned income in the five years prior to moving abroad.

Just Google "tax relief on stakeholder pensions when living abroad" and you will get many references to this arrangement.

AdmanD

@Pulaski
I see how you might feel that way but a) the funds are being contributed to a UK financial institution and b) you need to fund the product via a UK bank account - so the UK benefits.