Pensions

[Honest Joe]

Can anyone answer a question on pension payments please? I will be receiving my first pension payment soon and have opted to have it paid directly into my Turkish GBP bank account. This will be paid net, after deduction of UK tax, but I have a form that can be completed and submitted to HMCE to allow the pension to be paid gross and be subject to Turkish tax instead.
The question is - what rate of tax (if any) will I be subject to if I take the option of being taxed in Turkey? If I receive the pension net after deduction of 20% UK tax I can claim repayment for any overpaid tax (after accounting for my personal allowance of £6,475 for the 2010/2011 tax year.), but this can only be done retrospectively after the end of each tax year. I would therefore need to calculate the overall difference between the two options: taxed in the UK or Turkey.
Has anyone already gone through this process and are currently receiving their pension into a Turkish bank without paying UK tax?
Thanks in anticipation, Honest Joe

[Diverbaz 1]

I believe that is the good thing about opting to paying tax on pensions in Turkey, Turkey does not tax pensions.

[charles]

i recieve my Uk pensions directly into my TURKiSH BANK gross,
advantage gets better rate of exchange and it is regular. No tax deduction
Just had to fill in form for the Uk people in UK or arrange for original form to reach them. Disadvantage only paid monthly and arrives about 1 week after due date.
Proved my residency with photo copy of the reasidency document as turkish authorities reluctant to sign anything in English. info on pensions site

[Honest Joe]

Thanks Diverbaz and Charles,
I'm having the pension sent over in GBP so exchange rate does not matter - I can convert it to TL whenever the rate is good!

My main concern was having to pay higher tax if I opted to take the "Turkish route" to avoid paying UK tax. Paying no Turkish tax is the ideal situation!

My only minor concern now is that I don't yet have residency, but with the imminent changes that will not be a problem as I will probably have no choice in the matter.

Thanks again, and a very happy and healthy new year to you both ...

[maximumtom]

It is not as easy if you receive a Government pension for doing Government work.

I have put a link to the  UK/TURKEY DOUBLE TAXATION AGREEMENT

http://www.hmrc.gov.uk/international/Turkey-dtc.pdf

ARTICLE 18 refers to Pensions

ARTICLE 19 refers to Government service and the following subsection suggests that you will have to pay tax in the UK if you receive a pension for having done Government work unless you are a resident of, and a national of Turkey.  It doesn't sound as if it applies to the State Pension but it does sound as if it applies to teachers or anyone else who has done work for the state so I guess that would include Civil Servants, the armed forces etc.
Of course, who knows how HMRC interpret their own gobbledygook.

(2)
(a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State

[captainjon]

No tax on the pension as shown,but 15% tax on interest  on savings accounts

[Ian]

quote:Originally posted by captainjon

No tax on the pension as shown,but 15% tax on interest  on savings accounts

This is interesting - are we talking about state pensions here or private pensions?
I suspect you have to have residency to do this? (but it would offset some of the cost)

I am due to take a private pension in about 12 months but won't be due to take my state pension for 5 years.

Could I have both paid into Turkish Bank Account and not pay any tax?

[maximumtom]

I am puzzled by the documentation  and that people seem to be paying no tax on their pension.  The whole point of a 'Double Taxation Agreement' is so that people are not taxed twice (in 2 countries), not that they pay no tax at all.

[Ian]

Agreed - maybe another one of those famous anomalies  

[Chinook]

 

quote:The whole point of a 'Double Taxation Agreement' is so that people are not taxed twice (in 2 countries), not that they pay no tax at all.

Having made the required declarations as identified elsewhere you can have your pensions , both private and Government paid gross into Turkey.The Turkish tax rate on pensions is 0% - hence tax paid is zero.