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TonyTax
TonyTax, Tax Consultant
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I am considering living in Sweden. I have two small pensions

Resolved Question:

I am considering living in Sweden. I have two small pensions in addition to my state pension which gives me a total annual income of about £10500

Swedish tax starts at around £37000.
At present I pay income tax.
Is it possible to have my pensions paid into a uk bank ,tax free, for transfer regularly to a Swedish bank. (£10 a time) say £120pa
If not is is possible to have the pensions sent direct ,tax free ,from my sources? These will cost £10 a time,perhaps,ie £520 pa for state pension alone
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

I'm not sure what you are asking about here. Do you want to know if you can have your pensions paid free of UK tax if you go to live in Sweden or are you asking if you can get around the bank charges for transfers from your UK bank to your Swedish bank? Are you a UK or Swedish national? Can you tell me what your date of birth is.

 

Can you tell me how much each of your pensions is before tax annually please.

Customer: replied 3 years ago.

dob 5 7 39


I want to retain uk bank a/c. I want to know if pensions are tax free if I am not in uk and subject to taxes in Sweden. I will have Swedish bank a/c but money can only be transferred with a payment of about £10


 


State pension £138 pw, 7176 pa


teachers' pension 2013 £5576 pa taxed £409


life insurance £671.02 pa taxed £134.2


total gross income:£13423 pa


 


So first,can I get my pensions tax free if abroad

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.

Hi again.

As you were born between 6 April 1938 and 5 April 1948, you are entitled to a personal allowance of £10,660 for the 2014/15 tax year which starts on 6 April 2014. So, the first £10,660 of your income will be tax free. In addition, and assuming you are a UK national, all the pensions you receive will be taxable in the UK but you will be entitled to a deduction of one-fifth off your Teachers Pension (but see below) and the life insurance annuity income in addition to the personal allowance. See paragraph 1 of Article 18 of the tax treaty between the UK and Sweden here. Paragraph 2 deals with the UK state pension but does mention a one-fifth deduction.

If the Teachers' pension is paid as a result of your teaching in other than private schools, it is a government service pension and will not be taxable in Sweden. Take a look here for confirmation of the tax treatment of a Teachers' pension. See paragraph 2a of Article 19 of the tax treaty here.

It's not clear from the treaty whether the fact that your Teachers' pension is only taxable in the UK means that you won't qualify for the one-fifth deduction and I will need to do a bit more digging to find out one way or the other.

If you qualified for a one-fifth deduction from the teaching pension and the annuity, your taxable UK income would be £1,514 (£13,423 - £1,249 one-fifth deduction - £10,660 personal allowance) and you would pay tax of £303 (20%). Any tax you pay in the UK will be deductible from your tax liability in Sweden on the same income if you have one.

If you do decide to go to Sweden to live, you should complete a P85 before you leave so that the tax office can have your tax codes adjusted where necessary.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

A great help.I shall sign of but I would like any more info you have on teachers pension, especially in view of the starting point in sweden for tax payments and that around £25 a week is taken off my state pension after I was conned into being' contracted out'. This was based on a full pension I assume. My huge teachers' pension was reduced 2 years ago for some reason which they explained. It was complex.

Expert:  TonyTax replied 3 years ago.
.I am looking around for comfirmation of whether you will qualify for a 20% deduction off your Teachers Pension if you live in Sweden but I'm not hopeful as you won't be paying tax on it in Sweden. Likewise for the state pension but that will be taxable in Sweden. I cannot comment on the contracting out point.
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Expert:  TonyTax replied 3 years ago.
Thanks for accepting my answer.

I've had conversations with former colleagues about government service pensions and state pension in relation to the 20% deduction for a non-UK resident national living in Sweden. The consensus is that the 20% deduction will not apply to either the Teachers' Pension or the State Pension.

The teaching pension won't be taxable in Sweden in any event. The State Pension will be taxable in Sweden subject to their allowances system. The tax treaty says that it may be taxable in the UK. It also says that a state pension from the UK will be taxable only in Sweden if the recipient is both a resident and a national of Sweden.

If you do move to Sweden, you should complete a Form DT-Individual which you can find here and send it to the Swedish tax office who will then liaise with HMRC in the UK to ensure you are taxed correctly.
Customer: replied 3 years ago.

I may be getting married to a Swede.That should make some sort of differenbce


 

Expert:  TonyTax replied 3 years ago.
I wouldn't know one way or the other.

What you need to consider is that most of your UK income is covered by the personal allowance so any UK liability is going to be quite low. However, if as you say, tax doesn't start until you have an income of £37,000 in Sweden, it may be worth investigating the possibility of becoming a Swedish national.

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