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TonyTax
TonyTax, Tax Consultant
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As a UK subject, non-resident for UK tax purposes since 1970,

Resolved Question:

As a UK subject, non-resident for UK tax purposes since 1970, I am surprised to be assessed for tax on my state old age pension for the past two years. Previously I had received the pension gross with no deduction for tax. I am awaiting an explanation from the tax authorities.
Is this pension now taxable? If so, am I not entitled to personal allowances?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

Can you tell me which country you live in please. Do you have any other UK sources of income? When did you start to received your state pension?

Customer: replied 3 years ago.

My wife and I live in Lebanon (she is dual national), and have done since I retired in 1997.I receive a pension from Mobil Oil directly into my bank account in the Channel Islands;I have a notification from the inland revenue confirming this pension is non-taxable.( I never worked for Mobil in the UK). I have no other income which could be construed as UK-sourced income.

My uk state pension began when I reached 65 (2006).

Expert:  TonyTax replied 3 years ago.
Thanks.

Normally, the UK state pension will be taxable in the country of residence of the recipient which in your case is Lebanon. However, where there is no tax treaty between the UK and the second country which is the case with the UK and Lebanon, the state pension can remain taxable in the UK. If that is the reason that HMRC is asking you to pay tax on the state pension, as a UK national you will be entitled to a personal allowance of £10,500 to offset against it.

For now, I would wait for HMRC to respond to your request for an explanation as to why they are seeking to tax your state pension, given that you say that your Mobil Oil pension is taxable in the UK and would not, therefore, use your personal allowance. I suspect that your name has come up in a trawl of HMRC databases by their new computer system which traces what they call "orphan" tax liabilities and that it has not taken account of the fact that you are non-UK resident.

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





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Customer: replied 3 years ago.

In your 2nd para you suggest my Mobil pension is taxable in the UK; the inland revenue declare it non-taxable.

Expert:  TonyTax replied 3 years ago.

I do apologise. I wasn't suggesting it was taxable. I simply missed the word "not" in my answer. The line should have read "given that you say that your Mobil Oil pension is not taxable in the UK and would not, therefore, use your personal allowance.

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