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bigduckontax
bigduckontax, Accountant
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I am at the moment employed with an NHS trust and am planning

Resolved Question:

Hi I am at the moment employed with an NHS trust and am planning to continue working in the UK for a few mor years. I have contributed to the NHS pensions from L&T five years . Since I heard that the pensions would no longer be transferred abroad from April 2015, I decided to transfer my pension corpus to India, my native place. Few schemes are recognised for this called as QROPS. there are two types of schedule available. An immediate annuity plan provided by HDFCllife (HDFC LIFE will start paying me the yearly annuity soon after the fund is transferred to India) and a deferred annuity plan by Max New York life pension scheme, which is deposited as a pension fund and will mature till the age of 50-55 after which we have option of withdrawing 1/3 the total corpus and continue the rest of corpus with annuity either yearly or monthly.
The immediate annuity scheme fancied me as it is a recognised QROPS . When enquired with the company , I would have to pay tax for the Annuity I earn , to indian Government.
This is OK. But I am concerned since I continue to work in the UK, I would be asked to pay the tax for this annuity I earn from India, though the corpus is earned from the UK. Is this a possibility? Please help me with the dilemma of taking up which plan. (As I told I liked HDFC immediate annuity plan)
Thanks
Arun
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
I deduce from your question that you are concerned about being taxed on this pension in the UK as well as in India. Am I on the right track?
Customer: replied 2 years ago.

Yes that is correct. I dont want to go against the rule of HMRC. Although immediate annuity scheme by HDFC life is a recognized QROPS by the HMRC, I wonder if anyone working in the UK would be able to access it as the NI number is ***** to this pension and our regular taxes for the income in the UK.

Thanks

Arun

Expert:  bigduckontax replied 2 years ago.
I do not think you need to be concerned Arun. There is a Double Taxation Treaty between the UK and India the aim of which is to preclude items being taxed in both jurisdictions. This is achieved by means of tax credits, the tax paid in one State being allowed against any liability in the other country. As it is being taxed in India you would benefit from the Treaty.
I do hope I have been able to set your mind at rest on this matter.
Customer: replied 2 years ago.

But as a rule is this Annuity taxable by HMRC ignoring the taxation in India. I read somewhere HMRC looks mainly at the corpus which would remain undisturbed in this scheme.

Moreover would HMRC be aware at all that tax is filed in India? Just curious

The HMRC levies heavy penalties of 40~55% for going against the rules to its members.

The annuity is about 7% (~£40000 this would be £2800). Since i have no other income now in India, this would be below the taxation limit in India although i would have to file it.

Expert:  bigduckontax replied 2 years ago.
HMRC would not be aware until you claimed the double taxation on your annual self assessment tax return. The procedure is commonplace. However, as there is no tax due in India you would not benefit from the Treaty. The sum paid would merely form part of your worldwide income for Income Tax purposes and should be declared on your annual self assessment tax return with, of course, the tax levied.
Customer: replied 2 years ago.

But I am not sure what the HMRC says specifically on cash benefits from QROPS fund. So do you recommend taking up a defferred annuity scheme to be hassle free?

Thanks

Arun

Expert:  bigduckontax replied 2 years ago.
It is always a good idea Arun, saves a lot of quibbling.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.