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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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If take the max tax free lump sum from my occupational pensions

Resolved Question:

If take the max tax free lump sum from my occupational pensions after I have moved to work in South Africa will it still be tax free in the UK? Will I have to pay tax on it in South Africa? The money would stay in the UK for at least until the next tax year
thank you
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
Most pension schemes let you take 25% of your pension pot as a lump sum. This money is tax-free. This is true even if you are abroad.
A pension received outside of SA would be exempt from local tax, irrespective of where the fund is located and is applicable to residents and nonresidents.
To the extent that the fund was located in SA, it was argued that the source was in SA and therefore that the total amount was taxable in SA irrespective of the fact that the pension may have related partly to services that were rendered outside the country.
In terms of the new (November 2014) rule SARS has now indicated that the reference to source in the act refers to the originating cause that gives rise to the pension income, in other words where the services have been rendered.
Your pension will not be taxable to SARs.
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