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bigduckontax
bigduckontax, Accountant
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I am 62 and about to retire, I currently have a Uk passport

Customer Question

Hi,
I am 62 and about to retire, I currently have a Uk passport but have lived in Netherlands (resident) for 30 years.
I worked 10 years for Unilever in UK and have a small pension due.
I worked 30 years in Netherlands and have a large pension due.
I will retire to Canada and take Canadian nationality (citizenship).
All my pensions will be paid into a UK account (some 5-6000 pounds per month).
(I have some pre-tax financial advantage in doing it this way)
Q1
I am happy to pay UK tax on the 400 pounds or so Unilever pension
But want to be sure I am not liable for UK tax on the 5000+ netherlands pension, may I expect no liability since I spend 0 time in UK (certainly no more than one week per year and have no property in uk)?
Q2
I will be declaring the pensions in Canada, expecting to pay tax there.
Tax in Canada is averaging around 20% for me, which is better than a UK tax, would the uk-canada double tax agreement mean I do not pay any UK tax?
Thanks,
Dave
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Dave, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. It is normal for pensions to be taxed in their country of origin. Thus your Unilever pension of 400 quid will be the subject of UK tax treatment, but as an EEA citizen you are entitled to a personal allowance, currently 10.6K, to offset this so even if this is 400 quid a month you will still be below the taxable limit. Just make sure that the tax code allocated to your Unilever pension is correct; it should be 1060. Canada accepts dual nationality so this entitlement to personal allowance will continue (eg Germany does not recognise dual nationality). You will be protected by the UK/Netherlands Double Taxation Convention which precludes the same income stream from being taxed in both jurisdictions. When you are in Canada there are similar Treaties in force between that country, the UK and The Netherlands. This is achieved by means of tax credits, the tax paid in one country being allowed as a tax credit against liability in the other. Tax treaties do not, however, protect you from differences in rates of taxation. The fact that you elect to have your pensions credited to an UK bank account is irrelevant. You may find life in Canada a tad complex at first with your plethora of pensions and paying countries, but I am sure that it will all sort itself out in time. I do hope that I have been able to shed some light on your position.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3097
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your excellent support.
Customer: replied 1 year ago.
Thanks, ***** ***** reassuring.
To be clear, I work for a EU gov organization (but not EU in the sense of commission or parliament) that allows my pension paid in either netherlands or UK. They also give me an additional 800 pounds a month to offset against uk tax liability. I only need to show I have cleared my uk tax affairs each year, which is why i am happy to declare/pay tax .... even if it works out as zero ... in uk, since the offset 800 is a fixed amount whatever my tax bill.I don't think netherlands features in the answer, since I will not be living there and my pension was earned in a diplomatic enclave within netherlands (ie exempt from netherlands tax while working, pension taxable in netherlands only if i live there).Thanks again for the fast and useful service,
dave
Expert:  bigduckontax replied 1 year ago.
I had assumed in my answer that your EU pension would be paid in the Netherlands. If it is payable in the UK as you say then both it and the Unilever pension will be aggregated and less your personal allowance and exposed to UK Income Tax. The Double Taxation Treaty between the UK and Canada will than allow any tax deducted to be allowed as a tax credit against your Canadian tax liability. I am delighted to have been of assistance. I used to fly KLM a lot and once asked the ground staff at Amsterdam why they all spoke such perfect English. 'We have to know another language in Holland,' was their response; 'Nobody knows Dutch!' Not quite true as my daughter speaks English, French, German, Dutch, Italian, Greek and Maori and she is a geologist.
Customer: replied 1 year ago.
Ok Keith, I am still puzzled on the major pension.
My employer in Netherlands (with no office in UK) pays my pension into my UK bank account. This is of no interest to Netherlands because of diplomatic protocols. I will be non resident in UK, permanently resident in Canada, so I would have thought this is declarable in Canada at normal Canadian rates but since "Paid by on behalf of a person, outside the UK (overseas pension) then no UK tax liability". I loosely quote from table 5.20 Scope of liability to income tax on individuals receiving pensions, in the UK document https://www.britishcouncil.org/new/PageFiles/8535/ir20.pdf and was not planning to declare it in UK.Cheers,
dave
Expert:  bigduckontax replied 1 year ago.
I do not suppose that HMRC will be the slightest degree interested in a diplomatic pension being paid from the Netherlands. In any event the Double Taxation Treaties will cover the matter and should HMRC insist on taxing in the UK then the tax credit will be allowable against Canadian tax. It's six of one and half a dozen of the other.
Customer: replied 1 year ago.
Thanks a lot, I guess the point is finished.I always fly KLM by the way, with my many trips to Canada I have top status and frequent free upgrades. Your daughters choice of adding Maori as a language was interesting, an optional choice at university I suppose. My organization (European Patent Office) is always interested in scientists with English, french and German, if she is ever stuck for a job !
Expert:  bigduckontax replied 1 year ago.
She went to the Rudolph Steiner School of Edinburgh so learned English, French and German simultaneously from the age of 7 and was fluent by 11. She read Geology at St Andrews and on graduation the Prof got her onto a European Masters which was taught in Greece, Italy and an industrial attachment in Holland so she picked up these languages too. She did a Doctorate in Environment Control whilst working on a post graduate grant with Hewlett Packard. She represented them at conferences world wide flying business class whilst Dad as slumming it in reptile! She now works for the NZ Government and as many of her stake holders are indigenous she learned Maori. Actually, she is quite interesting as numerate people are often not good at languages. I knew an man who could learn an inflective Eastern language and be fluent in a fortnight. He spoke English, French, German, Gurhkali, Urdu, Mandarin, Cantonese, Thai, Cambodian, Vietnamese and Lao to name a few, but he could not add 2 and 2 and make if 4 even with a calculator! I have gone off KLM/AF because although I was gold card I simply did not get upgraded, well I did once. I now use Middle East Airlines where upgrades seem much more common and it makes the trip to the Far East half and half instead of 13 hours of watching paint dry! They are also very frequently cheaper.
Customer: replied 1 year ago.
Wow, your daughter seems to be a super heroine! I guess RS Edinborough is the home of Miss Jean Brodie type language education.When I travel KLM with my wife, and only I am world business, KLM allow us to switch seats during the flight. I usually let her start up front, she takes the meal and drinks, then after we swap back so I can sleep in comfort.
We have a large language services section, I was amazed to hear one of those guys went off to Africa to perform real time vocal translation and only considered he needed one week to prepare for this new language.Meanwhile, I am probably the highest ranked in my office with only 1.1 languages (English and shopping French), we are all expected to have 3-4 languages but I always managed to get waivers throughout my career :-)
Expert:  bigduckontax replied 1 year ago.
Well done. All RS (or Waldorf Schools as they are known in many countries) teach 3 languages from the age of 7. Nothing is taught before that age. The schools are the despair of Ofsted as they have 7 year olds who can't read or write and 11 year olds who are fluent in 3 languages, spoken and written.

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