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TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I will move to Japan soon and become resident in Japan. I

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I will move to Japan soon and become resident in Japan. I plan to have my company pension paid into an international bank and pay tax in Japan as the money is remitted to Japan. I also have a SIPP which I plan to drawdown in the UK up to basic tax limit. Will my UK tax be based on SIPP drawdown only or on both pension and drawdown income?


Articles 17 and 18 of the UK/Japan tax treaty here deal with pensions. Assuming your company pension is not derived from a government service job (see here), you will not pay UK tax on it if you are non resident in the UK. It will be taxable in Japan instead.

My understanding is that if you enter into a flexible drawdown or flex-access drawdown arrangement with your SIPP provider and then become non-UK resident, the income will not be taxable in the UK (as with the company pension) but that if you return to the UK within five years, the income you have drawn will be taxable subject to the 25% tax free proportion. Take a look here, here, here and here (page 6) for confirmation. There would appear to be a £100,000 threshold.

For those who leave the UK after 5 April 2013, the "five year period" replaces the "five full tax year period" for the purposes of temporary non-residence.

You should discuss your options with your SIPP provider, particularly their understanding on the tax position. You should complete and submit a P85 to HMRC before you leave the UK.

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

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello, I'm Keith and happy to help you with your question.
Just a small point, when you leave the UK for Japan don't forget to complete a Form P85 and send it to your tax office. On receipt HMRC will class you as non resident for tax purposes from the tax year after your date of departure and furthermore split the leaving year into two portions, one resident and one non resident. The form is available on the wbe, cant be filed on line and provides for a refund of any overpaid tax which may have occurred in the resident period.