UK Pension and Register for tax

[sarge57]

I am a British citizen but pretty much a permanent resident of Japan now and for the foreseeable future. My wife is Japanese she has lived in the UK and has a permanent right to remain.

I am not really sure where we are "Domiclied for Tax". For the past 10 years we have filled out UK self assessment tax returns, but we pay income tax on income in Japan. I don't know the consequences of this, it hasn't caused any problems as far as I can tell.

I will become eligible for a UK state pension this year. I know that as a resident of Japan the pension will never gain any inflation increases in the future. I don't know whether claiming my pension as a Japanese resident will be at odds with whatever tax domicile I have. Will this make any difference, and will I have to pay income tax on my pension in Japan ?

Or is there somewhere I can look to read up on all this, as I am really in the dark as to what happens with pension and tax between the 2 countries.

Thanks in advance for any advice.

Sarge

[Deep Blue]

You will be subject to Japanese rather than UK tax on your pension income.

You can read up on the subject here

https://www.gov.uk/government/publicati ... x-treaties

[Tkydon]

I am a British citizen but pretty much a permanent resident of Japan now and for the foreseeable future. My wife is Japanese she has lived in the UK and has a permanent right to remain.

I am not really sure where we are "Domiclied for Tax". For the past 10 years we have filled out UK self assessment tax returns, but we pay income tax on income in Japan. I don't know the consequences of this, it hasn't caused any problems as far as I can tell.

I will become eligible for a UK state pension this year. I know that as a resident of Japan the pension will never gain any inflation increases in the future. I don't know whether claiming my pension as a Japanese resident will be at odds with whatever tax domicile I have. Will this make any difference, and will I have to pay income tax on my pension in Japan ?

Or is there somewhere I can look to read up on all this, as I am really in the dark as to what happens with pension and tax between the 2 countries.

Thanks in advance for any advice.

Sarge

If you have been in Japan for more than 5 years, you are a Permanent Resident for Tax Purposes and Domiciled in Japan.

UK does not impose Global Taxation. You should not be paying Tax in the UK, except on certain UK sourced Income.

As long as you are living in Japan, and have lived in Japan for more than 5 years in the last 10 years, your global income is taxable in Japan, whether you remit the funds to Japan or not.

According to the UK-Japan Tax Treaty - Article
https://www.mof.go.jp/tax_policy/summar ... n-UKEN.pdf

Article 17
Subject to the provisions of paragraph 2 of Article 18
of this Convention, pensions and other similar remuneration
beneficially owned by a resident of a Contracting State
shall be taxable only in that Contracting State.

Your UK Pension is only taxable in Japan. The tax calculation is a little complicated. See

https://www.tax.metro.tokyo.lg.jp/book/ ... k2022e.pdf

Page 8 - Calculating the Public Pension Plan Deduction (Calculation Table)

See also

https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf

Pages 11-12, 21-23, etc..

You get a nice Tax Deduction that increases the tax free income, before the tax rates kick in, and so result in a lower aggregate tax rate.

[adamu]

Some relevant info on the wiki:

Taxation of state pension benefits for Japan-resident individuals

[kuma]

I am a British citizen but pretty much a permanent resident of Japan now and for the foreseeable future. My wife is Japanese she has lived in the UK and has a permanent right to remain.

I am not really sure where we are "Domiclied for Tax". For the past 10 years we have filled out UK self assessment tax returns, but we pay income tax on income in Japan. I don't know the consequences of this, it hasn't caused any problems as far as I can tell.

I will become eligible for a UK state pension this year. I know that as a resident of Japan the pension will never gain any inflation increases in the future. I don't know whether claiming my pension as a Japanese resident will be at odds with whatever tax domicile I have. Will this make any difference, and will I have to pay income tax on my pension in Japan ?

Or is there somewhere I can look to read up on all this, as I am really in the dark as to what happens with pension and tax between the 2 countries.

Thanks in advance for any advice.

Sarge

Some great answers already; apologies if the above duplicates in part or in whole, but just to add my thoughts in case useful:

Residency

Determination of residency can be simple in many instances, but decidedly complex in other circumstances. Great if your case is simple (as simple is good); also great if your case is more complex (as the pros of living a very international life would no doubt outweigh the cons of the bureaucracy involved).

As others have mentioned, the Japan-UK Double Tax Convention exists to minimise the effects of being doubly taxed upon the same income. (A second purpose is anti-avoidance.)

UK and Japanese domestic laws will still apply, but then treaty benefits can be claimed (ie an eligible individual could claim to not have UK income tax withheld on a defined income source on the basis that they are paying Japanese income tax on the same income, and the treaty deems Japan as their 'centre of interest' with primary taxation rights).

From your intro, it sounds likely that you will be deemed Japan resident for both Japanese income tax purposes and double tax convention purposes.

Should residency prove complex from the UK side, a couple of resources might be useful:
1. Statutory Residence Test
2. Dual residency: guidance on how dual residency and the double tax agreements work:

Claiming the UK state pension abroad

RetireWiki has various sections on this topic. Tax (including link to HMRC claim form for relief on UK income tax for pensions, etc), how to claim, possibility of temporary uprating during visits to the UK, etc.

Relevant gov.uk pages are the primary source. (RetireWiki has mainly distilled info from various gov.uk pages potentially relevant to readers in Japan.)

Further thoughts/questions

Some thoughts/questions (unasked for; feel free to ignore if not useful) in addition to the above answers to your specific question...

1. Are you set to receive the full UK state pension? If not, now may represent a unique opportunity to plug any gaps. (May also hold true for your wife, too.) If eligible, individuals can continue to plug gaps whilst receiving the state pension. Doesn't seem to be well publicised, but it's possible.

2. Have you seen the overseas claim form? It asks for details of every period of time spent in the UK, including visits. And a whole host of other data, much of which HMRC will already have... Haven't had to navigate this myself, but I understand some forum members have successfully claimed their pensions abroad. Godspeed!

3. An HMRC Subject Access Request (SAR) could help to compile some of the data. (Been-there-done-that folk may have gotten away with a covering letter and some incomplete data points for their claims?)

4. If you have UK personal pensions too, there are related considerations to the UK state pension. The wiki is more sparse on this area, but, if relevant, the same HMRC claim form for relief on UK income tax can be used for the state pension and personal pensions.

[Beaglehound]

And here was I believing actually claiming the pension might not be too arduous a process…that overseas claim form looks a beauty! At least I won’t have to navigate it for at least 14 years, and it makes me think there is some upside to death in the interim

[RetireJapan]

And here was I believing actually claiming the pension might not be too arduous a process…that overseas claim form looks a beauty! At least I won’t have to navigate it for at least 14 years, and it makes me think there is some upside to death in the interim

What the cursed hell is this thing?

I have no idea about most of the things they are asking about, and I'm only 45. How am I supposed to fill this in when I'm 70????

My original birth certificate? What the hell? I don't trust them to answer the phone, why would I send them the only copy I have of an important document?

Every holiday to the UK? How am I supposed to have that information?

Every address I have lived in the UK? Hah!

[kuma]

And here was I believing actually claiming the pension might not be too arduous a process…that overseas claim form looks a beauty! At least I won’t have to navigate it for at least 14 years, and it makes me think there is some upside to death in the interim

What the cursed hell is this thing?

I have no idea about most of the things they are asking about, and I'm only 45. How am I supposed to fill this in when I'm 70????

My original birth certificate? What the hell? I don't trust them to answer the phone, why would I send them the only copy I have of an important document?

Every holiday to the UK? How am I supposed to have that information?

Every address I have lived in the UK? Hah!

For those of us not claiming for a while, the form is from 2015, and will hopefully be revised at some point. The gov.uk link gov.uk link does mention calling the International Pension Centre as an alternative to sending in the form... yet the form requires so much detail and so many supporting documents that I don't imagine a phone call will avoid paperwork entirely!

Been meaning to ask those in receipt of their pensions on this forum how their claims process went.

Presumably some avoid the nonsense with a covering letter: "I have 35 qualifying years on my NI record. You know this because you are the keepers of the records. In addition to my NI records, you already have access to my UK employment records. As you also know, I was resident in the UK from birth until 2nd June 1985, and have been resident in Japan since. I have visited the UK since, most notably to Prestatyn Sands Holiday Park in '89, a narrowboat trip through Walsall and environs in '91, and the notorious Blackpool blackout of '93, the less of which is remembered, the better. None of these sojourns in the motherland have any bearing whatsoever on my eligibility for the state pension, excepting if it is deemed that my accidental inconveniencing of an OAP in Peterborough Town Hall Car Park in '93 immediately invalidated me from receiving my own pension, in which case perhaps in the intervening thirty years of my voluntary contributions, you might have notified me of their worthlessness due to this momentary lapse of concentration. I am of pensionable age, and curmudgeonliness. Kindly cease and desist the inquisition, and avail me with the benefits I have spent 50 years accruing entitlement towards."

I nominate MoneyMatters to write a template letter for us mere mortals

But in all seriousness, it would be good to hear from people who have navigated these shenanigans.

Re the acceptable professions to authenticate a photocopy of a birth certificate, have you ever seen such a restrictive list elsewhere?

[RetireJapan]

Re the acceptable professions to authenticate a photocopy of a birth certificate, have you ever seen such a restrictive list elsewhere?

I am ordained so can serve

Doctor might be the best option for many people, assuming you can find one willing to sign some weird foreign document...

[kuma]

It is a form worthy of admiration.

"Please send us your birth certificate." Then: "We need the original certificate." Next sentence: actually, we don't; a photocopy may suffice. Later on: please send us all the documents we ask for. Next sentence: if you don't have it, don't delay sending. Next sentence: please remember to send everything we ask for, otherwise your claim may be delayed. Next: other documents may be acceptable. Finale: are you sending your birth certificate?

Oh, and amidst all that, whilst we highlight restrictions on the professionals who can sign and stamp it, there are no stated restrictions on that person being one and the same as the applicant, or his relative, and no stated requirement to translate anything not in English or Welsh.

Also, the UK only dishes out 'short birth certificates' upon birth, which are useless for most official purposes, as a 'long birth certificate' is required. So 'original' is questionable use of language. The certificate ordering service at gov.uk refers to ordering a 'copy' of your certificate: https://www.gov.uk/order-copy-birth-dea ... ertificate

In summary:

politeness: please send us...
firmness: we need...
backtracking: a copy will suffice...
firmness: ...but suitably signed and stamped so as to be potentially more difficult to procure for many than the original
politeness: please remember...
pragmatism: we know you might not have it, so send in your claim anyway without delay...
realism: ...but then your claim will be delayed
desperation: other documents may be acceptable
we're as confused as you are: are you sending it?