Receiving uk pension while living in Japan.

[AlanJH]

Hi all,
Maybe asked before, but can't find the info I'm looking for.
So in the uk we have a tax code and currently the state pension falls below the current tax codes currently issued in the uk.
So basically living in the uk you would pay no tax if only holding a state pension.
But I heard in Japan they tax any income from other countries, including state pension.
Do they have a similar system where you only pay tax if it is over a certain amount?
Surety they dont tax every penny of it do they ?
Thank you
Alan

[TunaSki]

UK and Japan have a tax treaty agreement for pension income. So if you’re residing in Japan when claiming your UK state pension, you just submit this form to HMRC: https://www.gov.uk/government/publicati ... japan-1-dt that way you only pay tax in Japan (declare as pension income)

If you’re residing in UK and claiming your Japanese pension and Ideco annuity (and if you have an ideco and opt to receive it as an annuity) then you submit this form to the NTA: https://www.nta.go.jp/taxes/tetsuzuki/s ... f2/258.pdf that way you only pay tax in Uk, so Japan don’t withhold 20.42% non-resident tax on it.

[AlanJH]

Thank you for this information Tunaski, I will hold on to the link provided.

But as stated, the pension in the uk is not currently taxable as it falls below the taxing threshold.
So for example: pension paid directly into my uk hsbc account and is not taxed.
How much of it can I transfer over to Japan each year/month before it becomes taxable?
I'm assuming they dont tax every penny of the pension, otherwise knowbody would retire in Japan from the uk.
Thank you

[RetireJapan]

Thank you for this information Tunaski, I will hold on to the link provided.

But as stated, the pension in the uk is not currently taxable as it falls below the taxing threshold.
So for example: pension paid directly into my uk hsbc account and is not taxed.
How much of it can I transfer over to Japan each year/month before it becomes taxable?
I'm assuming they dont tax every penny of the pension, otherwise knowbody would retire in Japan from the uk.
Thank you

That's not really how things work. If you live in Japan you potentially (unless it is less than the public pension deduction and the standard deduction, or you have been here for less than five years) owe tax on your UK pension regardless of whether you choose to transfer it or not.

[TunaSki]

Thank you for this information Tunaski, I will hold on to the link provided.

But as stated, the pension in the uk is not currently taxable as it falls below the taxing threshold.
So for example: pension paid directly into my uk hsbc account and is not taxed.
How much of it can I transfer over to Japan each year/month before it becomes taxable?
I'm assuming they dont tax every penny of the pension, otherwise knowbody would retire in Japan from the uk.
Thank you

It’s not at the Uk thershold (yet). But with triple lock growth which will continue until you reach claiming age, it might be. Also if you have other UK sourced income it adds a to your UK state pension which might then push you above the UK threshold. Utilizing the Tax treaty should enable you to fully exclude your UK state pension from any UK taxation scope.

As far as I’m aware overseas pension income is not foreign sourced income. So even if you’ve been in Japan for less than 5 years, you still have to declare it to Japan even if you don’t remit anything to japan. (I’m basing that on Article 161(viii)(b) of the income tax law https://www.japaneselawtranslation.go.j ... ew/3120/en)

But pension income gets a nice pension income deduction https://www.nta.go.jp/taxes/shiraberu/t ... u/1600.htm

You’d add your Japanese pension, iDeCo annuity, and UK state pension, and applicable pension annuities together and then use that table to work out your pension income deduction

[Moneymatters]

But pension income gets a nice pension income deduction https://www.nta.go.jp/taxes/shiraberu/t ... u/1600.htm

You’d add your Japanese pension, iDeCo annuity, and UK state pension, and applicable pension annuities together and then use that table to work out your pension income deduction

OK. So that table is to show you what your taxable income will be after the pension income deduction.

Then you need to pay the standard income tax?
(Unless you had other deductions to claim.)

It almost feels too simple. If this was a Western Movie, my character would be saying “it’s quiet, too quiet”..
Just before taking an arrow to the knee..

I’d love to see the timing and step by step of someone over 65 with a mix of Japan and foreign pensions.
Timing of tax payments for example. I guess you’d pay tax on the foreign sourced pensions in arrears..

[TunaSki]

But pension income gets a nice pension income deduction https://www.nta.go.jp/taxes/shiraberu/t ... u/1600.htm

You’d add your Japanese pension, iDeCo annuity, and UK state pension, and applicable pension annuities together and then use that table to work out your pension income deduction

OK. So that table is to show you what your taxable income will be after the pension income deduction.

Then you need to pay the standard income tax?
(Unless you had other deductions to claim.)

It almost feels too simple. If this was a Western Movie, my character would be saying “it’s quiet, too quiet”..
Just before taking an arrow to the knee..

I’d love to see the timing and step by step of someone over 65 with a mix of Japan and foreign pensions.
Timing of tax payments for example. I guess you’d pay tax on the foreign sourced pensions in arrears..

After the pension income deduction is applied, the remaining gets taxed along with whatever other income you have.

But you also have other tax deductions such as the ¥480,000 basic deduction. Also your national health insurance (or whatever equivalent OAPs pay) should be a tax deductible too.

The UK state pension taxable event occurs each time it’s paid out to you. Which I think is every two weeks. So whatever UK state pension your get paid from 1st of January to 31st of December, you would add onto your Japanese tax return for that tax year (which you can file from 1st of January of the following year). Regarding the exchange rate (if you receive the Uk state pension in £) you’d then need to note the exchange rate each time it’s paid to you. That gives your the value in yen the moment the taxable event occurs, but also enables you to track your £>¥ foreign exchange gains too.

[Moneymatters]

But pension income gets a nice pension income deduction https://www.nta.go.jp/taxes/shiraberu/t ... u/1600.htm

You’d add your Japanese pension, iDeCo annuity, and UK state pension, and applicable pension annuities together and then use that table to work out your pension income deduction

OK. So that table is to show you what your taxable income will be after the pension income deduction.

Then you need to pay the standard income tax?
(Unless you had other deductions to claim.)

It almost feels too simple. If this was a Western Movie, my character would be saying “it’s quiet, too quiet”..
Just before taking an arrow to the knee..

I’d love to see the timing and step by step of someone over 65 with a mix of Japan and foreign pensions.
Timing of tax payments for example. I guess you’d pay tax on the foreign sourced pensions in arrears..

After the pension income deduction is applied, the remaining gets taxed along with whatever other income you have.

But you also have other tax deductions such as the ¥480,000 basic deduction. Also your national health insurance (or whatever equivalent OAPs pay) should be a tax deductible too.

The UK state pension taxable event occurs each time it’s paid out to you. Which I think is every two weeks. So whatever UK state pension your get paid from 1st of January to 31st of December, you would add onto your Japanese tax return for that tax year (which you can file from 1st of January of the following year). Regarding the exchange rate (if you receive the Uk state pension in £) you’d then need to note the exchange rate each time it’s paid to you. That gives your the value in yen the moment the taxable event occurs, but also enables you to track your £>¥ foreign exchange gains too.

Thanks. Super clear. I wonder if A.I. will allow us to fully automate the tax return in the next 10 years..

For my own future reference, this is the basic deduction.
https://www.nta.go.jp/taxes/shiraberu/t ... u/1199.htm

[TunaSki]

OK. So that table is to show you what your taxable income will be after the pension income deduction.

Then you need to pay the standard income tax?
(Unless you had other deductions to claim.)

It almost feels too simple. If this was a Western Movie, my character would be saying “it’s quiet, too quiet”..
Just before taking an arrow to the knee..

I’d love to see the timing and step by step of someone over 65 with a mix of Japan and foreign pensions.
Timing of tax payments for example. I guess you’d pay tax on the foreign sourced pensions in arrears..

After the pension income deduction is applied, the remaining gets taxed along with whatever other income you have.

But you also have other tax deductions such as the ¥480,000 basic deduction. Also your national health insurance (or whatever equivalent OAPs pay) should be a tax deductible too.

The UK state pension taxable event occurs each time it’s paid out to you. Which I think is every two weeks. So whatever UK state pension your get paid from 1st of January to 31st of December, you would add onto your Japanese tax return for that tax year (which you can file from 1st of January of the following year). Regarding the exchange rate (if you receive the Uk state pension in £) you’d then need to note the exchange rate each time it’s paid to you. That gives your the value in yen the moment the taxable event occurs, but also enables you to track your £>¥ foreign exchange gains too.

Thanks. Super clear. I wonder if A.I. will allow us to fully automate the tax return in the next 10 years..

For my own future reference, this is the basic deduction.
https://www.nta.go.jp/taxes/shiraberu/t ... u/1199.htm

It maybe not A.I, but You can file the tax return online, using the online preparation tool (https://www.keisan.nta.go.jp/kyoutu/ky/smsp/top#bsctrl) Which is just basically data entry, and all the maths is done for you by the tool. You can then submit it electronically (requires a usedID/password or a MyNumber card) or postal method where it will output a complete tax return form in pdf for you to print and post to your tax office.

Another one for your reference to note, is that the basic deduction for resident tax is ¥430,000. So you get ¥480,000 for income tax, but ¥430,000 for resident tax

[Tkydon]

The UK Japan Treaty is here

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."

No tax on UK Pension in the UK if you are living in Japan.

Other forms of income are treated differently in different articles of the Treaty.

The UK State Pension qualifies as a Public Pension in Japan, and so under the Japanese Tax System is entitled to the Public Pension Deduction; and additional around Y1.1M deduction on top of all other Allowances and Deductions.

You can see details here - Page 8 (Page 12 of the PDF)
https://www.tax.metro.tokyo.lg.jp/book/ ... k2023e.pdf

and here on Pages 22-23
https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf

The actual amount of the deduction depends on age and the level of other income.



See also these tables by Starkimpossibility:
https://japanfinance.github.io/tax/income/treatytables/