Receiving uk pension while living in Japan.

[Tkydon]

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

The Pension in the UK is not taxable at all in the UK if you live in Japan.

Regardless of the length of time you have lived in Japan, your UK Pension is taxable in Japan, and only in Japan, whether you remit funds to Japan or not.
You would have to do the calculations to see how much would be taxable after all Deductions and Allowances, and pay any tax due.

[Tkydon]

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.

Whilst other UK-Sourced Income may be taxable in the UK, the UK State Pension will not be taxable in the UK for a Resident of Japan under Article 6 of the Tax Treaty.

[AlanJH]

What a complicated mixed up system.
I feel completely lost in it all now.
And I was going to ask a question about transferring any uk savings via a wise account, think I will skip that question for now lol.
I just don't want to find my state pension ( no private pension ) is gobbled up in tax by the Japanese government.
They certainly don't handle their own pensioners too well ( 65.000 yen a month ) what the hell can they do on that ?
So as far a a foreigner in Japan, I feel very financially insecure.
I know absolutely nothing about all the tax returns system.
I think if there is some kind of treaty between the two countries, then it needs updating to where you transfer your tax allowance over with you.
I think people moving to the uk get a better deal, by some margin.
Does anybody on here actually get their uk pension living in Japan and if so, how much tax do you pay?
What a minefield this is.

[Tkydon]

What a complicated mixed up system.
I feel completely lost in it all now.
And I was going to ask a question about transferring any uk savings via a wise account, think I will skip that question for now lol.

You can transfer your UK Savings completely tax free, so long as the savings were in your account at the end of last year, there is no taxable event in transferring that money.
But that may expose you to tax on any UK Sourced Income in the tax year, as they assume that that income is transferred first, before savings, or tax that you should have paid if there was a taxable event.

You may need to consult a tax professional.

If you have a WISE Account registered in the UK there are no limits, but if you have a WISE account registered to an address in Japan, then transfer and balance limits apply.
https://wise.com/help/articles/2893492/ ... an-receive
https://wise.com/help/articles/3GBSRou4 ... e-in-japan
https://wise.com/help/articles/2899986/ ... ing-limits

I just don't want to find my state pension ( no private pension ) is gobbled up in tax by the Japanese government.

You will have to do the calculations on your total Allowances and Deductions. If the Total Taxable Income is less than Zero, then there will be no tax.

If you only have your UK State Pension, then I would expect that would not have to pay any tax after applying all the applicable Allowances and Deductions.

Again, you may need to consult a tax professional.

They certainly don't handle their own pensioners too well ( 65.000 yen a month ) what the hell can they do on that ?
So as far a a foreigner in Japan, I feel very financially insecure.

That is not correct.

Just the Basic Pension part of the Japanese National Pension is Y816,000 / 12 = Y68,000 Per Month if born after 1-Apr-1956
or Y813,700 / 12 = 67,808 Per Month if born before 1-Apr-1956

https://www.nenkin.go.jp/international/ ... nsion.html

but that does not include the Employees' Pension, or other employment related Pension component, which is related to Income

https://www.nenkin.go.jp/international/ ... loyee.html

It also does not include Employment related Defined Benefit or Defined Contribution Pensions run by the company they worked for.

I know absolutely nothing about all the tax returns system.
I think if there is some kind of treaty between the two countries, then it needs updating to where you transfer your tax allowance over with you.
I think people moving to the uk get a better deal, by some margin.
Does anybody on here actually get their uk pension living in Japan and if so, how much tax do you pay?
What a minefield this is.

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/

[TunaSki]

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.

Whilst other UK-Sourced Income may be taxable in the UK, the UK State Pension will not be taxable in the UK for a Resident of Japan under Article 6 of the Tax Treaty.

I know that, even shared links to the forms, as to utilize the tax treaty you have to apply for it.

I think the OP was contemplating the idea of not letting HMRC know they reside in Japan. And then “hide” the UK state pension from Japan, by not declaring it to Japan. Which would kind of work until Japan finds out. Because if HMRC believes OP resides in UK and only receives UK state pension, then because it’s below the threshold (for now), UK won’t tax it.

But as I explained to OP in that comment. Public pension is taxable to Japan regardless where it’s paid to. So it’s in OP’s best interest to utilize the tax treaty. Not only because they have a legal requirement to declare it to Japan. But then also it would mean zero tax UK side, once triple lock pushes UK state pension above the tax free threshold

[IloveJapan]

OK, I wonder if I have figured the above discussion out right. Just curious so I’m doing a calculation below.

So imagine say sb has 4 million in combined state pensions (the Japanese one, the UK one and the ideco).

Then would the following calculation get you the figure that is subject to taxation?

(4 mil x 0.75) - 275000 pension deduction - 480000 income tax deduction - 430000 residential tax deduction - health insurance

[Moneymatters]

…So imagine say sb has 4 million in combined state pensions (the Japanese one, the UK one and the ideco).

Then would the following calculation get you the figure that is subject to taxation?

(4 mil x 0.75) - 275000 pension deduction - 480000 income tax deduction - 430000 residential tax deduction - health insurance

To the untrained eye, (I rather greedily possess two of them.), this seems to be a decent calculator.

https://www.mmea.biz/simulation/nenkin_simulation/

Once you’ve entered the pension and what you think your health insurance payments will be is will spit out a result, likely holding a bit of paper like the Sumo’s use.

Then simply (I do everything simply) click where it says 計算内訳 to see the break down for income or resident taxes.
Hopefully the calc lines up..

[Wales4rugbyWC23]

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

For all the complexities that have been brough up about receiving state pensions and different sources of income from abroad in your retirement. Can you imagine doing your British and Japanese tax returns in your nineties for this income.... I have a good friend in Japan, whose father's retirement income came from a number of different sources within Japan, and the last few years when he had the onset of dementia it was a real nightmare preparing his tax return.

[Moneymatters]

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

For all the complexities that have been brough up about receiving state pensions and different sources of income from abroad in your retirement. Can you imagine doing your British and Japanese tax returns in your nineties for this income.... I have a good friend in Japan, whose father's retirement income came from a number of different sources within Japan, and the last few years when he had the onset of dementia it was a real nightmare preparing his tax return.

It is that very concern that has me thinking about automation. Although I’m fairly sure that once in retirement, if I forget my glasses and keys in the same day I’ll be dropped off in the mountains somewhere..

Joking aside I plan to fully record each step I can’t automate and will likely cash a private pension for one less complexity.
I think then I wouldn’t be filling a British tax return either.