sarge57 wrote: ↑Sat Jun 03, 2023 11:28 am
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.
