Drawdown pension from Switzerland - where is it taxed

Hi If I have a SIPP in the UK but am resident in Switzerland, if I: a) take 25% tax free it is not taxed in Switzerland (Art 18.2 of the Swiss / UK double taxation agreement says lump sums are taxed in the country they are paid b) If I then take small annual amounts out as drawdown (say 4% of the remainder), are they i) taxed in the UK (because they are small lump sums do fall under 18.2 again) or ii) taxed in Switzerland because they are income? Would be very grateful for some guidance. Thank you! Jestyn

Should really read my post before pressing send... "they are small lump sums SO fall under 18.2 again"

 

Hi
If you dont meet the conditions of Article 19, then the small annual amounts you then take are taxable in the UK as this is seen as a recurring pension and not a one off lump sum.

Oh, I'm sorry, you've really confused me. If it is a "recurring pension", shouldn't it be taxed where I live (in Switzerland), not in the UK? I live in Switzerland: lump sums paid in the UK are taxed there, regular pension income is taxed in Switzerland. But you've replied that because they are regular income not lump sums they are taxed in the UK. That isn't right is it?

Hi Jestyn thirkell-white,
The previous replies were issued based on you being a UK tax resident and the pensions being from Switzerland.
As UK pensions they will automatically be taxed in the UK but you can submit a claim under double taxation relief so that a code of NT is issued for you to then declare them in Switzerland:
Double Taxation: UK-Switzerland (Form Switzerland-Individual)
Thank you. 
 

Thank you. That's clearer, although I'm not sure why it wasn't clear where I lived: the first line of the first post says "If I have a SIPP in the UK but am resident in Switzerland:" 1) So, to confirm if I am a) resident in Switzerland b) Have a UK SIPP c) take small regular lump sums I can apply for an NT code, not get taxed on them in the UK, and declare them and pay tax on them in Switzerland. 2) What is the criteria for what attracts lump sum treatment vs pension treatment? Some percentage of the total fund? How regularly I take the amounts? Frequency of withdrawals? Thank you!

Hi,

Yes. As you are resident in Switzerland and have a UK SIPP. You can claim a NT tax code by submitting a validated DT individual UK/switzerland form.

Double Taxation: UK-Switzerland (Form Switzerland-Individual)

Article 18(2) covers lumps sums and advises they are taxable only in the UK.

Thank you.

Good afternoon, Following on this topic question 2 have not been answered, Article 18(2) covers lump sums but doesn't explain the criteria to define them if you have monthly withdrawals from your SIPP ninth UK being a Swiss tax resident 2) What is the criteria for what attracts lump sum treatment vs pension treatment? Some percentage of the total fund? How regularly I take the amounts? Frequency of withdrawals?

Hi,

Article 18(1) covers regular payments made at regular intervals from a non government pension. A resdient of Switzerland is only taxable on the UK pension in Switzerland, provided it is a regular payment at regular intervals. Paragraph 2 states that a lump sum payment from a UK pension, is taxable only in the UK.

Thank you.

Can you please give a bit more clarity on Article 18(1) covering "regular payments at regular intervals". Does that mean that if one had a UK SIPP of say £1,000,000 they could draw down £100,000 (regular amount) every month for 10 months (regular interval) and the payments still be classed as income drawdown and not capital lump withdrawals? Or are there some other rules or guidance on how much, or over how long a period, regular drawdown payments can be taken as income?

Hi Swiss Resident,
The phrase "regular payments at regular intervals" is meant to cover the various frequencies of consistent payments that may occur, such as weekly, monthly, quarterly etc, over a long period of time.
Drawdowns is the choice of taking a lump sum out of the pension pot.
It is not a regular payment at regular intervals.
As the UK / Switzerland tax treaty does not mention lump sums, any lump sum withdrawal, will be liable to tax in the UK. 
Thank you. 

Specifically then please, how many years or months is "a long period of time" in the view of HMRC? Thank you

Hi Swiss Resident

As it relates to regular payments being made, this could apply for anything over 6 months.

Thank you 

So back to my previous example, so would a pot of say £1,000,000 withdrawn in regular monthly amounts of £100,000 each for a total of 10 months (ie more than the 6 months you state above) therefore definitely count as income and not as lump sums? Thank you

Hi,
Yes this would be seen as a regular payment and not a lump sum
Thank you.