Payment from a retirement benefits scheme in Hong Kong

Hi HMRC admin, Context: - I came from Hong Kong to the UK on 10th September 2021 and stay here since then, therefore becoming a UK tax resident in 2021-2022. - I was an employee in Hong Kong before I came to UK. As part of my retirement benefits, I was enrolled into a pension fund scheme which consisted of two parts. The first part is the mandatory contribution made by my employer and me as per the legal requirement in Hong Kong, and the second part is the additional voluntary contribution made by my employer as per my employment contract. All the contribution went into the same pension fund account. - In October 2021 (i.e. after I came to the UK and became a UK tax resident), I received a lump sum payment from the above-mentioned retirement benefits scheme covering the voluntary contribution made by my employer during my employment with them in Hong Kong. Question: (a) Am I correct that, as per Article 17 of the tax treaty between UK/Hong Kong, the above lump sum payment shall only be taxable in Hong Kong, not the UK? (b) Assuming my understanding in (a) is correct, do I need to report this lump sum payment to HMRC (by self-assessment form or other means) and then claim tax relief? Or shall I just do nothing in this regard? Thank you so much. DL

Hi,
 

You are correct in stating that, per Article 17 of the UK/Hong Kong tax treaty, the lump sum payment of your Hong Kong pension is taxable only in Hong Kong.  As a resident of the UK you are however required to declare your worldwide income. You should therefore provide details of the lump sum in the foreign pages of your self assessment tax return, and claim Foreign Tax Credit Relief re: the Hong Kong tax paid.   See link: Relief for Foreign Tax Paid 2021 (HS263)    . Thank you.

Good morning. Thank you for your reply. Just want to make sure that my understanding is correct as I am slightly confused. According to Article 17 of the UK/Hong Kong tax treaty, the lump sum pension payment as a form of retirement benefits will only be taxable in Hong Kong (but actually I don't need to pay tax for it in Hong Kong according to Hong Kong tax law). I have just conducted a search in this forum and found that someone else from Hong Kong had raised very similar questions and they were advised that it would not be necessary to report such pension payment in a self-assessment tax return to HMRC. See link: https://community.hmrc.gov.uk/customerforums/pt/45c3cdde-9c9d-ec11-826d-00155d9c6f58#8cb178df-9c9d-ec11-b400-6045bd105228 https://community.hmrc.gov.uk/customerforums/sa/1d9209bf-757d-ec11-b820-00155d974e5f#7bb86c4c-bb7d-ec11-8d21-6045bd0e67bf In view of the above, I should be grateful if you would clarify whether I really need to report this lump sum pension payment to HMRC. If I have to report it and given that I don't need to pay tax for this pension payment in Hong Kong (therefore can't claim Foreign Tax Credit Relief re: the Hong Kong tax paid), will I be eventually taxed here in the UK which contravenes Article 17? Thank you so much. Kind regards, DL

Hi,

Under Article 17 of the Double Taxation Treaty with Hong Kong, the pension is only taxable in Hong Kong and as such should not be declared to the UK tax authorities.

Thank you.