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Posted Sat, 08 Jan 2022 15:42:33 GMT by Bigjock
My wife and I are both pensioners currently resident in Scotland (and taxed under the Scottish system). We are considering moving abroad to join family in Europe and becoming permanently resident there. We would be grateful for information on the impact on our tax situation especially from anyone with recent experience: 1 I receive a UK Teachers Pension (TP), a Civil Service Pension (CSP) as well as a State Pension; my wife receives a State Pension. I understand that under Double Taxation Agreements the TP and CSP (both classified as government pensions) must/will continue to be taxed in UK (and not abroad) whilst our State Pensions will be liable to tax abroad but no longer have to be declared in UK. Is this correct ? 2 If this is the case will I retain my UK Personal Allowance (PA) to offset against my TP and CSP? 3 Under the Marriage Allowance Transfer arrangement I currently receive part of my wife's PA in addition to my own PA. Will this still still be available to me, even if my wife is no longer liable to UK tax as a non-resident? 4 We are currently taxed under the Scottish Income Tax arrangements for residents of Scotland. Will my TP and CSP be taxed under the English or continue in the Scottish regime once I become resident abroad? Will we be required to complete annual UK tax returns and, if so, to which tax office ? Will I be required to inform the TPA and CSP agencies of the changes or will HMRC duly inform them? 5 We currently own our own house (where we have lived for over 20 years). Will we be liable to UK Capital Gains Tax if we sell this (a) before we move abroad and (b) within the first year (or longer) of moving abroad? 6 Will interest on UK bank accounts become liable to UK income tax and will we retain our Personal Savings Allowances (£1000) each ? Will share dividends and disposal of shares continue to be liable to UK Income Tax (Share Dividend Allowance) and UK CGT? Many thanks in anticipation
Posted Tue, 11 Jan 2022 12:34:14 GMT by HMRC Admin 19

It will depend on which country you become resident in as to where the pension is declared. Some countries will give full relief even for government pensions. Guidance by country can be found here:

Digest of Double Taxation Treaties

As a UK national you will still be entitled to your personal allowance regardless of where you are tax resident.   

You can still transfer marriage allowance even if you are non resident.

The rates of tax on any UK income will be based on your last place of residence, Scotland.

If you have no UK income other than the pensions then you will not need to complete a Self Assessment tax return. Criteria for completion of a return can be found here:

Self Assessment tax returns

If you sell your house within 9 months of it no longer being your main residence then you will not need to report anything for capital gains. You only need to report for captal gains if it is a taxable capital gain.

Tell HMRC about Capital Gains Tax on UK property or land if you’re non-resident

UK interest and dividends will still attract the savings and dividend allowance, however, as a non resident these would not be reported to the UK. 

Thank you.
Posted Mon, 02 Jan 2023 21:58:36 GMT by Bigjock
Hello again and many thanks for your advice which we found very helpful. Just to clarify that we have understood correctly and how the above would work in practice : (1) new UK tax code notice (on move to join family in Germany) a) new tax code will be calculated for UK income to include my Teachers Pension and Civ Service Pension (after full Personal Allowance). b) UK State Pension income will no longer be included (and UK tax exempt) c) TPA and CSP will automatically be informed of new (reduced) rate of tax due - without the need for me to submit future annual tax returns to HMRC. (3) I can still benefit from transfer of Marriage Allowance from my wife - even if she no longer has a tax liability in UK? (4) Annual Tax Return we would however still be required to submit annual tax returns if we continue to receive UK savings interest/share dividends/capital gains (even if within the approved exemption limits) - as per the criteria in the link you sent above -but this income would no longer be liable to UK income tax? Many thanks in anticipation
Posted Fri, 06 Jan 2023 12:07:30 GMT by HMRC Admin 19

That is correct in relation to your tax code.

There will be no need for a tax return if you no longer meet the Self Assessment criteria. You may still need to declare capital gains to the UK if this relates to the sale of UK residential property.

Thank you.
Posted Fri, 06 Jan 2023 19:14:57 GMT by Gary Coombs
Hi Bigjock, Germany and UK tax issues are close to my heart as I have the joy of having lived in both countries. My understanding is that unless you also have German nationality, your TP and CSP remain taxable ONLY in the UK as already stated. However, if you also have dual nationality (or have renounced your British and taken only German citizenship since Brexit), then taxation of government service pensions flips to Germany by virtue of Article 18(2)(b) of the DTA. The UK state pension remains taxable ONLY in the UK, not Germany by virtue of Article 17(2) of the DTA, so that too will be dealt with via a reduction in your UK tax code to recover tax on it. I am sure HMRC can confirm the above. There is also a quirk in the DTA that you will need to be aware of if you have income that is taxable in Germany. Remember, Germany will have taxing rights over your worldwide income, subject to things being excluded by the DTA, so any German earnings or pension, your TP/CSP if you have German citizenship, plus any bank interest/dividends etc from the UK or Germany. And that is Article 23(1)(d), which allows Germany to include any income that is excluded from taxation in Germany by reason of the DTA when setting the rate at which you pay tax on your German taxable income - so-called Progressionsvorbehalt in Section 32b Einkommensteuergesetz (EStG). You will have to report such income (your TP/CSP/State pension) on Anlage AUS, line36, of your German tax return. Also, Germany does not operate a Self Assessment tax regime and does not prompt you for a tax return. You must just submit one each year - something I was surprised to learn... If you have to pay German health insurance, rather than qualifying for the S1 procedure under which the UK still pays your healthcare costs, then your UK income will also have to be reported to the Krankenkasse (Health Insurance) as it will be used in setting the amount of your contributions. Hope this is helpful...

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