Hello HRMC admin,
I am one of the HK people who moved to UK with BNO visa for new life. Like many of them, I encountered uncertainty on taxation. I would like to seek your advice in respect of the salary and pension arising in HK.
I was a civil servant in HK and I started my pre-retirement leave with pay from 1 August 2022 to 30 October 2022. My employment with HKSAR government eventually ended on 1 November 2022.
During my pre-retirement leave, I arrived in UK on 2 August 2022 with BNO Visa. Upon I moved to UK, I could still receive salary from the HKSAR government for the period of August 2022 to October 2022, via my bank account in HK.
On 1 November 2022, I officially retired from the civil service employment. In December 2022, HK government, my ex-employer, further paid me a lump sum of pension for early-retirement due to ill health.
In fact, the salary for the period of 1 Aug 2022 to 30 October 2022, and the lump sum pension for early-retirement due to ill health were paid in HK by the HKSAR government and these payments were also taxed as Salary Tax in HK in the relevant tax year.
As I arrived in UK on 2 August 2022, and stayed for more than 183 days in the tax year of 21/22, I assumed I have become a tax resident here.
I would like to clarify the following,
1. According to the Double-Tax Agreement, article 17 stipulates that Pension arising in the contracting party and paid to an resident of other party for his past employment shall be taxable only in the first-mentioned party. From my understanding, the lump sum pension I received is taxable only in HK, and it is Not taxable in UK. Is it correct?
2. If the lump sum pension is considered Not taxable in UK, do I still need to declare the lump sum pension paid for my past employment in HK in the self-assessment from?
3. According to the Double-taxation agreement, article 18 1(b) stipulates that however salary paid by a government of a contracting party to an individual who rendered service to that party shall become taxable only in that Other Contracting Party if the service are rendered in that party and the individual in the case of UK is a National of the UK or did not become a resident of that party solely for the purpose of rending service. From my understanding, the salary I received shall be taxable in UK, therefore I Need to declare the salary of 1 August to 30 October 2022 paid in HK in the self-assessment form. Is it correct?
4. In case I am still required to declare lump sum pension received in the self-assessment form, can I claim for Tax Credit for the whole amount of lump sum pension payment? If yes, how can I do so?
5. In case I have to declare the salary received and paid by the HK Government after I arrived in UK, as I have paid salary tax in HK, can I claim for tax relief so that I only need the pay the differences of tax in UK? If yes, how can I do so ?
I appreciate your help in this matter. Thanks in advance!