UK Tax on Indian Provident Fund

Dear Sir I had completed 10 years of service in India and relocated to the UK in October 2022. I am currently planning to withdraw my Employee Provident Fund and have a few queries related to the taxation of the PF amount in the UK. I would greatly appreciate your assistance in addressing these concerns: 1) I contributed to the provident fund during my time as an Indian tax resident. If I withdraw the PF amount while in the UK tax residency, would the entire withdrawal amount be considered as taxable foreign income, or would it be limited to the interest earned on the funds after my move to the UK? According to the Double Taxation Agreement (DTA) details available on the HMRC website, specifically between India and the UK, it appears that the PF amount may not be treated as taxable foreign income in the UK. The relevant information can be found here: https://www.gov.uk/government/publications/india-tax-treaties/2020-uk-india-synthesised-text-of-the-multilateral-instrument-and-the-1993-double-taxation-convention-in-force#article-19--governmental-remuneration-and-pensions Thank you for your time and assistance.

Hi

HMRC cannot comment on future events as legislation and/or plans may change.

Thank you

Dear Admin, For my case given below , could you please help with tax implications . I came to UK on 2022 on deputation from an Indian company and then left the company and joined local UK company on 2023. Accordingly, my previous indian company has given the indian provident fund as lump sum settlement to my indian bank account on Feb 2024. Now ,while submitting UK tax for 2023/2024 , do I have to declare the whole amount as foreign income or only the interest earned during 2023-2024 needs to be declared , given I want to transfer total amount of money to UK account as soon as possible.

Hi,

Please refer to guidance below.

EIM75550 - The taxation of pension income: lump sums from foreign pension schemes

Thank you.

Hello, I am UK resident (non-domiciled). I am planing to withdraw my provident fund in India which was accumulated before I moved to the UK. The fund has three components (employee contribution, employer contribution, and interest earned). As employee contribution and employer contribution were my income before moving to the UK - categorise as Capital. so I will pay UK taxes on the Interest earned by declaring in SA106. How do I provide details of the employee and employer contribution in my self assessment return? Please suggest.

@hmrc - please guide

Hi,

The withdrawal of a lump sum from the provident fund (foreign pension scheme) by a UK tax resident is taxable in the UK under Article 23(1) of the DTC
and EIM75550 - The taxation of pension income: lump sums from foreign pension schemes details how that lump sum may be taxed.

Thank you.

Hi , I am a UK resident since September 2022. Prior to that I was a tax resident & employed in India for 15 years. I left my employment and moved to UK in September 2022. During my employment in India, I contributed to the Statutory employee Provident Fund ; in addition to the employer contribution . I have made NO contribution to the fund after my arrival into the United Kingdom (September 2022). The Total fund consists of my contribution + employer contribution+ accumulated interest (pre Sep 2022 + post Sep 2022). I am now planning to withdraw the accumulated funds and remit the same to UK . Based on the above advise I take it that as the payments in the fund occurred in the tax years before becoming a UK resident , these amounts will not be taxable in the UK. Please confirm. Regarding the interest earned, will the interest earned pre-Sep 2022 (before my arrival into UK) will it be taxable in UK ? I do understand that interest accrued post Sep 2022 is taxable. Grateful if you could advise on the above and whether this advise changes owing to the new budget announced yesterday. Many thanks for your advise

Hi,
Please refer to article 19 and 20 of the tax treaty:
UK/India Double Taxation Convention
Thank you

Thanks very much. Have read Article 19 & 20 , i interpret that any payments received owing to past employment in India (which is what the provident fund payment refers to ) is not taxable in UK and is taxable only in the Contracting state i.e. India. Is my interpretation correct. Please confirm Also did I need to show this receipt in my tax return? Thanks for your response to both the points

Hi ,
 

If not taxable you dont declare it on the return as taxable income. You do make reference to it on the comments section and under which article it is tax exempt . Thank you .