Tax on a UK Government Pension (if you live abroad)

Dear Sir/Madam, I would like to ask about receiving a “UK Government Pension” while living abroad (in Spain). In the past, I worked 15 years in the UK as a “UK civil servant”, and because of that, I receive a “UK Government pension”. But now I live in Spain, and I am Spanish tax resident. I am a Spanish national and also a UK national (I have the two nationalities). Where is this pension taxed: in the UK, or in Spain? As I have two nationalities (Spanish and British) I don’t know where I have to pay the tax on this pension, or whether I can choose where to pay the tax? Many thanks in advance for your help, because I don’t find the answer anywhere. Kind regards.

Hi
UK government pension remain liable to tax in the UK no matter where you are resident.
Thankyou.

HMRC Admin 10, Can I question that please? Amitia is a Spanish citizen. Surely Article 18(2)(b) means that taxing rights revert to Spain "2. b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State."

Dear Sir / Madam, Thank you for your reply. Receiving a “UK Government Pension” and being a resident abroad (in Spain) is affected by the “Double Taxation Treaty” between the UK and Spain (Article 17 and Article 18). The Treaty says: 1) If you are a UK National and a fiscal resident in Spain, you pay the tax on the "UK Government Pension" in the UK. 2) If you are a Spanish National and a fiscal resident in Spain, you pay the tax on the "UK Government Pension" in Spain. 3) What happens if you are a UK National and also a Spanish National (if one has the two nationalities, British and Spanish) and live in Spain? where would one pay the tax on the "UK Government Pension"? Please, could you reply to Point 3? Thank you very much. Thank you very much for your attention.

Thank you for your comment, Gary. In my case, I am a UK and a Spanish citizen (I have the two nationalities). If you are a UK National and also a Spanish National (i.e. if one has the two nationalities, British and Spanish) and live in Spain... where would one pay the tax on the "UK Government Pension"? - can you please comment on that, Admin 10? I look forward to hearing from you. Thank you very much. Kind regards.

My understanding is that it reverts to the country of residence and that single/dual nationality is not relevant; only that you have Spanish nationality and receive a UK Government Service pension while resident in Spain. The treaty refers to "a national of", not something else to deal with the concept of "a national of, as well as a national of somewhere else". My reasoning is that the 1964 UK/German treaty was worded slightly differently from the current one, which is worded the same in this regard as the UK/Spain treaty. In that old treaty the Government Service Pension citizenship override says, that the receipt of a UK government service pension when resident in Germany shall be exempt from German tax "unless the payment is made to a German national who is not also a national of the UK". If the current treaties intended to continue that outcome, then the wording would sure not have been changed to omit the reference to dual nationality... My understanding is that UK/German dual nationality citizens in receipt of UK Government Service pensions in Germany are being taxed on that income in Germany.

Hi Gary Coombs
The pension remains liable in the UK unless a formal claim for relief has been submitted :
Double Taxation: UK - Spain (Form Spain-Individual)
Thankyou.

Hi Amitia Wood,
You would pay tax in the country you are tax resident.
For a UK government pension these are normally still iable in the UK. if you are referring to a state pension then this can be exempt but you need to make a formal application for relief.
Please see guidance here: 
Double Taxation: UK - Spain (Form Spain-Individual)
Thank you. 








 

Admin 10 and 25, Thanks. I know that government pensions are normally taxable only in the paying country as that is stipulated in Article 18 (2)(a). However, where the recipient has (in this case) Spanish nationality and is resident in Spain then Article 18(2)(b) is clear that the pension shall be taxable only in the country of residence. The fact that the person may be required to submit a form to ensure the UK does not tax the pension contrary to the wording of the DTA is surely secondary to the question asked.

Hello Gary, Thank you very much for taking the trouble to explain all that in detail. It is the only clear answer that I have found so far on the internet. Thank you very much. Excuse me, HMRC Admin 10 and HMRC Admin 25, but could you clarify your answers again? I am referring only to receiving a "UK Government Pension" (for civil service work done in the past). HMRC Admin 10, and HMRC Admin 25... could you reply to this question, please: "If you are a UK National and also a Spanish National (i.e. if one has the two nationalities, British and Spanish) and live in Spain... where would one pay the tax on the "UK Government/Civil Service Pension"? - Please confirm. Thank you very much. I look forward to hearing from you.

Hi Gary Coombs,

HMRC are not always aware of an individuals nationality and they may not be tax resident in another country hence the request for the application.
Thank you. 

Hi Amitia Wood,

This type of government pension remains taxable in the UK. 

Thank you. 

 

We seem to be going round in circles here. Can you please set out how Article 18(2)(b) applies when a Spanish national, resident in Spain, receives a UK Government Service pension. My understanding is that in those circumstances, taxing rights revert to Spain and HMRC may require a form as proof. Similarly, when the same person has both British and Spanish nationality, the would still fall within Article 18(2)(b). This is not only an issue relating to Spain. I am aware of people in Germany suffering double taxation on UK Government Service pensions because they have taken German citizenship, the German authorities are contending that they fall foul of this Article, yet HMRC sometimes gives and NT code and is sometimes refusing for people with the same residence and nationalities.

HMRC Admin 25, I am sorry, but your statement.. "...This type of government pension remains taxable in the UK" is not fully correct. As Gary Coombs clearly stated... "... government pensions are normally taxable only in the paying country as that is stipulated in Article 18 (2)(a). However, where the recipient has (in this case) Spanish nationality and is resident in Spain then Article 18(2)(b) is clear that the pension shall be taxable only in the country of residence". HMRC Admin 25, could you please confirm Article 18(2)(b) as quoted above, and could you reply to the question: "If you are a UK National and also a Spanish National (i.e. if one has the two nationalities, British and Spanish) and live in Spain... where would one pay the tax on the "UK Government/Civil Service Pension"? - Please can you confirm? Thank you very much to all who replied. Kind regards.

Hi
As government pensions are normally taxable in the UK, the individual would need to provide evidence that they are a national and a resident of the country in question if this then allows the pension to be taxed elsewhere to allow the NT code to be applied.
Thankyou.

Hi Amitia Wood
You would receive full relief on the government pension if you are a national and resident of Spain and you would need to provide evidence of this for the pension to be exempt in the UK.
Thankyou.

Hello HMRC Admin 10, Thanks for your message. However, my initial question has not been answered yet. Here is my query again. Can you please tell me: "If a person is a UK National and also a Spanish National (i.e. if one has the TWO NATIONALITIES, British and Spanish) and they are fiscal residents in Spain... in which country do you pay the taxes on the "UK Government/Civil Service Pension"? Please could you reply to this specific question? Thank you very much. Kind regards.

Hi Amitia Wood, 
The pension would automatically be taxed in the UK.
However, as a National and a Resident of Spain, you can have this taxed in Spain and should submit the relevant claim form.
Double Taxation: UK - Spain (Form Spain-Individual)
Thank you. 


 

Hello HMRC Admin 25, Thanks for your reply. Just to double check, to make things clear... can you please confirm that this quote is correct?: ... ".. as a National of UK, and as a National and a Resident of Spain, you can have this taxed in Spain and should submit the relevant claim form" . Thank you very much. Kind regards.

Hi,
It is. You will need to submit the DT form if you wish the goernement pension to be taxed in Spain.
Thank you.