Do I need to pay tax on Japan pension refund?

Hi, I used to live in Japan for about 7 years, then moved to the UK. While living in Japan, I contributed to Japan National Pension which is similar to UK State pension. Because I only contributed to Japan National Pension for 7 years which is not enough to qualify to get pension when I reach pension age. So after moving out of Japan, I applied for pension refund which is something Japan Pension allows. A few months later I got the refund to my UK bank account. My question are because I applied and got the refund while being a UK tax resident: 1. is the refund considered as taxable? 2. if so, under which section/category should I declare the money under in my self-assessment? Thanks.

Hi,

The refund is not taxable but any interest or dividends that this then generates is taxable income.

Thank you.

Hi, thanks for getting back to me. Could you elaborate why the refund is not taxable?

Hi leo22,

It is not taxable as it is a refund on contributions that were deducted from income on which tax has already been paid.

Thank you. 

Hi HMRC Admin, As from the messages above, Japan Pension Lump-Sum Withdrawal is not taxable. Do I need to declare this in the Self-Assessment? Thank you very much!

Hi,

If it is not taxable in the UK and no tax has been deducted from it, then do not include in your Self Assessment Tax Return.

Thank you.

I would just like to clarify, because I am in a similar situation though my pension provider was a private company, not the Japanese government: - my pension contributions and my employer’s matching contributions were all taxed income while still in Japan - pension has grown in value during the years - I am told by the pension provider that cash out of pension value will follow taxation rules of the country where I receive it; that is, I won’t be taxed in Japan but I may have some tax liabilities in the UK. Would the growth of the pension pot be tax free? Or is it only the contributions that is tax free (because they have already been taxed)? For example, if £100,000 is the total of my personal and employer contributions and the pension total value is now £120,000, do I have to pay tax on the £20,000? Thank you!

Hi,
 

The pension pot in whole will be taxable when you eventually cash it in to take the money  . Thank you.

Dear HMRC Admin, It seems that I am in a similar situation to people in this forum. Starting Aug 2019, I have lived and worked in Japan collecting a private pension. After 4 years I have returned to the UK in August 2023, where I have just received a lump-sum withdrawal from the Japanese authorities. In the process of refunding this to me, they have taken almost 21% as tax. Now I have left Japan, it would be almost impossible for me to retrieve this money. My question is will I now be taxed again on the remaining amount by the UK government? Do I have to declare this in my self assessment? I should also add that I am now technically a UK resident again as by the end of the tax year on the 5th April 2024, I will have spent more than 183 days in the UK this year. Thanks, David

Hi DavidB88.
No you don't declare this as it's a refund of contributions. if treated the same way as a refund of UK contributions, it is correctly taxed as these payments
would have reduced your tax due at the time they were paid.
Thank you.

 

Dear HMRC Admin 20, Thank you for your answer. If this is true, I have no need to complete a self assessment and have been given a Unique Taxpayer Reference (UTR) by mistake. As HMRC will be expecting me to fill out and return my self assessment in April 2024, it seems that this is an error which requires correcting. How would I go about doing this? Is it possible to receive a phone number which I can contact or alternatively can someone please contact me to discuss this issue? thanks, kind regards, David

Hi, I am also in a similar situation having received a refund of contributions to a Japanese pension, with about 20% tax taken out of it by Japan. However, I was then given the opportunity to apply for a refund of the 20% taxed portion. If this tax is refunded, does the Japanese pension lump sum withdrawal then become taxable in the UK? Thank you.

Hi DavidB88,
Please refer to:
Self Assessment tax returns
Thank you. 

 

Sorry to post again but was worried my question wouldn’t get seen as an admin already replied while it was still in moderation. If anyone knows the answer to this would really appreciate, thank you - Hi, I am also in a similar situation having received a refund of contributions to a Japanese pension, with about 20% tax taken out of it by Japan. However, I was then given the opportunity to apply for a refund of the 20% taxed portion. If this tax is refunded, does the Japanese pension lump sum withdrawal then become taxable in the UK? Thank you.

Hi Rhi9191,
The refund of the contributions is not taxable but any actual pension that is withdrawn is taxable income.
Thank you. 

Hi Rhi9191,

Refunds of Japanese pension contributions are not taxable in the UK.

Thank you.