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Posted Tue, 29 Oct 2024 20:58:33 GMT by qprnick
Hi I am a non-UK resident for tax purposes and live in Australia. I will be receiving a lump sum payment from a UK pension scheme at the end of the year and I understand that they will be withholding tax at the UK emergency tax rate. I have no UK income other than this. Considering that the Australian government will also treat the lump sum payment as taxable income, I am unsure of the best way to recover any tax overpayment. Which of the following would apply to my situation: - I should lodge a UK self-assessment (SA100 & SA109) to recover the overpayment of tax in the UK. - I should lodge a claim under the double taxation agreement between Australia and the UK to recover all tax paid in the UK (since it will be paid in Australia). - All of the above Thanks
Posted Tue, 05 Nov 2024 12:02:20 GMT by HMRC Admin 19 Response
Hi,
Article 17 of the UK / Australia tax treaty covers pensions: 
2003 Australia-UK Double Taxation Convention - in force
It advises that pension payments are taxable in the individual's country of residence. The article makes no mention of lump sums. This means that a lump sum from a UK pension is taxable in the UK, as there is no agreement in place. You would need to claim a repayment of tax from HMRC for any excess tax deducted and claim a credit for UK tax paid when declaring the lump sum in Australia.  
Claim a tax refund when you've taken a small pension lump sum (P53)
Thank you.

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