Gary C

No, I am not an HMRC employee - I am simply reading the treaty. Italy, which has primary taxing rights over the worldwide income of its residents, is doing no more than applying its tax laws and the treaty. Double taxation is avoided by giving relief for tax paid in the UK. The fact that the UK tax is less than the Italian tax is of no relevance. I am sure HMRC will correct me if I am wrong.

Sounds as though Italy is doing what the double tax treaty says. Have a look at Article 6(1) or the link from HMRC in the post above yours. The UK can tax the income as it arises in the UK and Italy can tax the income as you are resident and it is part of your worldwide income. Italy would then give relief for the tax you have paid in the UK - no double taxation there.

If your grandfather has a UK National Insurance record then under the EU regulations on the coordination of social security systems he should qualify for a UK pension, as aggregation of his UK and Italian years should, one would expect, get him past any minimum requirements for a UK state pension. The EU regulations foresee that you claim all of your social security (state) pensions via the pension authority in your country of residence, i.e. Italy. They will liaise with DWP in the UK to progress his claim. If he is entitled to a UK State Pension, he will end up with a separate pension from each country. Under the UK/Italy double taxation agreement, the UK State Pension is taxable only in Italy.

HMRC Admin 25, You refer to Article 17(1) but that is subject to the potential override in Article 17(3), which returns taxing rights to the UK only if certain conditions are met. Can you point CK67 Keens at any relevant guidance concerning Article 17(3)?

Having looked at FN8 again, I can see where you are coming from but had not read it in that way. One for HMRC to tweak for future years perhaps? My reference to that particular bank was to indicate that you could just have the pension paid in Euros and then convert to £ at a time of your choice. That of course necessitates having sufficient other income to live from. If you visit Euroland you also have an account with a debit card to spend your Euros without incurring exchange costs... Just a thought.

Puffer, The point HMRC is making is on page FN8 of the foreign notes "If you have a pension that’s not taxable in the UK because of a DTA, give full details of the pension’s payer, pension and relevant DTA in the ‘Any other information’ box on your tax return. " Revolut has been mentioned but you could also look at other options like Starling Bank, who offer a € account. We have such accounts to receive an EU pension in €, to spend in Euroland, or change to £ as and when it is needed. Just a thought...

Beiderbeck Dunleath For what it's worth, this is in a lot of DTTs that I have looked at, and reflects how the domestic tax rules of the other country operate. I know this from the UK/Germany treaty and as I understand it, the underlying German tax policy is that the rate at which a person pays tax should be set by reference to their global income, not by reference to the amount of that income that is taxable in Germany. So, a person with income 50,000€, 10,000€ of which is exempted from German tax under the DTT, will pay tax on their remaining 40,000€ at the same rate as a person with income of 50,000€ arising wholly within Germany. We may not like that policy but it is not double taxation, as the income defined in the treaty is taxed only once.

Beiderbeck Dunleath I think you are confusing the different tax treatment of the different pensions. As HMRC says, if you have a Government Service pension and do not have Spanish citizenship, then that pension is taxable only in the UK in accordance with the DTT. However, as you say, you need to report the amount of that pension on your Spanish tax return so that Spain can determine your tax rate based on your worldwide income, even though part of that is not taxed in Spain (this is the same as in the UK/Germany DTT). Your UK state pension however, is taxed only in Spain, so would need to be reported on your Spanish tax return as taxable foreign income, not in the same place as the Govt Service pension.

nealry66, My understanding is that the state pension is a weekly benefit paid in arrears, which accrues when each weekly payment falls due, so the accruals basis would be weeks, not days. The law also provides that at commencement and "the other end" the weekly benefit is apportioned to days - this is the only time that provision is made to pay part weeks, which supports my understanding that it is a benefit that accrues on a weekly, not daily basis. So, I would consider the amount to enter on the return, is the first payment received (that part-week plus a number of other weeks), plus all 4-weekly payments received in the tax year, plus the number of full weeks accrued between the final 4-weekly payment and 5 April.

I agree the OP's comments about entitlement. S178 ITEPA 2003 states that "The taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid." The state pension is a weekly benefit, normally paid 4-weekly paid in arrears, even though entitlement arises on each week end-date within those 4 weeks. That surely means that if one receives a 4-weekly payment on, say, 10 April 2024, when the pension increase date was on, say, 8 April, then that payment includes entitlement to 3 weeks relating to 2022/23 tax year and 1 week (week ending 10 April) during 2023/24 at the rate applicable to 2023. The first week's entitlement at the 2024 pension rate would be week commencing 11 April, so ending on 17 April. This means that when calculating entitlement for tax return purposes, one must surely use 1 week at the old rate and 51 weeks at the rate for the year in question. This appears to be how Tax Codes are calculated, so why is it that Tax Returns are not pre-populated in the same way? The final sentence of EIM76005 would seem to support this. If you search this forum there is massive confusion on both sides and calling your helplines is equally frustrating. Calling DWP is even less rewarding. Isn't it time that HMRC and DWP worked together to give taxpayers certainty over the taxable amount of their state pension in the form of a statement on the annual increase letter telling people their taxable amount for the preceding tax year was £X, i.e. something broadly similar to a P60?