Answered2 years ago
Are UK government pensions assessable income in Thailand under the Dual Taxation Agreement?
Uk DTA and and Government Pensions Question.
Firstly reading the dual taxation agreement I find no mention of now to treat pensions. Reading the HMRC briefing notes I find that Government pensions have full relief (subject to N and R) and all other pensions have no relief. In principle all Uk Government pensions are taxed in the Uk. However if your a national of and resident in another contracting state then you can apply to HMRC to pay no tax in the UK and instead pay tax where you live. So in our case you would have to be a Thai national living in Thailand to gain tax relief for your UK government pension and instead declare it to the Thai Revenue Dept and pay the appropriate Thai tax rate. Please correct me if this understanding is wrong. Now my question. Are UK government pensions assessable income in Thailand? If so then it would be on a tax credit basis for already paid UK tax? Which could mean after deductions and allowances that you fall into a higher tax band in Thailand and so would be subject to additional tax on remittance. So whichever way you look at it the UK DTA just means you either pay all the tax in Thailand in example 1 or you pay tax in the UK and then a bit more tax in Thailand in example 2. And to choose example 1 it is only an option if your a Thai national. Looking for someone to either confirm my understanding or correct me. Many thanks.
Firstly reading the dual taxation agreement I find no mention of now to treat pensions. Reading the HMRC briefing notes I find that Government pensions have full relief (subject to N and R) and all other pensions have no relief. In principle all Uk Government pensions are taxed in the Uk. However if your a national of and resident in another contracting state then you can apply to HMRC to pay no tax in the UK and instead pay tax where you live. So in our case you would have to be a Thai national living in Thailand to gain tax relief for your UK government pension and instead declare it to the Thai Revenue Dept and pay the appropriate Thai tax rate. Please correct me if this understanding is wrong. Now my question. Are UK government pensions assessable income in Thailand? If so then it would be on a tax credit basis for already paid UK tax? Which could mean after deductions and allowances that you fall into a higher tax band in Thailand and so would be subject to additional tax on remittance. So whichever way you look at it the UK DTA just means you either pay all the tax in Thailand in example 1 or you pay tax in the UK and then a bit more tax in Thailand in example 2. And to choose example 1 it is only an option if your a Thai national. Looking for someone to either confirm my understanding or correct me. Many thanks.
Answer summary
The user seeks confirmation on their understanding of how UK government pensions are treated under the UK-Thailand Dual Taxation Agreement (DTA). Specifically, they inquire if these pensions are assessable income in Thailand, whether the already paid UK tax can be credited, and how this affects overall tax obligations in Thailand. Several comments provide input on the topic, indicating that UK government pensions are taxed in the UK and typically not countable as assessable income when remitted to Thailand. However, state pensions and private pensions brought into Thailand may be assessable, but allowances and tax credits can alleviate the tax burden.
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Pete *******
OP@John ******
the question was quite specific on UK tax so answering with US tax law is irrelevant. But thanks.John **********
All income brought into Thailand in a tax year on which you are a thai tax resident is assessable income and must be reported on a Thai tax return. That doesn't mean you will necessarily pay tax on that income as there are various allowances you can claim. You can also claim a credit for tax already paid on that money as well as any reliefs provided by a DTA
Tony ********
The government pension ( from government service or military etc), can only be taxed in the UK. They wont issue a tax code that will exclude it from UK tax. It is not assessable income if remmitted to Thailand. State pension is assessable in income when remmitted to Thailand same as private pensions. For those you can claim tax credit and allowances to reduce the bill to zero (or near). Very good webinar on uk dta if you search for expat thailand tax
Pete *******
OPGentleman great discussion thank you.
John **********
On government pensions, the ones determined to be so by the UK so not all by any means, they are exempt via the DTA but you have to claim the exemption. Otherwise people could just claim an exemption with no proof, you prove it via the tax return
Pete *******
OP@Tony *******
can point me to the source that states UK government pension when remitted to Thailand is not classed as assessable income? ThanksTony ********
@Pete ******
the dta overrides the Thai rule, so its not mentioned in the Thai rules specifically, you have to read it in the DTA. But if you have an hour to spare this is a very informative webinar on the UK DTA with Thailand. Where he mentions why you cant get the relevant tax code in the uk to skip the UK tax on the pensions, and explains about government and state pensions. ************************************************
John **********
@Tony *******
ah OK. None of these are income though and therefore not assessable. All income accumulated prior to *****
/2024 is treated as savings as per the government order. There's so many options it's impossible to cover them hereTony ********
@John *********
the first are obvious, money still abroad, money remitted before your a tax resident, and money already in your bank before ***
/24. The others were original capital, loans, gifts, inheritance. These can be excluded from reporting as not taxable. Obviously if there are capital gains on these you report the gains. Obviously this is done on trust at time of report, and if ever audited you would have to prove your remitence fell under these catagories and were excluded properly. And my take is gov pension falls under that way of working, there will be zero tax to pay as its non taxable in Thailand, so doesnt need to go on the return, but you must be able to prove it at a later date if required.John **********
@Tony *******
OK. Perhaps overriding was the wrong word but takes precedence works equally well, but for something to take precedence over another both must be aware and that's why any exemption is claimed via a tax return. I don't remember the webinar listing ANY foreign Sourced Income remitted to Thailand able to be treated as non assessable but it was some time ago. Since you've just relistened to it Perhaps you could refresh my memory?Tony ********
@John *********
the sematics was over your comment about DTA overriding local tax rules being wrong, the DTA by law takes presedence on items specifically mentioned. Just went through the webinar again, and it was stated government pensions are tax exempt between UK and Thailand, which in my mind means they don't have to be declared, as oppossed to declaring and only be in a position to credit tax paid, which could possibly not 100% credit it. Obviously a very different position to private and state pensions which are assessable. They also went through a list of foreign source income that can be treated as non assessable, (although government pension wasn't one of them).John **********
@Pete ******
it depends on the rules that apply. Say you get a 10k uk state pension and bring it all into Thailand. You won't pay any tax in in the UK so no tax credit, it's also not covered by the DTA. Therefore it will be taxed in Thailand according to Thai tax rules and you can claim all the allowances you are able under those rules. The chances are you will end up paying a small amount of tax in Thailand but you'll need to work it out for yourselfPete *******
OP@John *********
this exactly goes to the nub of the issue. If not assessable then only UK tax paid. If assessable UK tax credit applied plus deductibles may still mean the remittance is such that it brings you into a higher Thai tax bracket and therefore subject to additional Thai tax. So in effect the source of the remittance is both taxed in the UK and taxed in Thailand?John **********
@Tony *******
impossible. If you don't declare the income then you can't claim the relief. Not semantics even though the end result may be the same it's how you arrive at the resultTony ********
@John *********
its probably symantics, but the detail in the DTA if mentioned will take presedence over the corresponding rule in the Thai tax rule. I'm pretty sure in the webinar the gov pension example didnt have to be declared, but i might stand corrected, as i agree that without literally declaring all remitence, it would be very difficult to work out the relevant tax credits.John **********
@Tony *******
The DTA does not override thai tax rules. If you bring income into Thailand it is automatically assessable income. It needs declared on a Thai tax return and then you claim whatever reliefs including those provided by the DTAPete *******
OP@Tony *******
thanks, very helpfulTony ********
@Pete ******
article 19, section 2 a, is what makes it non assessable i believe. But obviously you cant claim credit on other remitence using the uk tax paid on the gov pension. ****************************************************************
Pete *******
OP@Tony *******
yep, seen and read all of that. Having read the DTA can you specifically point to how it treats pension because I can find no mention of it. Only the HMRC briefing notes give any detail. Would be great to read your source material to back up what you say regarding UK government pensions not being treated as assessed income. Many thanks in advance.
Frank **********
Best to contact a tax lawyer as you will get 100 different answers here because no one knows for sure.
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