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HMRC internal manual

International Manual

HM Revenue & Customs
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DT Applications and claims - Types of income: Pensions and Annuities

Social Security payments

National Insurance retirement pensions (NIRP)

A State pension is a National Insurance benefit and is not regarded as paid for services to the Government. For this reason it does not come under the Government Services article see INTM343020. You should therefore consider authorising relief from UK tax under the normal Pensions Article except where that article restricts relief to pensions which “are paid in consideration of past employment”. In such instances it may be possible for you to exempt the pension under the “Other Income” article of the Double Taxation Agreement (DTA). You need to check the country specific guidance and the terms of the specific DTA. Where there is no “Other Income” article you cannot give relief from UK income tax (UKIT).

State pensions are a taxable benefit but they are usually paid without deduction of tax. In some cases the pensioner does not have enough total income for it to be taxed. Sometimes you may receive a claim for other pensions where the State pension has not been included but you know one exists. You can exempt it without the formality of a claim providing that you are satisfied that all of the conditions for relief (including any “subject to tax” condition - see INTM332200) are satisfied.

Incapacity Benefit (IB)

Like a State pension, Incapacity Benefit is taxable but is paid without deduction of tax. Where a non-resident of the UK is able to benefit from the terms of a DTA it is possible that the treaty may allow for IB to be exempt from tax and to be treated as notliable.

Normally IB is only payable to people in certain countries. These countries include those that make up the European Economic Area and any country with which the UK has signed a reciprocal agreement. You should refer to the country specific guidance to check if relief from UK tax is available.