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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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HM Revenue & Customs
Updated
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Residence: Liability to UK Tax: Scope of liability to income tax on pensions

Table 2 - Scope of liability on pensions

Your UK domicile status Your UK residence status Arising Basis (AB) or Remittance Basis claimed (RB) UK Pension Non UK (overseas) Pension
         
Domiciled within UK 1. Resident and Ordinarily Resident AB Liable Liable
Domiciled within UK 2. Resident and Not Ordinarily Resident 2(a) AB Liable Liable
Domiciled within UK 2. Resident and Not Ordinarily Resident 2(b) RB Liable Liable on remittance
Domiciled within UK 3. Not Resident AB Liable Not Liable
Domiciled outside UK 4. Resident and Ordinarily Resident 4(a) AB Liable Liable
Domiciled outside UK 4. Resident and Ordinarily Resident 4(b) RB Liable Liable on remittance
Domiciled outside UK 5. Resident and Not Ordinarily Resident 5(a) AB Liable Liable
Domiciled outside UK 5. Resident and Not Ordinarily Resident 5(b) RB Liable Liable on remittance
Domiciled outside UK 6. Not Resident AB Liable Not Liable

Note: Use of this table is subject to any different treatment provided for under the terms of the relevant article in a Double Taxation Agreement.

Some UK social security benefits are liable to UK tax. These include the National Insurance Retirement Pension and Widows payments. You should remember to include any taxable benefits when calculating the individual’s taxable income for a tax year.

Pensions

Resident: When an individual is liable to UK tax on the arising basis (AB) they are taxed in the UK on most pensions whether they are from the UK or abroad. If they receive pension payments from outside the UK (an overseas pension) they might be entitled to a 10% deduction from the amount chargeable.

If the individual is liable to UK tax on the remittance basis (RB), they will pay UK tax on any UK pensions they receive but any overseas pension will only be taxed if they are remitted here. The individual is not entitled to the 10% deduction for overseas pension when they use the remittance basis.

Not Resident: Although an individual is not resident in the UK they will still pay UK tax on most pensions from sources in the UK.

An individual will not pay tax on pensions from sources outside the UK.