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Is 25% tax free lump sum from UK pension taxable in Ireland

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  • 21-01-2021 2:14pm
    #1
    RosslareChap
    Registered Users Posts: 14 ✭


    Hi. I have a 3 private pensions ( not defined benefit kind ) in the UK, but one's where company would contribute a percentage of my wages and I could do likewise. They were built up as I worked for different companies, and whilst I make no further contributions to those, I still get yearly statements and they are growing quite nicely. I returned to Ireland in 2008 and have been paying into a PRSA here since then. I am 52 now and the UK private pensions have 60 listed as retirement age.


    I am just wondering if I drawdown these pensions when I am 60 and take the 25% tax free lump sum, and return that money to Ireland, would I be taxed on that as income?. If I moved them to an Irish PRSA, could I avoid the tax on 25% lump sum that way?


    Thanks


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    #2
    Higgsy
    Registered Users Posts: 139 ✭✭Higgsy


    RosslareChap wrote: »
    Hi. I have a 3 private pensions ( not defined benefit kind ) in the UK, but one's where company would contribute a percentage of my wages and I could do likewise. They were built up as I worked for different companies, and whilst I make no further contributions to those, I still get yearly statements and they are growing quite nicely. I returned to Ireland in 2008 and have been paying into a PRSA here since then. I am 52 now and the UK private pensions have 60 listed as retirement age.


    I am just wondering if I drawdown these pensions when I am 60 and take the 25% tax free lump sum, and return that money to Ireland, would I be taxed on that as income?. If I moved them to an Irish PRSA, could I avoid the tax on 25% lump sum that way?


    Thanks

    Hi,

    I was wondering if you ever got a response or an answer to this. I am in a similar situation, I live in Ireland and work in the Northern Ireland and pay into a company pension. It is not clear to me where (in which jurisdiction) I will be taxed when I come to take the lump sum and the drawdown the pension.

    Did some searching but the answer is not clear.

    Cheers


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    #3
    Cameraman
    Registered Users Posts: 476 ✭✭Cameraman


    I am in a similar situation to the previous two posters - UK pension, resident in Ireland - and here's what I've found out so far (haven't had to implement it yet, so there may be other issues, but got this from someone who has done it already).

    Ultimately you are due to pay tax wherever you are tax resident. You should only have to pay one 25% tax on lump sums as there is a double-taxation agreement between the UK and Ireland. However, unless you take action - you may be caught for tax in both locations and need to reclaim it later.

    The action needed is to fill in the form referenced here :

    https://www.gov.uk/government/publications/double-taxation-united-kingdomireland-si-1976-number-2151-and-protocols-form-ireland-individual

    This should mean that all UK pension payments are gross payments, and you sort out the tax here (in Ireland)


  • Options
    #4
    Higgsy
    Registered Users Posts: 139 ✭✭Higgsy


    Cameraman wrote: »
    I am in a similar situation to the previous two posters - UK pension, resident in Ireland - and here's what I've found out so far (haven't had to implement it yet, so there may be other issues, but got this from someone who has done it already).

    Ultimately you are due to pay tax wherever you are tax resident. You should only have to pay one 25% tax on lump sums as there is a double-taxation agreement between the UK and Ireland. However, unless you take action - you may be caught for tax in both locations and need to reclaim it later.

    The action needed is to fill in the form referenced here :

    https://www.gov.uk/government/publications/double-taxation-united-kingdomireland-si-1976-number-2151-and-protocols-form-ireland-individual

    This should mean that all UK pension payments are gross payments, and you sort out the tax here (in Ireland)


    Thanks for the reply. That is very similar to what I have found. That makes sense for the 25% lump sum if you chose to take that. The question then is if you use the income drawdown approach do we then have to do a tax return every year in which we take money out of the pension.?

    I know depending on when you retire this could all change. I am 20 years from that point if I make it that far :-),


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    #5
    Cameraman
    Registered Users Posts: 476 ✭✭Cameraman


    Higgsy wrote: »
    The question then is if you use the income drawdown approach do we then have to do a tax return every year in which we take money out of the pension.?

    Yes - it will be treated as income and taxed at whatever your relevant tax rate is. I have self-employed income anyway, so have already been submitting a tax return.

    It's still in the future for me too - but looming ever nearer. I'm trying to find out as much as possible of what's required in advance.
    Useful information also on the AskAboutMoney site.


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    #6
    The J Stands for Jay
    Registered Users Posts: 5,669 ✭✭✭The J Stands for Jay


    You can transfer your UK pension to an Irish one before you take retirement benefits. It could save all this hassle, and I believe the ARF regime here is more flexible than the UK Drawdown regime.

    You'd need to get proper advice on this though, there are pros and cons to each course of action.


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