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New Double taxation agreement
https://mail.paphospeople.com/ppforum/viewtopic.php?f=2&t=33712		 Page 1 of 1
Author:  M.A.D [ Thu Jun 21, 2018 8:27 pm ]
Post subject:  New Double taxation agreement
Does this mean that apart from service / civil service pensions etc....old age pension will now be UK taxed since they are 'publically funded' or am I reading wrong
Author:  clive of payia [ Thu Jun 21, 2018 8:47 pm ]
Post subject:  Re: New Double taxation agreement
As I understand it, only UK govt. paid pensions, i.e. military & civil service will be taxed at source in the UK. Could actually work to some peoples advantage in that their UK govt. pensions falls below the UK limit for paying income tax. Secondly if you also have a private or company pension as well not taxed in the UK because you pay tax in Cyprus, this private pension falls below the Cyprus limit for paying income tax. So no tax at all, and its been agreed with the Cyprus tax authorities who will lose revenue.
Author:  M.A.D [ Thu Jun 21, 2018 9:25 pm ]
Post subject:  Re: New Double taxation agreement
IF as I understand, private and 'state pensions' are taxed in Cyprus and 'Government Pensions' taxed in the UK.....I will benefit from not paying any tax :banana
Author:  KG [ Fri Jun 22, 2018 6:27 am ]
Post subject:  Re: New Double taxation agreement
I don't think this measure has been passed here yet, however as I understand it, the plan is to tax government pensions only in the UK, as is already the case for some government pensioners. The rest of your income including state pension provision will be taxed here. It is not clear what will happen with regard to those on government pensions who are already taxed here amd not in the UK. There is some anecdotal evidence that some have enquired from the UK Revenue and been told that it will only apply to new claimants and that existing arrangements will continue as at present.

In my case, it won't make too much difference either way with current UK tax rates and allowances. What I lose on the roundabouts I gain on the swings by putting my local tax below the threshold, but it is more convenient to continue to pay tax here, and keeps me one step farther from the grasp of the UK Revenue for inheritance tax purposes.
Author:  gerbear56 [ Fri Jun 22, 2018 2:20 pm ]
Post subject:  Re: New Double taxation agreement
KG wrote:
I don't think this measure has been passed here yet, however as I understand it, the plan is to tax government pensions only in the UK, as is already the case for some government pensioners. The rest of your income including state pension provision will be taxed here. It is not clear what will happen with regard to those on government pensions who are already taxed here amd not in the UK. There is some anecdotal evidence that some have enquired from the UK Revenue and been told that it will only apply to new claimants and that existing arrangements will continue as at present.

In my case, it won't make too much difference either way with current UK tax rates and allowances. What I lose on the roundabouts I gain on the swings by putting my local tax below the threshold, but it is more convenient to continue to pay tax here, and keeps me one step farther from the grasp of the UK Revenue for inheritance tax purposes.

Having just seen our tax consultant and being in receipt of local govt pension, which at the moment is taxed in Cyprus, unfortunately under the new arrangement I will go back to being taxed in the UK.
Jim.
Author:  KG [ Fri Jun 22, 2018 4:41 pm ]
Post subject:  Re: New Double taxation agreement
gerbear56 wrote:
Having just seen our tax consultant
UK or local consultant in Cyprus? I would wait to hear from the UK Revenue before taking any action. If they are going to move the goalposts they should tell you in advance.
Author:  M.A.D [ Sun Jun 24, 2018 5:31 pm ]
Post subject:  Re: New Double taxation agreement
Here is the Cyprus Mail take on this

Major tax changes afoot for UK nationals living in Cyprus

The updated UK-Cyprus Double Taxation Agreement (DTA) signed on March 22 this year in Nicosia will have major ramifications for UK nationals residing on the island.
Significantly, the new DTA will tax all government pensions at source (in the UK) and affected individuals will pay UK standard tax rates.
It should be stressed that this applies to publicly funded pensions – such as those received by former members of the British armed forces – paid by the government and not private pensions. Nor does it apply to the statutory state pension.
The DTA has not yet entered into force, but will do so once both countries have completed their parliamentary procedures and exchanged diplomatic notes.
According to the British High Commission in Nicosia, they expect this to happen at the beginning of tax year 2019-2020.
“An announcement will be made when these procedures have been completed,” the British High Commission said.
The Sunday Mail contacted the British High Commission, having been alerted to the coming changes by a reader.
In email exchanges with the British High Commission, they confirmed that the previous – that is, the still-in-force but lapsing – DTA allowed for UK government pensions to be taxed in Cyprus at a rate of 5 per cent.
According to the UK diplomatic mission, the minimum rate on pensions in the UK is 20 per cent, “with those taxpayers also eligible for the relevant tax free allowance of £11,850”.

“Those affected by these changes will be able to continue to file their tax returns as previously.”

Readmore

https://cyprus-mail.com/2018/06/24/major-tax-changes-afoot-for-uk-nationals-living-in-cyprus/
Author:  Poppytim [ Sun Jun 24, 2018 8:05 pm ]
Post subject:  Re: New Double taxation agreement
What it does not seem to state,unless I am being particularly stupid, is surely you cannot have two tax free allowances so for example if your allowance is at 11k in the UK and you use this against your civil service pension then surely you cannot get the 19k allowance in Cyprus as well? That would mean that you would be receiving tax free allowances of around €32k!
Author:  M.A.D [ Sun Jun 24, 2018 9:37 pm ]
Post subject:  Re: New Double taxation agreement
Poppytim wrote:
What it does not seem to state,unless I am being particularly stupid, is surely you cannot have two tax free allowances so for example if your allowance is at 11k in the UK and you use this against your civil service pension then surely you cannot get the 19k allowance in Cyprus as well? That would mean that you would be receiving tax free allowances of around €32k!



According to a couple of financial sites you can have BOTH allowances since you are being taxed in 2 separate countries

This is from Nigel Howarths web site
In some cases the change will result in them paying no tax in Cyprus or UK as their income falls below the tax thresholds in both countries.
Author:  Poppytim [ Sun Jun 24, 2018 10:44 pm ]
Post subject:  Re: New Double taxation agreement
Well if that is the case Dave it can only be good news for many I would think until Cyprus realises how much income they will be losing!!
Author:  Number6 [ Sun Nov 08, 2020 5:39 pm ]
Post subject:  Re: New Double taxation agreement
Is a Royal Mail pension classed as a government funded pension ?

I ask because My wife after years of having the Tax code NT , as of this June her tax code has changed to the standard code .
Author:  M.A.D [ Sun Nov 08, 2020 6:18 pm ]
Post subject:  Re: New Double taxation agreement
Some info here but I would think the first port of call would be the Post Office Pension administrators to confirm HOWEVER I have had a look and there web site is 'dodgy' :doh Maybe worth a phone To contact the Pensions Service Centre Or call: 0114 241 4545. The team is available between 8:30am and 5pm, Monday to Friday.

http://mail.paphospeople.com/ppforum/viewtopic.php?f=2&t=34205&view=next
Author:  Number6 [ Sun Nov 08, 2020 9:20 pm ]
Post subject:  Re: New Double taxation agreement
Thanks Dave .

I did some searching and found this . “ When Royal Mail was privatised, the government took on the liability for paying pension benefits built up before 1 April 2012. These benefits were put a separate scheme: the Royal Mail Statutory Pension Scheme (RMSPS). The Royal Mail Group PSC administered the RMSPS under a contract with Cabinet Office agreed in 2012”

So it looks like Royal Mail pension is government funded .

I will have to spend sometime reading the link you posted .
Author:  M.A.D [ Mon Nov 09, 2020 9:43 am ]
Post subject:  Re: New Double taxation agreement
I have read your original question again
“Is a Royal Mail pension classed as a government funded pension ?
I ask because My wife after years of having the Tax code NT , as of this June her tax code has changed to the standard code .”

I am a bit confused

If it was a ‘private’ pension and she wasn’t taxed before, it should make no difference if they change the name to it being a Government pension, it’s the same amount she receives and if it is still below the UK Tax allowance,, she shouldn’t pay tax
If you are living in Cyprus and paying tax here using the Double Taxation Treaty, it still needs to be declared as ‘worldwide’ earnings but can be set aside against Cyprus tax

In my case my Government (Military) pension under the double taxation Treaty is taxed at source (UK) but because it is just below the UK allowance (£12,500) I pay no tax on it
My Private pensions and UK State Pension are taxed in Cyprus and I am liable for tax, however they are just below the allowance (€19,500) and again I pay no tax
Author:  Number6 [ Mon Nov 09, 2020 1:16 pm ]
Post subject:  Re: New Double taxation agreement
Now I am confused , you say

“ If you are living in Cyprus and paying tax here using the Double Taxation Treaty, it still needs to be declared as ‘worldwide’ earnings but can be set aside against Cyprus tax “

And yet you say you do not do this ?
Author:  M.A.D [ Mon Nov 09, 2020 1:59 pm ]
Post subject:  Re: New Double taxation agreement
Yes I do this

I opted to have my Government / Military pension taxed at source and all other pensions taxed in Cyprus

In my case my Government (Military) pension under the double taxation Treaty is taxed at source (UK) but because it is just below the UK allowance (£12,500) I pay no tax on it
My Private pensions and UK State Pension are taxed in Cyprus and I am liable for tax, however they are just below the allowance (€19,500) and again I pay no tax

I declare ALL my pensions and the Military pension taxed in the UK is deducted from the total income (there is a section on the Cyprus tax return to do this

Example

If your Government pension is say £10k per year and you opt to be taxed ‘at source’ because it is below the UK allowance £12,500 you don’t pay tax
You still have to declare it in Cyprus as part of ‘worldwide’ income but it is NOT eligible to be taxed here since it is already being taxed in the UK albeit at a no tax rate

Cyprus tax return
Worldwide earnings total £25k
UK Government Pension £10k
UK State Pension £10K
Private Pensions £5k

In Cyprus under double taxation you would only pay tax on State Pension and Private Pensions..total £15k
Author:  Number6 [ Mon Nov 09, 2020 2:24 pm ]
Post subject:  Re: New Double taxation agreement
Thanks for explaining Dave .

One more question if you have an income in the U.K. although lower than the tax allowance , do you still have to fill in a U.K. tax declaration ?
Author:  M.A.D [ Mon Nov 09, 2020 4:47 pm ]
Post subject:  Re: New Double taxation agreement
I haven't. I have never had or been asked to complete a UK Tax Return since I informed them of my move to Cyprus and my intention to be taxed here.
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