Foreign Pension Income

Kay999 · June 2020

Hello - I have a client who has a small pension in Canada. I have read an article that quoting that you don’t pay UK tax on your foreign income or gains if you don’t bring them into the UK, for example, you don’t transfer them to a UK bank account and keep them in your (in this case Canadian) bank account.
Can anyone confirm this? He is British and resident in the UK. I can't see that it is unremittable income. Should this be included in his return and be taxable as it is part of his worldwide income?

PhilHallAAT · September 2020

Kay,

It sounds like you're talking about the remittance basis.

This only applies if the client has unremitted foreign income and gains of less than £2,000 in a single tax year. If this is the case, and your client doesn't remit the Canadian overseas pension to the UK (and there is no other unremitted foreign income or gains which would mean the £2,000 limit is exceeded, then the Canadian pension wouldn't be taxable in the UK.

If this £2,000 figure is likely to be breached then you may find HMRC's internal manual and the relevant section on Canadian pension income and double taxation of interest. It's available here:

https://www.gov.uk/hmrc-internal-manuals/double-taxation-relief/dt4610#:~:text=Article 17 of the agreement,only in the United Kingdom.

Hope that's helpful in clarifying matters.

Phil

Jagz1234 · June 2021

You are clearly wrong and have little understanding of the remittance basis.

Your client is uk tax resident and British therefore he is uk domicile (technically it is England, Scotland etc domicile under common law).

A uk domicile individual can not claim the remittance basis.

What you need to declare the income on the foreign pages as taxable (but some foreign pensions are exempt under the DTT so you should check.)

You need to apply the any foreign tax credit against the income and the credit is lower of the Canadian tax charged or the uk tax.

I suggest you rectify your advice and consult the uk Canada dta immediately.

Foreign Pension Income

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