Expats Need to Take Action Now on Public Service Pensions if Living and Working Abroad in Cyprus or UK
ProACT Sam Says we know how to help Expats with Pensions Living and Working Abroad.
The new 2018 Cyprus Double Taxation (DT) Treaty came into force on 1st January 2019 and from April 2019 -
UK Expats Living Abroad in Cyprus as Tax Residents with UK Public Service Pensions are taxed PAYE in the UK.
CY Expats Living Abroad in UK as Tax Residents with Cyprus Public Service Pensions are taxed at source in Cyprus.
Depending upon your income UK Expats in Cyprus could start paying UK tax at source from April 2019 at 20% or 45%.
HMRC will start issuing new pension tax coding notices in Feb 2019.
Even if you had a no tax NT pension coding, this is removed for Public Service Pensions under the new 2018 DT treaty.
Tax Saving Action
A new concession has been introduced. This allows UK Expats to elect for their pension to be taxed in their country of tax residence, as under the old 1974 DT treaty.
If you don’t elect to pay tax under the old rules, then you will be taxed under new rules.
We have created a sample letter to download available here.
This means that until the end of 2024, for 5 years, you will continue to be taxed under the old rules.
Should I Take Action to Elect?
Not necessarily. Under the 2018 DT treaty the Public Service Pension is only taxed in the UK (or Cyprus is sourced there). So Expats now have the opportunity to use an additional £12000 per annual personal allowance tax free.
If your Public Service Pension is below £12k then you will pay no tax in the UK under the new 2018 DT rules.
If your Public Service Pension is £17k then you will pay £1000 tax in the UK under the new 2018 DT rules, but no tax in Cyprus.
If your Public Service Pension is over £17k then you will pay UK tax at 20% rising to 45% in the UK under the new 2018 DT rules, but only 5% in Cyprus.
ProACT Know How - Free Download
We have prepared a free sample of the letter to elect to keep you pension taxed under the old rules.
Download below:
If you want to discuss your situation, and what is the best option for you please contact us for a free review ‘Should I Elect to Have My Pension Taxed Under the Old DT rules’.