# Government Pensions - Proposed Tax Allowance Cuts



## Dunpleecin (Dec 20, 2012)

Not sure if this is discussed elsewhere, I couldn't find it under a search.

There is a big worry from people in receipt of a government pension that their tax allowance will be cut and they will therefore pay more tax. For some this could mean the difference between their income being enough to pay the bills or not.

For those receiving a government pension this is the consultation paper:

https://www.gov.uk/government/consu...ents-entitlement-to-the-uk-personal-allowance

From reading that, and from comments from other sources, it seems that such pensioners won't be affected by any changes. Unless, potentially, they are receiving other incomes.

So I think the bottom line is that, if you're happily retired in Spain on a government pension and think you're going to be paying more tax, you shouldn't have to worry.

I do, however, stand to be corrected. I also apologise if there's another thread but I couldn't find one.


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## thrax (Nov 13, 2008)

It was mentioned on another thread but basically your conclusion is, I believe, correct. It came from an Osborne idea which attracted quite a bit of controversy so it was dropped.


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## Number 6 (Sep 24, 2014)

thrax said:


> It was mentioned on another thread but basically your conclusion is, I believe, correct. It came from an Osborne idea which attracted quite a bit of controversy so it was dropped.


Thrax, I can't find anything about it being dropped, in fact the consultation document was updated on the 4th August and is due to end in October.

The thing with this is, It's not just about pensions, it's about removing the personal allowance from ex pats. It will have a serious impact on all expats who rely on UK earned income from any source to fund their life in Spain.

If adopted it may cause a swift rise in the number of expats registering to pay tax in their adopted country, so as to take any benefit they may be through double taxation agreements.


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## 90199 (Mar 21, 2010)

I pay tax in both countries, I have a U.K. government pensions which can only be taxed in the U.K., unless the taxpayer is a Spanish national………….Coincidently, we have both applied for Spanish nationality.


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## larryzx (Jul 2, 2014)

When this came up in another thread I called my tax office in UK who deal with the tax on my government employee pension. They said their understanding was that the consultation was to stop tax relief on rental income in UK (like Gov pensions taxable in UK) but that it would not affect government employee pensions. Whilst they were not 100% on thus I will take it as the best source of information, ignore newspaper headlines, and not be concerned


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## Dunpleecin (Dec 20, 2012)

Thanks for the replies. Apologies if I marginalised the readership to a relative few. And further apologies if I have raised further concerns to those affected.


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## Number 6 (Sep 24, 2014)

The new proposals have nothing really to do with pensions, (taxed at source or not) rental incomes or any other UK income.

What they are proposing is to abolish the personal allowance from those that are resident abroad, the personal allowance is around £10,000 per year (slightly more for pensioners) This is the sum every UK taxpayer can earn before they start paying tax. As an example,under the current rules if you received a pension of say £10,000 per year and tax was stopped at source (20% £2000) you would then receive a rebate of a similar amount. Under the new proposals you would not get the rebate.

Like wise for rental income say you had a income of £15,000 after allowable expenses, at the moment you would only be taxed on £5000 (£1000 @20%) Under the new proposals you would be taxed on the full £15,000 (£3000 @ 20%)

Of course we all know that residents in Spain are obliged to declare *all* their worldwide earnings to the tax man here so any taxed paid in the UK will be treated under the DTT arrangements

What the UK government is sort of saying is, most if not all of the G20 countries operate a tax free threshold (Spain's is 5151€ 6069€ over 65) so why should the expat potentially get that benefit twice.


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## larryzx (Jul 2, 2014)

Number 6 said:


> Of course we all know that residents in Spain are obliged to declare *all* their worldwide earnings to the tax man here so any taxed paid in the UK will be treated under the DTT arrangements


But that has never affected tax paid on UK Government employee pensions as Hacienda have totally ignored them.. i.e. as if they do not exist.


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## Dunpleecin (Dec 20, 2012)

Number 6 said:


> The new proposals have nothing really to do with pensions, (taxed at source or not) rental incomes or any other UK income.
> 
> What they are proposing is to abolish the personal allowance from those that are resident abroad, the personal allowance is around £10,000 per year (slightly more for pensioners) This is the sum every UK taxpayer can earn before they start paying tax. As an example,under the current rules if you received a pension of say £10,000 per year and tax was stopped at source (20% £2000) you would then receive a rebate of a similar amount. Under the new proposals you would not get the rebate.
> 
> ...



Thanks for that, but the reason for the thread was the specific scenario in which Government pensions have to be taxed in the UK, wherever you live. There are other situations in the document I know, but these are not what I was aiming at.


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