Taxation of UK pensions

I recently came across some answers to a question which suggest that there are a number of misconceptions about how UK pensions are taxed when one lives in Belgium.

Pensions (state, occupational or private) originating from the UK are subject to tax (IPP) in Belgium unless they are pensions being paid in respect of service to the government (eg civil service) or local government (but not teaching). These exceptions are taxed in the UK but all other UK pensions can be paid without deduction of UK tax if you are resident in Belgium and don't spend too many days a year in the UK.

If you go to the UK Revenue and Customs site (www.hmrc.gov.uk), you will be able to find both an English language version of the current UK-Belgium Double Taxation Treaty (www.hmrc.gov.uk/taxtreaties/in-force/belgium-dtc.pdf) in which Articles 18 and 19 make this clear and a down-loadable DT-Individual form (www.hmrc.gov.uk/cnr/dtindividual.pdf) enabling you to claim exemption from UK tax (ie be tax-coded "NT") and to obtain a refund of UK tax already paid (within the last 4 tax years). You will have to get the form certified by the Belgian tax authorities before HMRC will accept it but they should do this for you within a couple of days.

Unfortunately the Belgian Tax people, although very helpful, can give misleading advice, partly because they are dealing with large numbers of DTTs which are all different. However they will catch up with any obligation to pay IPP eventually and if you do nothing now, you stand the real risk of having to pay it and being unable to get a refund of the tax you have already paid in the UK.

If at all possible, have your UK pension(s) paid directly into a Belgian bank account as this will give you an unchallengeable record of the actual payments made to you in euros; you can gross up each taxed payment by applying the ratio of the annual gross total to the annual net total shown on your UK P60 form each year.

If you have a mix of pensions (eg state and civil service), you will still need to claim UK tax exemption in respect of the state and any other occupational/private pensions, even though the state pension appears to be paid without deduction of UK tax.

Finally, note that any pensions that remain taxable in the UK still have to be declared (with GROSS amounts) on your Belgian tax form - details being included both in the tabular entries and on the back page.

I find it useful to keep a spreadsheet for each year on which I record every taxable UK payment I receive (even if it isn't remitted to Belgium, it is still potentially taxable here), applying contemporary exchange rates, and grossing up, as necessary. I then send a signed copy of the spreadsheet as an annexe to my tax return to justify the entries made therein.