Home A-ZTaxation of pensions in Northern Ireland

Taxation of pensions in Northern Ireland

When you reach State Pension age you no longer pay National Insurance Contributions, but you don’t automatically stop paying Income Tax.

Source: Gov.uk

You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.

Your total income could include:

the State Pension you get (either the basic State Pension or the new State Pension)
Additional State Pension
a private pension (workplace or personal) – you can take some of this tax-free
earnings from employment or self-employment
any taxable benefits you get
any other income, such as money from investments, property or savings

Source: Gov.uk Tax on Pension

Cross-border issues

How will your pensions be taxed if you retire across the border?

Living South with Northern Pension

Your UK pensions and your State Pension will still be taxable in the UK unless there’s a ‘double taxation agreement’ (covering pensions) with the country where you decide to live. There is such an agreement between the UK and the Republic of Ireland. As a result your pension will be taxed in your country of residence so once you are resident in the South your income is generally taxable in the South. The tax is usually due to be paid annually in a lump sum.

Please see the following form available for download from the HMRC website – Form IRL-Individual. It enables you as a resident of Ireland to apply under the United Kingdom/Ireland Double Taxation Convention for relief at source from UK income tax on a UK state retirement pension or incapacity benefit, and UK-source pensions, purchased annuities, royalties and interest. The form also provides for a claim to repayment of UK tax in cases where payments of the income have already been made with UK tax deducted.

Ifyou get a UK pension for public service e.g. a teacher’s, nurse’s, civil service or forces pension – it will normally remain taxable in the UK, however, your pension from that employment will be exempt from UK tax only if you are an Irish national or a dual national of the UK and of Ireland, as well as being resident there. For more details call HM Revenue and Customs (HMRC) on+ 44 135 535 9022 if calling from the South, or 0300 200 3300 if calling from the North. or visit the HMRC website – Tax enquiries for non-uk residents

The International Pension Centre provides information about pensions and benefits if you live abroad or have lived abroad. Tel 0191 218 7777 or use the online enquiry form: https://secure.dwp.gov.uk/ipc/personal-details

Living North with Southern Pension

If you receive an Irish pension while you are living in the North it will usually be subject to UK tax rules. You will need to report the Irish pension to HMRC.

You may have to do this by completing a UK Self Assessment tax return. For further information please visit: Gov.uk – tax on foreign income

How much tax you’ll pay on overseas income normally depends on whether you’re ‘resident’, ‘ordinarily resident’ or ‘domiciled’ in the UK.

Please note that as of 2017/18, 100% of the overseas pension is reportable in the UK. For 2016/17 and prior years, only 90% of the overseas pension income was reportable.

If you have a source of income in the UK from which you have tax deducted under PAYE, you may be able to arrange for HMRC to deduct the tax due on the overseas pension by adjusting your tax code (like how tax is sometimes collected on UK state pensions). This may mean that you can avoid having to file a UK Self Assessment tax return, if you do not otherwise meet any of the criteria to file one.

Source: Low Income Tax Reform Group

Taxation of pensions in Northern Ireland

Cross-border issues

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