Retiring to the UK - California State Pension

Interesting that standing up for one's rights (or trying to, if there are any) is considered aggressive. Must be a cultural difference.

Maybe, in a way.  Or maybe it just depends on point of view.  What seems to us individual taxpayers like just insisting on fair treatment (because we know our own intentions and know that we aren't would-be tax evaders) presumably may look different to the IRS/HMRC, who don't know we're not would-be tax evaders and therefore tend to suspect that we may be.

Whereupon the IRS instinct seems to be to slap on a penalty whereas the HMRC instinct is to refer it upstairs and wait for a ruling.  :-)

Anyway, if you do want to argue with the stance taken by HMRC over the UC pension, Article 26 lets you do that.  But it's probably not worth the no doubt extensive hassle, if resourcing and claiming tax credits solves the problem.

Maybe, in a way.  Or maybe it just depends on point of view.  What seems to us individual taxpayers like just insisting on fair treatment (because we know our own intentions and know that we aren't would-be tax evaders) presumably may look different to the IRS/HMRC, who don't know we're not would-be tax evaders and therefore tend to suspect that we may be.

Yes, but that opens up very interesting philosophical questions.

On a very basic level, in the US (a republic) power flows from the people. This is the reason we are innocent until proven guilty, and that governmental powers of search and seizure are limited and that we must be charged with a crime to be held. We have the Courts to check both the Executive and Legislature.

Therefore this institutional paranoia - everyone lies to the cops - is a corruption. It is understandable....you only have to take a radar gun out and clock almost every single car on I-95 exceeding the limits...but basing policy on it is disturbing, and completely counter to the very essence of liberty.

It is too an affront when you consider the legal methods used by many at the top to minimise their tax burdens:

Warren Buffett is fond of saying his tax rate is lower than his secretary’s.

http://www.barrons.com/articles/warren-buffetts-nifty-tax-loophole-1428726092

My personal view, we need to be honest about how much public services....everything from bin men to Trident to the NHS costs, and realize that it is not cheap. And everyone must do their part.

On a very basic level, in the US (a republic) power flows from the people. This is the reason we are innocent until proven guilty, and that governmental powers of search and seizure are limited and that we must be charged with a crime to be held.

SoS, not to contradict the basic premise of your statements, your heart and thinking are in the right place, but be careful not to drink too much of the Koolaid.

FBARs are filed with the Financial Crimes Enforcement Network. You have a simple private, personal foreign bank account. The account is regulated and taxed by authorities in the tax jurisdiction where the account is maintained. The authority is acknowledged as reputable by the US Treasury. The understanding is you must make the declaration to FinCEN giving all details of the account otherwise you are assumed guilty of money laundering and other crimes. You make the declaration in an attempt to prove your innocence.

As for seizure:

https://www.washingtonpost.com/news/wonk/wp/2015/05/15/how-the-irs-seized-a-north-carolina-businessmans-life-savings-without-ever-charging-him-with-a-crime/

https://www.rt.com/usa/199883-irs-structuring-civil-asset-forfeiture/

There are a number of other articles, these are just the first two I grabbed.

Ummm, they won't send it to an overseas address.    They will only send it to a US Bank Account. I did read on the form that I cannot select the no-withholding option of it's going to an overseas address, but since they won't send it to an overseas address I'm not sure why it's even on the form!

http://ucnet.universityofcalifornia.edu/retirees/direct-deposits-to-foreign-banks.html

 

This is all about tracking foreign transactions. MA will deposit directly to a foreign bank, but I cannot choose no withholding and withholding of income tax should be the same as if I was still working for MA. It is UC policy not to deliver your pension payments overseas and you have to file this compliance form if all the money UCRS deposits into your US account is then transferred to a foreign bank.

http://ucnet.universityofcalifornia.edu/forms/pdf/iat_form.pdf

I think that even if you deposit into a US bank, if you don't give a US home address UCRS is required to withhold tax from your pension using the usual IRS rules given in W-4P for payments made to overseas addresses.

https://www.irs.gov/pub/irs-pdf/p505.pdf

Payments delivered outside the United
States.

You generally must have tax withheld
from pension or annuity benefits delivered outside
the United States. However, if you are a
U.S. citizen or resident alien, you can choose
not to have tax withheld if you give the payer of
the benefits a home address in the United
States or in a U.S. possession. The payer must
withhold tax if you provide a U.S. address for a
nominee, trustee, or agent to whom the benefits
are to be delivered, but do not provide your own
home address in the United States or in a U.S.
possession

This is all about tracking foreign transactions. MA will deposit directly to a foreign bank, but I cannot choose no withholding and withholding of income tax should be the same as if I was still working for MA. It is UC policy not to deliver your pension payments overseas and you have to file this compliance form if all the money UCRS deposits into your US account is then transferred to a foreign bank.

http://ucnet.universityofcalifornia.edu/forms/pdf/iat_form.pdf

I think that even if you deposit into a US bank, if you don't give a US home address UCRS is required to withhold tax from your pension using the usual IRS rules given in W-4P for payments made to overseas addresses.

https://www.irs.gov/pub/irs-pdf/p505.pdf

Oh for goodness sakes!!!! Then why don't they just say that if your address is outside the USA you have to fill out the darned form regardless of where the bank is? I was not planning on having all of it sent over, but drawing on it once every couple of months to move funds over to the UK. I was keeping the US bank to also cover my credit cards. Or do I need to also plan to get UK credit cards? Oy. Whatever. 

Ok, so I'll put down a large number of exemptions so my withholding is very minimal. That's doable if you don't end up actually owing tax, right? Otherwise, I believe they said they would automatically set it up as "married with three dependents" - which is better than "filing single" but still takes out a chunk of the total from my immediate use.  It's somewhat annoying that they just going to hold onto my money and any interest it earns them until I file the following year, when they will then shunt it back into my bank account in the States where it will then earn ME (almost no) interest. Until I then move it over to the UK bank.

Apparently I will need to set up a monthly payment plan for HMRC, or otherwise will have to, when the time comes, pay all of the one year's taxes and half of the next year's taxes in advance at that time if I have not got a payment plan set up to do a little each month. Have I got that part right?

I'd simply ask UCRS about withholding if you deposit the money to a US bank and have a UK personal address. I imagine they will require either the se withholding as you had while you worked at UC or the married with 3 exemptions default.....but best to check.

I don't know about estimated payments to HMRC, but I imagine it's best to make them regularly.


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SoS, not to contradict the basic premise of your statements, your heart and thinking are in the right place, but be careful not to drink too much of the Koolaid.

I always feel bad for Koolaid....it was actually Flavoraid...

You know, I see the point of a filing requirement, it seems to be an acceptable abridgement. It is more the institutional paranoia that gets me. 

FYI here is an interesting bit about how the USAF advises it's retirees living in the UK to treat tax on their USAF pensions. I think that they are correct as far as Article 19 goes, but they completely ignore the possibility of the retiree having UK citizenship and the saving clause and whether Article 19 is even relevant. This underlines that each situation is different and all factors need to be considered. Also how the Treaty and local law are applied are sometimes not strictly as you'd expect from reading the treaty and HMRC may well not apply the saving clause for military pensions. What does "permanent residence" mean as far was HMRC is concerned? I have had someone from HMRC say to me that they don't bother with the savings clause much......

ncome Taxes on US Military Retirees' Pay
UK/US Income Taxes on Retired Pay
Income Taxes on US Military Retirees' Pay:
Money received as retirement pay by a retired U.S. military person resident in the United Kingdom is subject to income tax by the United States Government, but such money is wholly exempt from tax by the British Government.

Authority for this is the bilateral tax treaty between the United States Government and the United Kingdom Government. The current treaty came into effect =Jan. 1, 2004. For United Kingdom purposes the treaty may be referred to as United Kingdom-3 Income Tax Treaty, and the relevant article is Article 19.

Should any bank or other financial institution attempt to impose British taxes on such money you should refer them to the provisions of this treaty. If a retired US military person resident in the United Kingdom is required to file a British income tax return then the person's military retired pay may be reported in the following manner [this procedure has worked without known exception for decades].

On the supplementary pages for Foreign income make no entry to the question about Pensions income. In the additional information box at the end of the supplementary pages enter the following: "Page F[number of page where question about pensions income is located], Pensions: Military Retirement Pay received from USA Government is not subject to UK tax--the provisions of Article 19, Section 2(A), of the United Kingdom-3 Income Tax Treaty apply." Should you wish you may add "(For information only the amount received was $.......)".

Should you desire a copy of the treaty article, you may obtain it from the Internal Revenue Service, 24 Grosvenor Square, London W1A 1AE, England.

http://www.501csw.usafe.af.mil/factsheets/factsheet.asp?id=10855

FYI here is an interesting bit about how the USAF advises it's retirees living in the UK to treat tax on their USAF pensions. ....snip....

http://www.501csw.usafe.af.mil/factsheets/factsheet.asp?id=10855

Interesting. I need to just sit down and write to them and see what I get back. And, if it's favorable, hold onto the letter like it's gold and include it with every tax doc I send to them from that point on!

Interesting. I need to just sit down and write to them and see what I get back. And, if it's favorable, hold onto the letter like it's gold and include it with every tax doc I send to them from that point on!

One thing for sure in all this is that if you are a US citizen or Green card holder the US will always tax a US Government pension. The question is how HMRC applies the saving clause in Article 1.5.b (assuming HMRC recognizes the pension as US Government) for a UK permanent resident....

One thing for sure in all this is that if you are a US citizen or Green card holder the US will always tax a US Government pension. The question is how HMRC applies the saving clause in Article 1.5.b (assuming HMRC recognizes the pension as US Government) for a UK permanent resident....

Oh, I have no illusions about the IRS.    

Drafted a letter last night, sending it tomorrow. I won't be a permanent resident in the UK and am not a national of the UK, but would be resident for tax purposes. I think. Unless they consider Irish persons to be permanent residents.

Well, I shall lob it off via the post and see what comes back. Fingers are crossed that it will be favorable - and if so I'll put a copy of the reply in with my forms every year. If not, nothing lost by checking in advance.

Have a lovely weekend.

Interestingly, I received correspondence from HMRC that states the UC pension would be covered by the dual-taxation treaty clauses and, thus, I would not be taxed on it in the UK.

By previous posts it looks like she is dual Irish/US. I think she put EU to differentiate that her right to live in the UK derives from EU law, not domestic British law.

No it doesn't.

If Nan is Irish then that is not EU law. An Irish citizen can live in the UK under an agreement between the UK and the Repubilc of Ireland, that was in place long before the EU started.

Under that British/Irish agreement, when an Irish citizen moves to the UK, they are regarded as settled and are treated as a returning Brit. The same when a British citizen moves to RoI, they are treated as a retuning Irish citizen. Even though being born in Britian or Ireland does not make a child British/Irish anymore, the exception is a child born to an Irish citizen in Britain and a child born in Ireland to a British citizen.
* There are 6 different types of British passports but this agreement only applies to those who are British citizens.


Totally different to an EEA citizen who has strict rules to follow at all times that keep changing, even for those already in the UK. They and their non-EU families using EU law, can be deported from the UK and banned (presently for 1 year) if the EEA citizen never was never/stops being a qualified person.

Although it seems that while many other EEA countries check the status every year of other EEA citizens living in their country, to ensure they are keeping to EU treaty rights of free movement by being a qualified person and removse anything they are allowed if they aren't, the UK has brought in the Immigration Act 2016 which makes immgiration crime, criminal.

This new law will affect EEA citizens and their non-EU family members who no longer have a right to reside in the UK as the EEA citizen has ceased to be a qualified person; illegal immigrants and overstayers. None of this law affects an Irish citizen in the UK because under that Britsh/Irish agreement made many years ago, the Irish in Britain are treated the same as a Brit: they have a right to always live in Britain.



If an Irish citizen wants to bring non-Irish/British family members to the UK they they would have to use EU laws to do that. Only an Irish or British citizen, can use the British/Irish agreement.

The Irish citizen in the UK (or the British citizen in the Republic of Ireland)  would then have to follow EU rules and be a qualified person at all times, for their non EU family to be allowed to reside in the UK/Republic of Ireland. If their spouse is an EEA citizen, then that EEA citizen is the one who must be a qualified person at all times. Being married to a citizen of that EEA country, is not being a qualified person under EU free movement treaty rights.

If Nan wasn't an Irish citizen, but just an EEA citizen wanting to retire to the UK, then she would have to buy Comprehensive Sickness Insurance as EEA citizens are not allowed to be a burden to another EEA country. As a retired person (self sufficient qualified person) in another EEA country, that country do not have to provide the free/cheaper healthcare that their own citizens enjoy. Without that CSI, they have no right to reside in the UK.

Normally an EEA citizens own EU country pay for all their healthcare if they retire to another EEA country, via an S1 form. They present their S1 when they want to use that countries healthservice and that country then bills their own EEA country.
 i.e. For the UK. Just being a British citizen does not mean the UK will pay your healthcare bills if you retire to another EEA country. Last April, the UK changed who they give an S1 to, to 'someone who is in receipt of a UK state pension', before they just have to be retired to get an S1. This April, the UK changed their pension rules to only give a state pension to someone who has contributed at least 10 years of NICs to the UK (no more getting a UK state pension on the back of the contributions of a spouse). The rest who retire to another EEA country and who can't have an S1 form the UK, have to buy private health insurance to cover their own bills in that EEA country or the UK.




I haven't got a clue about tax agreements, but just wanted to point out the rules (at present) that allows Nan to live in the UK as an Irish citizen, are much better than those using EU laws to resdie in the UK. Although there is Brexit and nobody knows yet what will happen to those usiung EU law to live in the UK and on what terms and whether the EU will still allow the Irish to live in the UK under the agreement they hold with the UK.

Hi Sirius.

Well, I am now well-versed! Thanks.  If it were just me, there'd be no problem at all - I have the dual citizenship and my current employer will gift me with a nice insurance policy (fully paid by them) for life when I retire.

I have to use the EU route, though, as I have only one close relative - my adult daughter - who is not an Irish citizen. She  is currently doing very well in full-time higher education and wants to go on for additional degrees; thus, it appears that she's going to continue to be financially my dependent for at least the next several years. I cannot bring her in to the UK using "UK" rules because there is no viable option to bring in adult dependent children. (If she were a same-sex domestic partner, yes, but because she's my daughter, no!)

Her only option if the EU family permit application is rejected would be to go in for her studies on a Tier 4 visa, which would mean she'll have to leave the UK when her studies are done (or if she doesn't make it all the way through) unless she finds a suitable position that earns enough to meet the visa threshold and an employer that can/will sponsor her visa. In her future profession people aren't terribly well-paid and often build a reputation with contract work over years, so the chance of her getting an employment-based visa immediately really isn't very good. (Not impossible, just not good.)  Also, if she can't find a funded spot in a PhD program, she will have to work for a while to save up enough money to pay the Uni fees (at international student rates) - basically a gap year or two - which she won't be able to do on the Tier 4 visa.

I have always been a single parent and had to plan for worst-case scenarios, since we had no safety-net if anything went wrong. So far a combination of good fortune/dumb luck/hard work/thorough planning has got us this far. I am doing everything I can to get her launched as far up the socio-economic ladder as I can, so she won't end up living hand-to-mouth for years in tenuous low-wage jobs. (I've done that and worked my way up, but it's entirely better to start higher and work up from there!)

The older I get, the more I'm really wanting to just settle in one place, and I really do like it in the UK, particularly the far North of England and in Scotland. After she's properly launched in a career I'd like to buy a nice little property somewhere, join the ladies' auxiliary, and putter in my garden all day dealing with the weeds and crabgrass.    I will spend my money on me  and travel a bit. She will have her career, and I'll see her when she can visit. That's the goal, anyway!

So, at present we're going to try the EU Family Permit route (and it's all conditional on Brexit, of course) just after the New Year. If we are given the go-ahead on that, we'll make the move early next year as EU. If not, I'll go in as Irish and she'll go in as Tier 4, later in the year, and hope for some future change that would work better for her - otherwise, when she's done we'll have to leave the UK. (I guess we'll go to France or Germany?)

The caveat is, of course, if she is allowed in on the EU permit, given all the recent and evolving developments, I'll be operating on the assumption that her (and thus "our") permission to remain can be revoked at any point if the Brexit formalities do not turn out to be favorable to her. It is, as they say, "a crap shoot." But nothing ventured, nothing gained!

All of which leads me to a further question - we need to find "comprehensive health cover" for her.  Does anyone know what UK immigration considers to be appropriate cover?  I've looked at a half-dozen websites for UK health insurance and it's all over the page.  We know she can use the NHS as a student, but the regulations state that on the EU permit she needs to have her own cover - and that will be especially important until the 5 year "leave to remain" mark passes, at least. Any estimates of cost for a relatively healthy young adult and/or recommendations for an insurance company?

Thanks for any advice you can offer. It's a big leap for us....

Hi Nan.

As I'm sure you are aware, it won't be easy for you daughter to enter under EU rules if your daughter is over age 21. Not impossible, but you are going to have to prove (with lots of evidence) how your daughter is still dependant on you if she is older than 21. I assume she will get her university funding from the US? How will you show she is dependant on you? Will she be living with you and will you transfer money to her bank account regularly so that she can live on that money?  These are some of the things you need to think about.

About the CSI (Comprehensive Sickness Insurance) for you daughter, how are you planning on exercising your treaty rights of free movement as a qualified person? If it is accepted that she is your dependant, then what she (the non-EU national) can have in the UK is based on how their EU citizen (you) are exercising treaty rights as a qualified person.

As EU citizens, we are allowed 3 months in another EEA country, then we and all our dependants must leave if we don't exercise treaty rights of free movement by becoming a qualified person. We (and any dependants with us) have no right to reside in another EEA country if we don't remain a qualified person at all times.


As you mentioned, there is Brexit and that is the unknown for EEA citizens in the UK or who want to move to the UK. It is unlikely your daughter will make the 6 years in the UK on EU laws that she needed, before Brexit kicks in and EU rules end in the UK. She would have to see if she what might be offered under the Brexit negotiations. The same might apply for Irish citizens in the UK, depending of whether the EU will allow Irish citizens to still live in the UK. The UK have said they will still allow this after Brexit (it was an agreement before the EU was invented)  but the Republic of Ireland still being able to do that, will be down to what the EU will allow them to do. Lots on the internet on that.

You probably couldn't have picked a worse time, but things usually work out.