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Topic: Is a U.S. Disability Pension taxable in UK  (Read 1762 times)

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Is a U.S. Disability Pension taxable in UK
« on: October 20, 2016, 09:27:12 PM »
I am a US citizen moving to the UK with my wife, a UK citizen. We will be resident in the UK, but I won't become a UK citizen for 5 years.
I have a pension from the County of San Diego. It is a disability pension for being injured on the job, and only a small portion is taxable. I thought I read somewhere that if a pension is not taxable (or not fully taxable) in the country of origin, then it is not taxable in the UK (or the same amount that is taxable in the US is taxable in the Uk).
Can anyone help me with this?


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #1 on: October 21, 2016, 03:09:34 AM »
Were you a San Diego County employee and is the "disability pension" part of the County retirement pension benefits?....ie instead of getting your regular pension at retirement age you got to take a (usually reduced) pension early.


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #2 on: October 21, 2016, 03:57:06 AM »
Yes, I was a San Diego County employee, and I had to take a reduce disability pension as I was injured on duty and no longer able to do my job.


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #3 on: October 21, 2016, 12:42:05 PM »
Yes, I was a San Diego County employee, and I had to take a reduce disability pension as I was injured on duty and no longer able to do my job.

Well Government pensions are covered under Article 19 of the tax treaty and they are not UK taxable when paid to US citizens resident in the UK. They are still US taxable.
« Last Edit: October 21, 2016, 12:43:42 PM by nun »


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #4 on: October 21, 2016, 02:01:33 PM »
(a) I would check that the San Diego State pension a Government pension for the purposes of the tax treaty?  If so, I agree with Nun.
(b) Or, if, as stated, the cause of the disability was by reason of the job, then it's not taxed anyway in the UK (ITEPA 2003, s 644).
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Re: Is a U.S. Disability Pension taxable in UK
« Reply #5 on: October 21, 2016, 05:42:50 PM »
Thank you both for your help! How does one check to see if a pension would be deemed to be a government pension?


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #6 on: October 21, 2016, 05:43:02 PM »
(a) I would check that the San Diego State pension a Government pension for the purposes of the tax treaty?  If so, I agree with Nun.
(b) Or, if, as stated, the cause of the disability was by reason of the job, then it's not taxed anyway in the UK (ITEPA 2003, s 644).

I strongly suspect that a pension from San Diego County is a local government pension and so would fall under the "political sub-division" wording.  If you were a local government, state, or Federal employee (not a contractor) or get a US military pension then those would be government pensions.
« Last Edit: October 21, 2016, 05:46:13 PM by nun »


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #7 on: October 21, 2016, 07:06:02 PM »
HMRC Manuals give HMRCs interpretation of government versus non-government pensions.


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #8 on: October 21, 2016, 10:38:11 PM »
HMRC Manuals give HMRCs interpretation of government versus non-government pensions.

I remember one case on this forum where HMRC ruled that a 401a pension account from University of California was not a government pension because it was administered by the trustees of the University. IMHO that's a wrong decision because she was a state employee, UC is funded by CA and here pension was funded from CA state funds. So my approach would be to start from the assumption that the San Diego County pension is a government pension and let HMRC argue otherwise if they ever bother to question that assumption of just use robnw's option (b)
« Last Edit: October 21, 2016, 10:39:55 PM by nun »


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #10 on: October 22, 2016, 12:58:27 PM »
I think the OP has a government pension under the Treaty....and HMRCs definitions. If I ever have to deal with this I will definitely claim that my pension from work at the University of Massachusetts is governmental because the check comes from the Massachusetts State Retirement Board and is defined as a:

Massachusetts State Pension Group 1:General state employees, such as clerical or administrative workers, and all employees who are otherwise not classified.


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #11 on: October 23, 2016, 12:39:36 PM »
Well Government pensions are covered under Article 19 of the tax treaty and they are not UK taxable when paid to US citizens resident in the UK. They are still US taxable.
Not quite. Under 19(2)(b) if the US citizen is also a British national then the UK has the right to charge tax; with a resourcing foreign tax credit in the US under Article 24(6).


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Re: Is a U.S. Disability Pension taxable in UK
« Reply #12 on: October 23, 2016, 02:43:54 PM »
Not quite. Under 19(2)(b) if the US citizen is also a British national then the UK has the right to charge tax; with a resourcing foreign tax credit in the US under Article 24(6).

Yes, I thought that the lack of UK citizenship was obvious as the only citizenship I mentioned was US and the OP is also only a US citizen.


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