Are you an expat living in Vietnam? Have you got a UK pension? Here are your options for the tax-efficient management of your pension.
No UK tax should be due on any payments you receive as a tax resident of Vietnam, assuming the pension is paid in consideration of past employment.
The DTA allocates the taxing rights to Vietnam - which in turn can exempt the income from Vietnamese tax.
But, if your UK pension is a personal scheme, then tax may still be due in the UK.
In all cases, the pension fund remains exposed to British IHT.
As a non-UK resident, if you've lived abroad for more than 5 years and transfer your pension to a Gibraltar QROPS this can remove your UK tax obligation.
Your pension payment would be subject to tax in Gibraltar at a rate of 2.5%.
No tax should be due in Vietnam.
British IHT should not bite either, assuming you're non-UK resident and have been for 5 years+.
Gibraltar doesn't have death charges.
As a non-UK resident, if you've lived abroad for more than 5 years and transfer your pension to a Maltese QROPS this can remove your UK tax obligation.
Your pension payment would be subject to tax in Malta at a rate of up to 35%.
No tax should generally be due in Vietnam.
Assuming you're non-UK resident and have been for 5 years+, like Gibraltar there should be no British IHT - and Malta doesn't have death charges.
According to HMRC, you usually have to pay tax on your UK income even if you’re not a UK resident.
Double tax agreements, where they exist, can prevent you being taxed twice.
You usually have to send a Self Assessment tax return if you have a pension outside the UK and you were UK resident in one of the 5 previous tax years.
Under the DTA between the UK and Vietnam, generally pensions paid in consideration of past employment to a tax resident of Vietnam is not taxed in UK, but only in Vietnam.
For pension income not paid in consideration of past employment, for example one to which you've contributed yourself, there's the risk that it can be taxable in both the UK and Vietnam.
Government pensions are different again, so this needs checking if you once servce in the army for example.
At the moment there's no Gibraltar/Vietnam DTA, meaning QROPS payments would be taxable in Gibraltar, currently at 2.5%.
There's no UK income tax if you're non-UK resident (for 5 tax years+, and withdrawals are below £100,000).
Gibraltar doesn't have death taxes.
You may be protected from UK IHT.
You may also benefit from protection from UK death benefit charges if you remain non-UK resident (and non-UK resident for the last 5 years + before payment).
At the moment there is no Malta/Vietnam DTA, meaning QROPS payments would be taxable in Malta, currently at rates up to 35%.
Malta doesn't have death taxes.
Lump sum death benefits paid from a registered pension scheme or non-UK pension scheme are taxed at the recipient's marginal rate of income tax where the owner of the pension rights dies age 75 or over.
Where the recipient is, for example, a trust or a company and so does not have a marginal rate a 45% charge will apply.
If the deceased was under the age of 75, these lump sum death benefits are not taxed unless they are paid out more than two years after the scheme administrator became aware of the death.
For those who are non-UK resident and have a QROPS, the UK tax cost on succession can be less...but take expert advice, don't make any assumptions relating to taxation.
Vietnamese residents are taxed on their worldwide income; nonresidents are taxed only on Vietnamese-source income.
An expat's liability to personal income tax is determined by their residence status.
• If you have accommodation to reside permanently in Vietnam, with a term of 183 days or more in a tax year (pre July 2013, it was 90 days).
Accommodation is very wide in meaning, pretty much anywhere giving you a roof over your head!
If you, as an expat, are considered to satisfy this rule, but you actually reside in Vietnam for fewer than 183 days in a year and cannot prove that you are a tax resident somewhere else that tax year, you will find yourself resident in Vietnam for tax purposes.
A non-tax resident of Vietnam is someone not meeting all this and so is not liable to tax except on Vietnam-sourced income.
Individuals must file separate returns; joint filing is not permitted.
Employment income is taxed at 5% to 35% for residents, and 20% for non-residents.
Other income is taxed at 0.1% to 20%.
Capital gains are taxed at 20%.