If you want to retire in Thailand from Britain, you need to plan for your pension. If you leave your benefits in the UK, you have to face the hefty and unnecessary tax of up to 45% per annum. Unfortunately, you cannot transfer your retirement benefits from the UK directly to Thailand because there is no Qualified Recognized Overseas Pension Scheme (QROPS) in the Asian country.
Basically, this means that you have to use other QROPS avenues to get your money to Thailand. You are allowed to use neutral tax jurisdiction QROPS platforms in Hong Kong, New Zealand, Gibraltar, and Malta. The New Zealand and Hong Kong avenues are the most used due to flexible DTA rules. For you to transfer UK pension to Thailand, you should understand the No Tax and Double Taxation Agreement (DTA) rules.
No Tax Rule
If your pension was earned in the UK, it’s reasonable to pay tax in the UK. In case your earnings are less than £10,000 per year, then you don’t have to pay anything as a tax. Alternatively, you can pay tax in Thailand and not the UK on the pension after it has been wired into a Thai bank account.
DTA Rules
1. Article 16- UK Taxation Rule
If you choose to leave your pension in the UK, you’ll be taxed for the years that the amount stays in your retirement scheme (20-45%). If it reaches a time that you want to transfer the money to Thailand through intermediaries, you’ll face another taxation.
2. Article 18- Hong Kong-Thailand DTA Rule
If you are decided on residing in Thailand after retiring in the UK, the Hong Kong pension transfer route is the easiest. You’ll be exposed to a double taxation system but the second taxation right goes to Hong Kong.
3. Article 19- New Zealand-Thailand DTA Rule
The DTA gives the taxation right to Thailand and not New Zealand. Nevertheless, there is the benefit of avoiding tax in NZ on pension growth and death.
Conclusion
Everyone’s financial position is unique, so you need to look at you overall retirement plan to get the optimal solution. Hopefully, the above discussion has given you a quick overview of what’s involved in transferring your pension from the UK to Thailand. By and large, it may be hard to transfer UK pension to Thailand but you may find it smart to keep the money outside the UK. In this case, you are able to change the form of your money from GBP to USD and be able to avoid the hefty taxes.