UK Social Security Pension

[Desley Revell]

Putting this out to members of this Group if anyone can give me information that shows this pension contains an undeducted purchase price (UPP).

Recently in some of the BAPA emails, someone stated that they claim a percentage on their Income Tax for the UPP.

I was asking our accountant, and they have advised that they have never seen this and report our pension as a pension without UPP.

Any information would be greatly appreciated.

Desley Revell
Brisbane

[Paul Swain]

Hi Desley!

Check the posts here https://groups.google.com/g/bapanews/c/Afj0qQ3FkIg
in particular this one
https://groups.google.com/g/bapanews/c/Afj0qQ3FkIg/m/8DprD60cDgAJ which
includes the link to the ATO advice and another link setting out the way
that pensions are classified.

Your accountant should now be able to correct any past Australian tax
returns so that the UPP is taken into account for all the past years, as
well as claimed in your future tax returns.


Paul

[JO ODDIE]

Hi Dorothy

I believe it was Michael Scully who posted this very comprehensive explanation to me. 

This refers to the UK State Pension. 

Good luck

Kind regards

Jo

Taxation of British pensions in Australia

If you received a pension from the United Kingdom State Pension (previously known as the British National Insurance Scheme), you may be entitled to a UPP deduction.

For a category A pension or a category B widow's pension, you can calculate your deduction by multiplying your UK State Pension (in Australian dollars) by 8%. If you want your UPP calculated using the Exact method, you will need to write to us and request a private binding ruling.

If you received a category C or D pension you are not entitled to a deductible amount of the UPP.

https://www.ato.gov.au/Individuals/myTax/2020/In-detail/Foreign-pensions-and-annuities/#Britishpensions

Categories of British State Pensions

The categories of contributory SP available are:

• Cat A - category A pensions, comprising basic and additional pensions, are paid to individuals based upon their qualifying NI contributions. In certain circumstances, spouses and civil partners were able to inherit these when the principal recipient died.
• Cat B - category B pensions, comprising basic and additional pensions, are paid to the surviving spouses and civil partners of deceased category A recipients where the survivor is not entitled to category A pension.
• Cat ABL - category ABL pensions are paid to married persons and civil partners when a person’s own category A basic pension is less than the maximum amount payable and they are able to ‘top up’ using their spouse or civil partner’s NI contributions.
• Cat BL - category BL pensions are paid when a person has no category A basic pension entitlement but can claim an SP using their spouse or civil partner’s NI contributions.
• Cat AB - category AB pensions are paid when a person’s own category A basic or additional pension is less than the maximum amount payable and they are able to ‘top up’ using their deceased spouse or civil partner’s NI contributions.
• GRB only

The categories of non-contributory SP are:

• Cat C - category C pensions are payable to people over SPa on 5th July 1948 and their widows – the only remaining entitlements are payable to widows.
• Cat D - category D pensions are awarded to people who:
• reach 80 years of age
• satisfy certain residency conditions and
• failed to qualify for category A or B pension or
• receive less by way of basic pension than the rate of Category D pension.

https://stat-xplore.dwp.gov.uk/webapi/metadata/SP/Category%20of%20Pension.html

Sent from my iPhone

On 14 Feb 2021, at 20:04, Paul Swain <ata...@zaparaxy.net> wrote:

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[JO ODDIE]

Apologies, that should have read Desley, Desley. I don’t know whether it was autocorrect or me! Jo

Sent from my iPhone

On 14 Feb 2021, at 20:08, JO ODDIE <joo...@aol.com> wrote:



[Derek Russell]

Dear All,

I see a discussion stream from a couple of yours ago on this issue. UK pensions are taxed for Australian residents.  It seems clear that it is possible to get an 8% reduction in the taxable amount of the UK state pension under the Undeducted Purchase Price (UPP rules).  I also have a UK Teachers Pension Scheme pension.  Does anyone know whether these work pensions are also eligible to use the 8% rule?  The other way to get a UPP deduction involves calculating the contributios you have made to the scheme and using actuarlial tables to calculate the UPP, but the Teachers Pension Scheme has stopped recording contributions and they seem to be entirely unavailable unless your payroll office is prepared to dig out every contribution you every made (for me from 1987 to 2012).  

Cheers

Derek