Hello,

There are many misconceptions surrounding this problem. As a former Inland Revenue employee who has thoroughly researched this problem may I please try to explain the correct position?

If you are a UK citizen "resident" in Turkey certain UK pensions are exempt from UK tax. These include NI Retirement Pension, Disability Benefits, Private pensions and purchased annuity, employment related pensions. Some "government" pensions are specifically excluded from this exemption including: civil service, military service and local authority pensions (this includes police, fire service and teachers but confusingly not NHS service pensions).

The first step in the process is to inform your UK tax office that you are now resident in Turkey and ask for a form P85. When you complete this form the Inland Revenue should rule on your "residency status" and send a form DT/Individual for completion. You will need to complete this form as far as possible and then take to your local Turkish tax office to complete the certificate included in the form. This is where it gets really difficult. The certificate asks the Turkish authorities to certify you are registered with them (no problem here because you should have your tax number) and are paying tax on the income shown in the form. The Turkish authorities will not do this because pensions are specifically exemted under Turkish tax legislation. However, there is a way to get round this "Catch 22". The Turkish tax office will give you a certificate confirming you as a "potential taxpayer".

The UK Inland Revenue should (I think) accept this as proof that you are entitled to uk exemption on the pensions described above. Simply send the completed form to the Inland Revenue Non Resident Tax Office who should then authorise your pension payer to cease deduction of tax and repay any tax deducted since the previous 6 April. If you have been resident in Turkey for more than the current Tax year (6 April-5 April) they will also arrange for a refund of any tax deducted in previous years but only up to 7 years prior to the current tax year. They will also pay you interest on the tax you overpaid in the previous years.

Your residence status for tax purposes has no bearing at all on your entitlement to free NHS treatment or to receive increases in your NI Retirement Pension. Whether you do or do not pay UK tax also has no bearing on these entitlements. This is a complete red herring and should not affect your decision when considering whether you should apply for exemption from UK tax on your pensions.

If you would like specific advice on your particular circumstances please feel free to email me.

Brian.

Hello all,

Just to let you know that my claim for exemption from UK tax on pensions has just been accepted by Inland Revenue (after 2 years and much negotiation with IR and Turkish Tax Authority) and now waiting for a cheque of ₤4,000 approx for UK tax overpaid for the last 4 years.

It seems all the work was worthwhile and I am confident I can arrange a refund for anyone in a similar situation. Get in touch if you want to know more.

I know its a bit early but I will be celebrating this weekend! Cheers!

Brian.

Brian, despite having a place in Turkey for the last few years just settling down here for good and starting to sort out admin. Your post was most interesting and I will be following up on it. Has there been any change to the tax situation since your post? Are you still available for advice if necessary?

Hi Brian,
I sent my form off Oct 09 do you think I will have to wait 4 yrs to be exempt from uk tax on my pension.

Sandra

Hi Brian,

Received my form back from HM Revenue am now tax free from Uk do I have to get in touch with my private pensions to let them know.


Sandra