taking cash free lump sum from UK SIPP when non resident

[jdepp]

Hello all, pretty basic question as below
I am no longer UK tax resident since a few years, now in EU country.
I still hold my SIPP with one of the UK leading providers but realise I never updated my residency with them, although I know I can retain the account if in europe. Obviously I have informed HMRC that I am no longer resident in UK.
Given Labour etc I am seriously thinking about taking my 25% tax free lump sum out of SIPP in case this might be abolished in the Reeves end October statement. Does anyone have any idea if this withdrawal is impacted by being non UK resident? I recall asking years ago and was told that I can take it as long as I have a UK bank account, which I do.
(I am not asking from point of view of where the funds will go and subsequent taxation).

Thanks!

[the0ni0nking]

Depends where you are resident as different rules may apply.

Spain for example does not recognise that the lump sum should be tax free in its entirety. Am sure other countries have similar nuances.

[jdepp]

Thanks for answer, but I mean more from UK end if there is an issue with the procedure to receive this from a UK SIPP when non resident in UK.
I am fairly certain that there is no issue but wanted to check if anyone had had issues.

[BigB]

I have just today triggered a 25% cash lump sum release from a major UK provider DC scheme (not specifically a SIPP) - I nominated a UK bank account for funds transfer and there were no further questions on where it would be going.

At this point I could easily be non UK resident.

At the point at which you then look to move the funds offshore, there could well then be questions triggered by anti money-laundering requirements, but I'm guessing there won't be anything pension specific.

[jdepp]

Thanks BigB, yes that's what I expect. I left 3 years ago but still live in fear of doing something wrong given statutory rules tests are so complicated.

[the0ni0nking]

Thanks for answer, but I mean more from UK end if there is an issue with the procedure to receive this from a UK SIPP when non resident in UK.
I am fairly certain that there is no issue but wanted to check if anyone had had issues.

Ah - I see. I did check your previous posts so I could see you are likely in Malta and then I decided I had no idea whether Malta would recognise the lump sum as tax free and stopped there - good job I did given I had gone off on a tangent!!

I used to try and keep my banking set-up in the UK fairly clean - but now as I am moving overseas I'm deliberately keeping UK accounts open and not mentioning anything. Despite leaving the UK, I will continue to receive rental income from UK property into a number of different UK bank accounts. (I effectively keep 1 bank account per property to make my accounting easier).

[Lootman]

I left 3 years ago but still live in fear of doing something wrong given statutory rules tests are so complicated.

I have been looking into those statutory tests recently and did not notice anything that would specifically condemn a non-resident to residency purely for engaging in financial transactions in the UK.

I would feel confident that the issues for formal tax non-residency are quite distinct from whether a UK bank regards as you as living in the UK or not. Apparently people who left the UK years ago can and do retain UK accounts and UK addresses without a problem.

I'd assume that payments from a UK pension after the TFLS would be taxable in the UK as UK source income, but I do not have any personal experience of that and it might depend on where you now live.

[BullDog]

I left 3 years ago but still live in fear of doing something wrong given statutory rules tests are so complicated.

I have been looking into those statutory tests recently and did not notice anything that would specifically condemn a non-resident to residency purely for engaging in financial transactions in the UK.

I would feel confident that the issues for formal tax non-residency are quite distinct from whether a UK bank regards as you as living in the UK or not. Apparently people who left the UK years ago can and do retain UK accounts and UK addresses without a problem.

I'd assume that payments from a UK pension after the TFLS would be taxable in the UK as UK source income, but I do not have any personal experience of that and it might depend on where you now live.

If a dual tax treaty exists between the UK and the other country, it is the dual tax treaty that determines where pension payments are taxable. It's not difficult. In the dual tax treaties I have read, there is a section specfically dedicated to pension payments. Note that it is extremely unlikely any UK tax free lump sum will be recognised by another jurisdiction as not subject to tax.

[jaizan]

I have just today triggered a 25% cash lump sum release from a major UK provider DC scheme (not specifically a SIPP) - I nominated a UK bank account for funds transfer and there were no further questions on where it would be going.

At this point I could easily be non UK resident.

Surely there's no problem getting your 25% without paying UK tax ? But that is a question.

I presume the issue is over tax payments due in whatever other country you're resident in. Most of the countries you might consider living in supposedly have some level of data sharing with the UK, so I suspect hoping they don't know is risky.

[torata]

Thanks for answer, but I mean more from UK end if there is an issue with the procedure to receive this from a UK SIPP when non resident in UK.
I am fairly certain that there is no issue but wanted to check if anyone had had issues.

My OH, who is non-UK tax resident, took 25% cash from her private pension last year. The pension provider knew she was non-resident. There was no issue but the money went to a UK bank.
Tax in the resident country is another issue.

The issue in the UK is trying to get an annuity when non-tax resident.

torata