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Old 16.03.2015, 17:04
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Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

Hi everyone,
It has been a long time since I visited, and visiting EF again makes me realise how different life in Switzerland is from the UK, and I miss it!


Anyway, I have a question on the taxation of pillar 2 and pillar 3a funds in the UK, before it has even been withdrawn.

As UK residents need to often pay tax on overseas interest income, does anyone know if this applies to pillar 2? And pillar 3a?
So say you get a yearly statement, saying pillar 2 and 3 received x amount of interest. Do I put this interest on a Self assessment return (assuming you are chosing the arising basis of taxation)?

I am not a resident in CH anymore so am thinking tax treaty's might not apply to me in this case?


I am hoping they are properly 'wrapped' as pension and are excluded from reporting requirements as long as you don't withdraw any funds, but would like to be certain. I have asked a UK financial advisor this, but he is not sure. (I searched the forum, and have not found this particular question and answer anywhere).
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Old 16.03.2015, 20:08
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

Good question....
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Old 16.03.2015, 20:49
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

Contact HMRC and ask them.
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Old 16.03.2015, 23:07
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

I have tried that several times. Either I get cut off on the Phone by the system or I am told an inspector will call me back. Which they never did. Just thought someone here might have been in a similar situation and found out.
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Old 17.03.2015, 07:58
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

I wouldn't be wanting to use "an internet forum told me to do it" as a justification.
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Old 18.03.2015, 12:56
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

Common guys, I would not, ever. I thought a forum was about sharing information. I just thought if any of the other UK expats here that might have moved back, and had a similar question once, and investigated this, they could share what their sources said.


It is a simple situation, not affected by personal circumstances. (It would apply to anyone moving to the UK with pillar 2 and 3a accounts).


If I manage to get an official answer I would of course share that here too.
In the meantime, if anyone does know... many thanks!
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Old 18.03.2015, 13:49
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

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Common guys, I would not, ever. I thought a forum was about sharing information. I just thought if any of the other UK expats here that might have moved back, and had a similar question once, and investigated this, they could share what their sources said.


It is a simple situation, not affected by personal circumstances. (It would apply to anyone moving to the UK with pillar 2 and 3a accounts).


If I manage to get an official answer I would of course share that here too.
In the meantime, if anyone does know... many thanks!
I guess this issue would go away if it was invested & not held as cash. No idea why you would keep a (cash) Pillar 3a after you have moved back.

I don't believe the Pillar 2 is taxable as you can't actually get the money yet, it will be taxable in the UK when you take it as a monthly pension. If you take the whole thing as cash you probably have to only pay the CH withholding tax, of course the law may well be different when you come to take the money.
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Old 10.06.2015, 23:53
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

I have the same question. When I left Switzerland the pillar 2 was paid out into a Freizuegigkeitskonto (Vested Benefits Account) which has accrued a small amount of interest. Assuming that this 'pension' account was blocked until retirement the interest was not declared. It turns out that I can in fact transfer the money to the UK and since I left before 31st May 2007 I can take the whole lot! I have taken advice from a major accountancy firm who are convinced that :

paraphrased..
- "The interest belongs to the fund so does not need to be declared to the UK tax authorities"
- "Due to the double taxation treaty you do not need to pay income tax on the amount when you cash out".

(All of this assumes that the entire amount was earned whilst you were domiciled in Switzerland)

This sounds a bit unbelievable to me. Effectively I could withdraw the whole amount one day before retirement and not pay any tax. The problem is that nobody, even HMRC can give a definitive answer on this. If you do hear back please let us all know !

Thanks,
Dave
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Old 11.06.2015, 00:04
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Re: Must you pay tax in the UK on interest on pillar 2 and pillar 3a?

Quote:
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I have the same question. When I left Switzerland the pillar 2 was paid out into a Freizuegigkeitskonto (Vested Benefits Account) which has accrued a small amount of interest. Assuming that this 'pension' account was blocked until retirement the interest was not declared. It turns out that I can in fact transfer the money to the UK and since I left before 31st May 2007 I can take the whole lot! I have taken advice from a major accountancy firm who are convinced that :

paraphrased..
- "The interest belongs to the fund so does not need to be declared to the UK tax authorities"
- "Due to the double taxation treaty you do not need to pay income tax on the amount when you cash out".

(All of this assumes that the entire amount was earned whilst you were domiciled in Switzerland)

This sounds a bit unbelievable to me. Effectively I could withdraw the whole amount one day before retirement and not pay any tax. The problem is that nobody, even HMRC can give a definitive answer on this. If you do hear back please let us all know !

Thanks,
Dave
You can actually take the cash in FULL now, UK does not require compulsory insurance.
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