A HMRC pensions warning has been issued over a large tax bill if you don’t have the correct code. A customer got in touch with a question about how to pay their tax as we head towards the self-assessment deadline at the end of January.
A taxpayer reached out with a query and asked: “I meet all the conditions, My self assessment payment is for a USA Pension. Can I still pay by PAYE? If so who do I contact at HMRC?” HMRC said in reply via a public Twitter (now X) response: “The balancing payment for the 23/24 tax year would be collected through the PAYE income source commencing 6th April 2025.”
They went on and explained: “I was originally told that tax for foreign pensions had to be via self assessment. However I believe there is a reciprocal arrangement US/UK which may mean tax on my US pension can be paid via PAYE?”
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HMRC responded to spell out that it “cannot operate PAYE” on a foreign pension and that the person “must declare this to us”. HMRC said “The reciprocal arrangement is the double taxation agreement that stipulates who is entitled to the tax on this income and where any claim to foreign tax relief is to be given.
“If you wish for this pension to be included in your PAYE code to avoid having a large tax bill at the end of the year please contact us.” Another query then came in from the same taxpayer, who was reaching out via Twitter, now X, to ask: “Can I open a cash ISA, LISA and stocks and shares ISA in the same financial year?”
In reply, HMRC issued a response and told the taxpayer : “Yes, as long as you don’t exceed your £20,000 ISA allowance in any given tax year.”