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Tax-friendly retirement/tax residence scheme
for UK retirees
Under
the Double Taxation Relief
(Taxes on Income) (United Kingdom of Great Britain and Northern Ireland)
Order, 1995 (Articles 18 and 19(2)),
UK citizens receiving a
pension in the UK and who who take up residence in Malta, can have their
pensions remitted to them in Malta free of any UK income tax.
The scheme is not available to
pensions paid by, or out of funds created by the UK government and paid
to an individual in respect of services rendered to the UK. Therefore
civil service pensions and similar state pensions are excluded.
UK pension benefits are
remitted net of any UK tax to Malta are then taxed at 15% in Malta,
provided the pensioner holds a Maltese Permanent Residence Permit. Since
UK income tax on pensions stands at 40%, it is clear that UK citizens
taking up Maltese residence and remitting their pension to Malta will
make a tax saving of 25% on his or her entire pension and this become
particularly favourable for higher pensions.
A quick calculation will
therefore show that any UK citizen in receipt of a pension in excess of
£15,000 annually, will begin saving on his tax liability once he or she
takes up residence in Malta.
[Refer to our
page on Conditions for Residence]
Below is a calculation of the
potential savings based on a pension being paid to a single person under
65 years of age; savings for elder and married people can be greater.
|
Pension |
UK tax |
Malta tax and PRP costs |
Net savings |
|
50,000 |
12,952 |
10,380 |
2,572 |
|
60,000 |
16,952 |
11,880 |
5,072 |
|
70,000 |
20,952 |
13,380 |
7,572 |
|
80,000 |
24,952 |
14,880 |
10,072 |
|
90,000 |
28,952 |
16,380 |
12,572 |
|
100,000 |
32,952 |
17,880 |
15,072 |
|
150,000 |
52,952 |
25,380 |
27,572 |
|
200,000 |
72,952 |
32,880 |
40,072 |
|
300,000 |
112,952 |
47,880 |
65,072 |
For more information about the
Malta
Residence Scheme, click
on the links on the left hand menu of this page. |
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