expat network

Why Has My Military Pension Suddenly Reduced?

military pension

“Why has my military pension suddenly reduced? Is there anywhere I can find a definitive guide to the Taxing of expatriates’ pensions?

I know there are two main categories of expatriates those that are in countries and territories that have reciprocal agreements with and those that don’t.  I know this affects if your pension is fixed or follows the UK pensions with increases.”

“The reason I ask is I have just started receiving my Military Pension it was £136.46 but this month dropped to £110.57 I know that the Philippines has an agreement with UK reference to pensions but do not know what it is and what it covers. I also seem to remember some reference recently to Military Pensions.

I also know that the state pension has penalised me for being in the Military against the state pension in a term called “contracting out” and so I cannot get a full state pension even if I pay voluntary payments. Which I did not so long ago but it seems they have not included them in my assessment and have not replied to me either.”


Les Trotter of Tax Safe responded as follows:

Your recent pension query has been referred to us but whilst we cannot really comment with regard to rates of pensions, additional voluntary contributions and contracting out, we believe the problem with your pension may be much more straightforward.  For the tax year ended 5/4/18 it may well be that your pension of £136.46 was covered by your Personal Allowances and if you do have State Retirement Pension, whilst this would be a restriction to your coding allowances, the balance should be more than sufficient to cover any military pension with no UK tax liabilities arising.

As you appear to have had tax deducted for April 2018 we would guess that your Personal Allowances have been withdrawn and as there are no allowances to offset against your military pension, it has been taxed at 20% reducing it to approximately £111.00.  We would therefore respectfully suggest that you would need to contact HMRC, i.e. the department dealing with the issue of code numbers against your pension, query the situation and they should be able to reinstate your Personal Allowances, arrange the refund of any over deducted tax via your pension and then ensure your pension is paid on a gross basis thereafter.