There’s a tax treaty between the UK and the Philippines that’s supposed to stop your pension being taxed twice.
But here’s what almost nobody tells you: for UK pensioners living in the Philippines, that treaty is practically useless.
And the bigger issue?
Most UK pensioners here are overpaying tax to HMRC every single year — often without realising it.
In this article, I’ll break down why the UK–Philippines tax treaty doesn’t work in practice, how much you might be overpaying, and the simple steps to reclaim your money from HMRC.
If you’re a UK pensioner already living here — or planning to retire in the Philippines — this could easily put hundreds of pounds back in your pocket every year.
The Myth of the UK–Philippines Double Taxation Treaty
The UK–Philippines Double Taxation Agreement (DTA) has been around since 1976, with an update in 1997.
On paper, it looks ideal. Article 17 states that private pensions should be taxed only in your country of residence.
So, if you’re resident in the Philippines, your UK pension should be taxed here — not in the UK.
Sounds simple, right? You live in the Philippines, so HMRC leaves you alone.
But that’s not what happens in reality.
The Problem: The Philippines Doesn’t Tax Your Pension
The Bureau of Internal Revenue (BIR) in the Philippines does not tax foreign pension income for non-citizens.
There’s no system, no mechanism, and frankly, no interest in doing so.
If you’re a non-resident alien receiving a UK pension here, it’s not subject to Philippine income tax.
The BIR only taxes Philippine-source income.
That creates a bureaucratic loop that traps British retirees:
- HMRC says: “Get a certificate from the Philippines proving you’re tax resident there, and we’ll stop taxing your pension.”
- BIR says: “We don’t tax foreign pensions, so we can’t issue that certificate.”
The result? You stay in the UK tax system, even though you no longer live there.
The treaty technically gives the Philippines the right to tax your pension — but since the BIR doesn’t use that right or issue residency certificates, HMRC keeps charging UK tax as if you still lived there.
So, yes, the treaty exists — but in practice, it doesn’t protect UK pensioners in the Philippines at all.
👉 You can download a full PDF copy of the UK–Philippines Double Taxation Agreement here (link provided in the video description).
Understanding the Two-Pension System
To see how this actually affects your tax bill, you need to understand how the UK treats two main types of pension:
1. The UK State Pension
Your State Pension is paid gross, meaning no tax is deducted before payment.
For the 2024–25 tax year, the full amount is £11,502 per year if you’ve paid 35 years of National Insurance.
But “gross” doesn’t mean “tax-free.”
It’s still taxable income — HMRC just doesn’t deduct tax automatically.
2. Your Private or Workplace Pension
Private pensions (SIPPs, workplace pensions, and personal pensions) are taxed differently.
They have 20% basic rate tax deducted automatically at source before payment.
If you’re a higher-rate taxpayer, your provider still only deducts 20% — and you’re responsible for declaring and paying the extra 20% or 25% through Self Assessment.
For most UK pensioners in the Philippines, you’re in the basic rate bracket, and that’s where the overpayment trap appears.
The Overpayment Trap
Here’s where it gets messy.
HMRC automatically applies your personal allowance (£12,570 for 2024–25) to your State Pension first.
Since your State Pension of £11,502 uses up most of that allowance, you have just £1,068 left.
Your private pension is then given a BR tax code — that stands for “Basic Rate.”
This means your pension provider deducts 20% tax from every pound, with no allowance applied.
You end up overpaying tax every single year, simply because of how HMRC assigns your tax codes.
The Real Numbers: How Much You Overpay
Let’s look at a realistic example.
You receive:
- State Pension: £11,502 (gross, no tax deducted)
- Private Pension: £5,000 (taxed at source)
Your total income is £16,502.
What your provider actually deducts:
Private Pension = £5,000 × 20% = £1,000 tax deducted.
What you really owe:
- Total income: £16,502
- Personal allowance: £12,570
- Taxable amount: £3,932
- Tax owed @20% = £786.40
Result:
You’ve overpaid £213.60 that year.
Over five years, that’s over £1,000 you’ve unnecessarily handed to HMRC — money that could be sitting in your bank account.
How to Get Your Money Back
You can reclaim your overpaid tax in two ways:
Option 1: File a Self Assessment Return
Declare your total income (State and private pensions) and calculate your actual tax owed.
HMRC will issue a refund — often within a few weeks if you file online.
Option 2: Use Form R43
If you no longer file Self Assessment, use Form R43 — “Claim for repayment of tax if you live abroad.”
You can download it from GOV.UK, complete it, and post it to HMRC.
HMRC usually sends your refund directly to your nominated account.
You can claim up to four tax years back, so don’t delay.
👉 Useful links:
Bonus Tip: Check All Your Tax Codes
If you have more than one private pension, HMRC sometimes assigns the wrong tax code, causing even more overpayment.
Check your coding notices.
If you see “BR” or “D0” where it shouldn’t be, contact HMRC and ask them to review it.
They may refund the extra tax automatically.
The Reality: The Treaty Doesn’t Work for Expats
Let’s be clear — this isn’t tax evasion or some loophole.
You’re following the rules. The system itself is broken.
The treaty exists on paper, but the UK and Philippine tax offices simply don’t cooperate in practice.
That leaves thousands of retirees paying tax in the UK on income that legally shouldn’t be taxed there at all.
Until the two governments modernise their systems, this won’t change — so it’s up to you to understand it and protect yourself.
Take Control of Your Retirement Income
If you’ve overpaid HMRC, claim it back.
If you haven’t checked your code, do it now.
And if you’re planning to retire in the Philippines, go in with your eyes open — not everyone does.
Join the Naked Expat Community
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And remember:
Just because there’s a treaty… doesn’t mean it works for you.
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