UK Pension Winter Fuel Payment and bonuses

[Russett]

Well hello everybody, it's a delight to see that this new version of TT has been born. A thousand thanks to the people who got it up and running for all their time and effort.
I have a couple of questions concerning my pensions from the UK and Ireland.
First off, as a UK state pensioner I receive two separate bonus payments once a year from the pension service: the UK winter fuel payment and a Xmas bonus payment. From the Irish pension service I also receive a Xmas bonus once a year.
So now we come to the German tax return. I am already aware that these two pensions are tax free in Germany, but count towards Progressionsvorbehalt and are entered into the Anlage AUS, in the section "Nach DBA steuerfreie Einkünfte / Progressionsvorbehalt". A huge thank you once again to PandaMunich for the detailed instructions. What I do not know is whether these bonus payments would be considered to be part of my total pension by the German tax office.
2023 was the first year in which I received the pension for the full calendar year, so this is also the year in which the tax-free part of my UK and Irish social security pension gets calculated and then frozen, in GBP/Euro. Do I calculate 18 % of the total pension including bonuses as the frozen tax-free part or should I separate the bonus payments from the pension payments and enter them separately. If I have to enter the bonuses separately, then which tax form should I use for that purpose?
I really hope someone has already had experience with this and can come to my rescue.
Any help would be very much appreciated.

[Franklan]

Well hello everybody, it's a delight to see that this new version of TT has been born. A thousand thanks to the people who got it up and running for all their time and effort.

Just out of curiosity, how did you find your way to this "new" site?

[Russett]

I googled toytowngermany and found this wikipedia page:

https://en.wikipedia.org/wiki/Toytown_Germany

After scrolling down to the bottom, I found the new external link:

New Toytown Homepage

Oh boy, was I happy! Unfortunately, all the old pages which were the most informative for me and which I had bookmarked have all disappeared. When I click on the bookmarks, I just end up at the start page of The Local.

[PandaMunich]

I have a couple of questions concerning my pensions from the UK and Ireland.

First off, as a UK state pensioner I receive two separate bonus payments once a year from the pension service: the UK winter fuel payment and a Xmas bonus payment. From the Irish pension service I also receive a Xmas bonus once a year.

So now we come to the German tax return. I am already aware that these two pensions are tax free in Germany, but count towards Progressionsvorbehalt and are entered into the Anlage AUS, in the section "Nach DBA steuerfreie Einkünfte / Progressionsvorbehalt". A huge thank you once again to PandaMunich for the detailed instructions.

What I do not know is whether these bonus payments would be considered to be part of my total pension by the German tax office.

2023 was the first year in which I received the pension for the full calendar year, so this is also the year in which the tax-free part of my UK and Irish social security pension gets calculated and then frozen, in GBP/Euro.

Do I calculate 18 % of the total pension including bonuses as the frozen tax-free part or should I separate the bonus payments from the pension payments and enter them separately.
If I have to enter the bonuses separately, then which tax form should I use for that purpose?

The UK and Irish Christmas bonuses are part of your social security pensions (which both the UK and Ireland misleadingly call State Pensions):

• UK: https://www.gov.uk/christmas-bonus

• Ireland: https://www.citizensinformation.ie/en/s ... mas-bonus/

So yes, they enter the frozen tax-free pension allowances in GBP (for your UK social security pension) and in € (for your Irish social security pension) which is 18% of your total 2023 social security pensions.

Your pension tax-free allowance (Rentenfreibetrag) is 18% of your full yearly 2023 social security pensions including Christmas bonuses, since you first drew these pensions in 2022.
The tax-free percentage is 100% minus the "taxable part" of 82% (for a pension first drawn in 2022) taken from the table in § 22 Nr. 1 Satz 3 a) aa) EStG: https://www.gesetze-im-internet.de/estg/__22.html

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However, the UK Winter Fuel Payment is not part of your social security pension: https://www.gov.uk/winter-fuel-payment
It is most similar to the German Energiepreispauschale (EPP): https://www-lohnsteuer--kompakt-de.tran ... r_pto=wapp

Which means that it has to be declared as "sonstige Einkünfte" in Anlage SO every year (in 2022, that's in line 10 of Anlage SO. In the 2023 Anlage SO it's in line 12): https://www.steuertipps.de/finanzamt-fo ... einkuenfte

[Russett]

Thank you so much Panda. Always so helpful.

Sorry, but I have just one more question and then I can leave you in peace (hopefully).

Since I receive my UK pension roughly on a monthly basis, do I have to calculate each single payment into Euro or can I use the total for the year and then convert this total sum to Euro. If I'm allowed to convert the total annual sum, is there an average conversion rate for the whole year or do I need to pick out a particular month (e.g. June) and use that rate?

Sorry, it turned out to be more than just one more question!

[PandaMunich]

Since I receive my UK pension roughly on a monthly basis, do I have to calculate each single payment into Euro or can I use the total for the year and then convert this total sum to Euro. If I'm allowed to convert the total annual sum, is there an average conversion rate for the whole year or do I need to pick out a particular month (e.g. June) and use that rate?

Officially, you have to use the ECB daily exchange rate (scroll down to "Download a PDF with the exchange rates of a specific day"): https://www.ecb.europa.eu/stats/policy_ ... ex.en.html

But they do allow you to use the ECB average monthly exchange rate instead, which you can find here: https://www.bundesfinanzministerium.de/ ... kurse.html

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Just checking:
You do know that you have to declare the gross pension in Anlage AUS and the gross UK Winter Fuel Payment in Anlage SO, i.e. the amounts before British/Irish income tax was deducted.

[Russett]

PandaMunich wrote:

Just checking:
You do know that you have to declare the gross pension in Anlage AUS and the gross UK Winter Fuel Payment in Anlage SO, i.e. the amounts before British/Irish income tax was deducted.

Yes, I am aware of that. Thanks again.

[Bogies]

Hello Russet, hello Panda.
I thought I'd put my comments in this thread, as I presume Russet, that your Tax declaration was accepted without any problems, and Panda, you have been so kind in helping me on the old ToyTown.
I have finally received my tax return from 2022. As discussed, I took 82% from the amount paid in 2022 and put it on Anlage AUS in row 66.
Staat = Großbritannien.    Quelle= Dept for Works and Pensions. §22 EStG and the amount. 
The chap at the FA. said that this was wrong. He again took %82 from my amount, and placed it along with my German pension (Rente).  This increased my Zumutbare Eigenbelastung, reducing my Außergewöhnliche Belastungung, and causing my Tax (Einkommensteuer) to rise by €233.00 over that, worked out by WISO. As my UK pension was paid for a full year, first in 2023, I reckon I'm going to lose out on future tax returns as 2023 is the year when the tax-free part would be frozen.
How can I point the FA Beamter in the right direction? All help would be greatly appreciated. Thank you. PS. I didn't get a UK Winter Fuel Payment.

[PandaMunich]

I have finally received my tax return from 2022. As discussed, I took 82% from the amount paid in 2022 and put it on Anlage AUS in row 66.
Staat = Großbritannien.    Quelle= Dept for Works and Pensions. §22 EStG and the amount. 
The chap at the FA. said that this was wrong. He again took %82 from my amount, and placed it along with my German pension (Rente).  This increased my Zumutbare Eigenbelastung, reducing my Außergewöhnliche Belastungung, and causing my Tax (Einkommensteuer) to rise by €233.00 over that, worked out by WISO.

Sorry, but I don't understand what happened.

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Did the Finanzamt suddenly tax your UK social security pension outright?
If that is the case, you need to do an Einspruch immediately, pointing him to article 17 (2) of the double taxation agreement (DTA), which gives the taxation right on your UK social security pension (misleadingly called "State Pension" by the UK), to the UK: https://www.bundesfinanzministerium.de/ ... onFile&v=1

2024-04-20 20_25_01-Bundesgesetzblatt Teil 2 Nr. 33.jpg (83.3 KiB) Viewed 266 times

--> all that Germany can do, is use the taxable part of 82% of your UK social security pension as income subject to Progressionsvorbehalt, as is laid down in article 23 (1) d) DTA D/UK:

2024-04-20 20_25_21-Bundesgesetzblatt Teil 2 Nr. 33.jpg (38.49 KiB) Viewed 266 times

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Or is all that happen that your UK social security pension was listed as part of your "total yearly income" = "Gesamtbetrag der Einkünfte", which is defined here: https://www.steuertipps.de/lexikon/g/ge ... einkuenfte
And therefore your "extraordinary burden", i.e. your "außergewöhnliche Belastung" (usually dentist costs) did not have their full effect, since your "bearable burden"="zumutbare Belastung, which is a percentage of your total yearly income (for example, 5% of it, if you are single and your total yearly income is up to 15,340€) and which you are meant to pay out of your own pocket, rose because of the UK social security pension also being included in your total yearly income?
If that is what happened, you have nothing to complain about.

[Russett]

Bogies wrote:

I presume Russet, that your Tax declaration was accepted without any problems

I'm afraid I didn't really pay much attention as to how my UK and Irish pensions were treated for 2022, as my tax bill was +/- 0€, so I was very lazy about it and just packed it away.

@Panda

My tax software looks like:

Steuerfreie Einkünfte
Staat: Vereinigtes Königreich und Nordirland
Einkunftsquelle: gesetzliche Rente
Einkunftsart (Angaben in Paragraphen): § 22 EStG Sonstige Einkünfte

Would you consider it advisable to refer to the double taxation agreement in the section Einkunfsquelle, e.g.?

gesetzliche Rente nach DBA Artikel 17 (2)

[PandaMunich]

My tax software looks like:

Steuerfreie Einkünfte
Staat: Vereinigtes Königreich und Nordirland
Einkunftsquelle: gesetzliche Rente
Einkunftsart (Angaben in Paragraphen): § 22 EStG Sonstige Einkünfte

Would you consider it advisable to refer to the double taxation agreement in the section Einkunfsquelle, e.g.?

gesetzliche Rente nach DBA Artikel 17 (2)

No, what your tax software wrote is correct, social security pension income is "sonstige Einkünfte" and is defined in § 22 EStG, i.e. the source is § 22 EStG.

Article 17 (2) of the DBA D/UK (DBA = Doppelbesteuerungsabkommen = double taxation agreement) just tells us which country, in this case the UK, gets to tax that UK social security pension (= gesetzliche Rente).

[Bogies]

Hallo Panda,
Thank you for your swift reply.
Let's say I received €8000 for my UK Pension 2022, which was first paid to my German bank account in March 2022 in four weekly intervals.

I put on my tax return for 2022 row 66 on the form AUS 
Staat = Großbritannien.    Quelle= Dept for Works and Pensions. §22 EStG and the amount. €6560 (%82 from €8000)

The Finanzamt then added €5379 (%82 from €6560) to my German Pension, let's say €25,000 as income, making a total of €30,379,and taxed it saying that the UK have taken no tax, which they haven't, so Germany is entitled to tax me.

Because of this increase in income, my so-called reasonable burden was higher, leading to a higher taxation than that worked out by my WISO-Tax program.

So I guess ill have to let them know that I had already taken the %82, but surly the UK pension should come under the Progressionsvorbehalt

They have taken the €5379 from "Steuerfrei Einkünfte mit Progressionsvorbehalt" and added it to Sonstige Einkünfte, "Summe der zu besteuernden Renten und Leistungen". Again, many thanks for your help, it's sincerely appreciated.

[PandaMunich]

Let's say I received €8000 for my UK Pension 2022, which was first paid to my German bank account in March 2022 in four weekly intervals.

I put on my tax return for 2022 row 66 on the form AUS 
Staat = Großbritannien.    Quelle= Dept for Works and Pensions. §22 EStG and the amount. €6560 (%82 from €8000)

The Finanzamt then added €5379 (%82 from €6560) to my German Pension, let's say €25,000 as income, making a total of €30,379,and taxed it saying that the UK have taken no tax, which they haven't, so Germany is entitled to tax me.

Because of this increase in income, my so-called reasonable burden was higher, leading to a higher taxation than that worked out by my WISO-Tax program.

So I guess ill have to let them know that I had already taken the %82, but surly the UK pension should come under the Progressionsvorbehalt

They have taken the €5379 from "Steuerfrei Einkünfte mit Progressionsvorbehalt" and added it to Sonstige Einkünfte, "Summe der zu besteuernden Renten und Leistungen".

Send them this Einspruch letter immediately by registered letter, i.e. by Einschreiben.
If you don't want to send it on paper, you could send it by e-mail instead, to your local Finanzamt's e-mail address, just google the name of your Finanzamt and e-mail. Well, as long as you don't live in Baden-Württemberg, they don't do e-mails except DE-Mail.

Attach your UK tax returns 2021/22 and 2022/23 to the Einspruch, as proof that you have taxed your UK social security pension in the UK.
The fact that you didn't end up paying any UK income tax on it, because the UK also gives non-residents the personal tax-free allowance doesn't change that, your UK State Pension still "counts" as having been taxed by the UK.
Please note that your UK tax return should include the form R43, with which you apply for the personal allowance as a non-resident: https://assets.publishing.service.gov.u ... __2023.pdf
Instructions for form R43: https://assets.publishing.service.gov.u ... __2023.pdf

Since the UK has a self-assessment system, you will not have more than the filled in forms of the UK tax return - a Bescheid (which is usually what the Finanzamt is after) doesn't exist in self-assessment systems.
And after a few years of filing pointless UK tax returns, you will probably get a letter from HMRC to please not file in future years since no UK income tax ever results from them.

Also attach this BMF-Schreiben: https://www.bundesfinanzministerium.de/ ... onFile&v=3
and highlight this part on page 5 in it:

• 2.3 Besteuerung im Sinne der Subject-to-tax-Klausel
  
  Eine Besteuerung in dem Vertragsstaat, dem das Besteuerungsrecht nach dem DBA
  zugewiesen ist, liegt vor, soweit die Einkünfte in die steuerliche Bemessungsgrundlage
  einbezogen werden.
  Davon ist auch dann auszugehen, wenn eine Besteuerung infolge
  - von Freibeträgen,
  
  unterbleibt

Also attach a print-out of this translated article on the UK personal allowance for non-residents (if you send your Einspruch by e-mail, print it into a PDF file and attach it to the e-mail. The Finanzamt only accepts PDF files as attachments): https://taxscouts-com.translate.goog/th ... r_pto=wapp

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Betrifft: Steuernummer: write your Steuernummer, it will look like this 123/456/78901
Einspruch gegen ESt-Bescheid 2022

Sehr geehrte Damen und Herren,

hiermit lege ich Einspruch ein gegen den Einkommensteuer-Bescheid 2022.

Meine britische gesetzliche Rente darf nicht durch Deutschland besteuert werden, wie Sie es getan haben.
Gemäß Artikel 17 Absatz 2 DBA-Großbritannien hat Großbritannien das Besteuerungsrecht an ihr, sie unterliegt lediglich dem Progressionsvorbehalt gem. Artikel 23 Absatz 1 d) DBA-Großbritannien in Verbindung mit § 32b Absatz 1 Nr. 3 EStG.

Ich hatte in Anlage AUS im Bereich "Nach DBA steuerfreie Einkünfte / Progressionsvorbehalt" nur den steuerpflichtigen Anteil iHv 82% (gem. § 22 Nr. 1 Satz 3 a) aa) EStG, da das Jahr des Rentenbeginns 2022 war) meiner britischen gesetzlichen Bruttorente eingetragen, gem. H 32b "Ausländische Renteneinkünfte" EStH: https://esth.bundesfinanzministerium.de ... nhalt.html

• Ausländische Renteneinkünfte
  Ausländische Renteneinkünfte sind im Rahmen des Progressionsvorbehalts mit dem Besteuerungsanteil (§ 22 Nr. 1 Satz 3 Buchst. a Doppelbuchst. aa) und nicht mit dem Ertragsanteil zu berücksichtigen, wenn die Leistung der ausländischen Altersversorgung in ihrem Kerngehalt den gemeinsamen und typischen Merkmalen der inländischen Basisversorgung entspricht. Zu den wesentlichen Merkmalen der Basisversorgung gehört, dass die Renten erst bei Erreichen einer bestimmten Altersgrenze bzw. bei Erwerbsunfähigkeit gezahlt werden und als Entgeltersatzleistung der Lebensunterhaltssicherung dienen (BFH vom 14.07.2010 – BStBl II 2011 S. 628).

Antrag:
Bitte veranlagen Sie wie beantragt und erlassen Sie einen neuen Einkommensteuer-Bescheid 2022.

Begründung:
Sie haben meine britische gesetzliche Rente aufgrund der Subject-to-tax Klausel in Artikel 23 Absatz 1 Buchstabe a DBA-Großbritannien der Besteuerung in Deutschland unterworfen, da nach Ihrer Ansicht die Besteuerung der britischen gesetzlichen Rente in Großbritannien nicht erfolgt ist.

Dies ist nicht der Fall, meine britische gesetzliche Rente wurde durch Großbritannien besteuert, es ergab sich nur keine britische Einkommensteuer, da Großbritannien großzügigerweise auch Nichtansässigen den britischen Grundfreibetrag (= personal allowance) in Höhe von 12.570 GBP (ca. 14.500€) gewährt (im britischen Steuerjahr 2021/22: 12.500 GBP), siehe hier: https://www.gov.uk/tax-uk-income-live-a ... -allowance
und hier: https://www.gov.uk/income-tax-rates
Für das britische Steuerjahr 2021/22, siehe hier: https://www.gov.uk/government/publicati ... t-and-past

Wie Sie aus dem BMF-Schreiben vom 20.06.2013 "Anwendung von Subject-to-tax-, Remittance-base- und Switch-over-Klauseln nach den Doppelbesteuerungsabkommen unter Berücksichtigung des Urteils des BFH vom 17. Oktober 2007 - I R 96/06 - (BStBl 2008 II S. 953)" in Kapital 2.3 "Besteuerung im Sinne der Subject-to-tax-Klausel " ersehen können: https://www.bundesfinanzministerium.de/ ... onFile&v=3

• 2.3 Besteuerung im Sinne der Subject-to-tax-Klausel
  a) Eine Besteuerung in dem Vertragsstaat, dem das Besteuerungsrecht nach dem DBA
  zugewiesen ist, liegt vor, soweit die Einkünfte in die steuerliche Bemessungsgrundlage
  einbezogen werden.
  
  Davon ist auch dann auszugehen, wenn eine Besteuerung infolge
  - von Freibeträgen,
  ...
  unterbleibt

wurde meine britische gesetzliche Rente durch Großbritannien tatsächlich besteuert, obwohl wegen des britischen Grundfreibetrags keine britische Einkommensteuer zu zahlen ist.

Ich weise darauf hin, dass in Großbritannien das System der Selbstveranlagung besteht, also die Ermittlung der Steuerlast (in diesem Fall: 0 GBP) durch den Steuerpflichtigen, also durch mich selbst: https://de.wikipedia.org/wiki/Selbstveranlagung

• Unter Selbstveranlagung versteht man in Deutschland die Ermittlung der Steuerlast durch den Steuerpflichtigen. Die eingereichte Steuererklärung steht einem Steuerbescheid unter Vorbehalt der Nachprüfung gleich (§ 168 AO). In der Regel handelt es sich um Steueranmeldungen (mit Liste der selbst zu veranlagenden Steuern). Die Finanzverwaltung überprüft die eingereichten Steuererklärungen in maschinellem Verfahren unter Heranziehung von Risikomanagementsystemen. Eine weitere Möglichkeit der Überprüfung besteht in der Durchführung einer Außenprüfung durch die Finanzverwaltung.
  
  Situation in anderen Ländern
  Die Selbstveranlagung ist in den USA, Großbritannien, Italien, Kanada, Spanien, Polen, Tschechien, Ungarn und Irland üblich. Carsten Kühl, Finanzminister von Rheinland-Pfalz, führt aus: „Es ist doch bemerkenswert, dass die amerikanische Bundessteuerverwaltung mit etwa 90 Millionen Einkommensteuerpflichtigen mit weniger Personal auskommt als Deutschland mit zirka 30 Millionen Steuerpflichtigen.“

Das britische Steuerjahr geht vom 6. April bis zum 5. April des Folgejahres, ich reiche als Nachweis, dass ich die britische gesetzliche Rente 2022 versteuert habe, meine britischen Einkommensteuererklärungen für die britischen Steuerjahre 2021/22 und 2022/23 als Anlagen ein.

Mit freundlichen Grüßen
your signature (if you send the Einspruch by registered letter)
your_first_name your_surname

[Bogies]

Hello Panda, a thousand thanks. I have, in fact, never sent the R43 to the UK. As I understand, I will print out the R43 for 2022 to 5 April 2023, and send a copy of this to the Finanzamt, along with my Einspruch. Would this be my course of action?
Similarly, I would print the R43 for 2023 to 5 April 2024 when I send in the tax return for 2023.
You're a treasure. Many thanks.

[Bogies]

Hello Panda, just checked the R43. What do you think. Can I fill these out, and send them to the Finanzamt or is it all too late.? The question has been answered in your post.

[PandaMunich]

Thank you for the incredibly detailed answer, but now I'm lost. I have never done a tax return for my UK Pension, which I could send to the Finanzamt.

You were always supposed to do UK tax returns which you would send to HMRC, in which you declare the income for which the UK has the taxation rights, i.e. the UK social security pension, and if you also let a house/flat in the UK, the UK rental income resulting from that.

--> you now need to fill in the UK tax return forms starting with the UK tax year in which you first received your pension.
Since you talk about March 2022, that will be starting with the UK tax year 2021/22.
So we are talking about you now filling in and sending to the UK the tax forms for:

• UK tax return 2021/22

• UK tax return 2022/23

• UK tax return 2023/24

The form R43 is a UK tax form, so it is part of the UK tax return that you file at HMRC (from a quick google, it is is not necessary if you fill in a self-assessment tax return, but since you will be sending the Finanzamt an article translated into German that mentions the R43, put it in anyway, so that the Finanzamt sees it).

According to this page: https://www.gov.uk/tax-uk-income-live-abroad
you will need to fill in the following paper tax forms as your UK tax return:

1. Self Assessment tax return: https://www.gov.uk/government/publicati ... turn-sa100
2. SA109 form: https://www.gov.uk/government/publicati ... -etc-sa109
3. R43 form (so that the Finanzamt sees what it expects to see and HMRC won't mind if there is a redundant form in the package): https://www.gov.uk/guidance/claim-perso ... ive-abroad

But maybe someone who has actually filed such a UK tax return can chime in?

Before posting them to HMRC in the UK, make copies of these filled in paper UK tax returns, to send to the Finanzamt, as attachments to your Einspruch.

It is very important that your Einspruch reaches the Finanzamt within 1 month and 3 days of the date written on the Bescheid, or you can no longer get the Bescheid corrected.
So even if you do not have everything now, send the Einspruch letter/e-mail now and you can send them copies of your missing UK tax returns later on.

[Bogies]

Again, a thousand thanks. I'm sorry to keep you busy on a Sunday, you were faster than I was with your reply. I’ve got the idea now. The Bescheid came a couple of days ago in electronic form, so I expect the paper Bescheid will arrive next week, will get everything sorted for the FA. And get the other forms filled out for the UK. .
Have a good, rest Sunday. And thank you.

[PandaMunich]

The Bescheid came a couple of days ago in electronic form, so I expect the paper Bescheid will arrive next week,

If you got an electronic Bescheid, i.e. a PDF file that looks like the paper Bescheid: https://expertise.tax/wp-content/upload ... t-page.png
then that is all you get, i.e. there will be no paper Bescheid by post.

And the date written on that electronic Bescheid is the binding one, i.e. the one within a month and 3 days of which your Einspruch has to reach the Finanzamt.

[Bogies]

Hello Panda. The Bescheid arrived today, and it's exactly as you said. The Einspruch will go out tomorrow.
A thousand thanks.

[GaryC]

Just back from holiday and a bit jet-laggy and tired but thought I would add a few thoughts.

Under UK tax law you are required to notify HMRC of any new source of income but are only required to submit a self-assessment tax return if you receive a "Notice to complete a tax return" from HMRC. You can of course submit a tax return voluntarily though HMRC does not encourage that sort of action. As a non-resident who is entitled to the UK personal allowance you are technically required to make a claim but I am not sure how strict HMRC is on that issue if it is clear that the allowance is due. Actually, if I remember correctly, all taxpayers are technically required to claim the personal allowance annually, which would be a nightmare if imposed!

When you submit a tax return HMRC will provide a Tax Calculation based on that return (it contains similar information to a Bescheid in Germany) which has been accepted by the FA when we have sent them.

The German phrase "tatsächlich besteuert" in Article 23 is "effectively taxed" in the English text. This means that the income has been "subject to tax", i.e. the income in question is "taxable income" and the fact that allowances or reliefs available against income generally means that no tax is ultimately payable the income remains "subject to tax", i.e. "effectively taxed". From a UK tax perspective income is not "subject to tax", i.e. would not be effectively taxed, if it is "exempt" from UK tax in the way that ISA interest or a pension lump sum are tax-exempt. I vaguely recall writing something about this on the old TT forum and found some supporting case law for the "subject to tax" point. Maybe the fog will clear once the jetlag subsides, lol