Pension arrangements and your home in Bulgaria
A common concern of those retiring to a new home in Bulgaria is their pension. In particular, they worry about how - or even if - they can collect their UK pension once they move to their Bulgarian property. They also need to find out if the UK pension will be subject to tax when they are living in Bulgaria permanently.
The social security system in Bulgaria is in a period of transition prior to the country´s accession to the EU (scheduled for 2007/8). However, in June 2005, the average state pension for people living in Bulgaria was just 183.1Lv - about 60 GBP a month. Because the local pension is so low, income from a UK pension is much more important to people who retire to Bulgarian property, and it must be protected from taxation as much as possible.
Which pensions are liable to tax when you are living in Bulgaria?
If you are living in Bulgaria for more than 183 days a year, your worldwide income, including your pension, will be subject to taxation. Even tax-free lump sums in the UK become taxable for people who set up home in Bulgaria. This situation is not as grave as it may appear and can often be circumvented.
Many people ignore their pension planning until it is too late, and only realise the implications after they have settled into their Bulgarian property. Once they are living in Bulgaria they believe there is little they can do to alter their situation. There is actually a great deal that can be done by means of restructuring to significantly reduce the amount of your pension income liable to tax.
Get specialist advice so you can relax in your new home in Bulgaria
You need specialist tax and investment advice on pensions if you are to maximise the benefits before and after retirement. There are a number of companies listed in our service directory which offer UK and International Tax Advice. One expert offering advice to retired folk with Bulgarian property is Blevins Franks. Your liability to tax once you start living in Bulgaria could be hugely reduced with specialist advice. Expert advice is crucial if you are to maximise your entitlements and make the most of your new home in Bulgaria.
