Welcome to tax bytes for expats. The top tax tips

you want to know as an expat, the podcast is here to help

answer the common queries and concerns expats have when moving to

or from Ireland. Complex taxes explained

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money and stress hi

everyone, welcome. To this episode of Tax

Bites for expats. We had a little bit of a hiatus over the

summer, but we're back with a bang and today we're going to talk with

Mel Morgan of

ukstatepensionabroad.com. mel is one

part of a husband and wife team which have extensive business, banking

and compliance experience behind them. His wife Martha is a

qualified financial advisor with the Institute of Bankers since

2007. She's many years financial service experience across

both private and retail banking. Mel is a commercial and marketing

professional with a passion for excellent customer experience

developed in luxury goods and the sport businesses. He holds a BCom

and MBS in marketing and financial management from the University of

College, Galway and UCD. The Morgans have a simple goal which is to

help as many people as possible avail of what is rightfully theirs to

build for retirement. And to date they have assisted hundreds of

people from around the world in achieving a favorable beneficial

result from the Department of Work and Pensions and UK

revenue via their website ukstatepensionabroad.com.

but I'm not going to spend any more time telling you about him. I'm going

to let him speak for himself and welcome him to this episode.

Mel, thank you so much for joining us. I hope my intro did you justice.

You and Martha have a very interesting background. I'd like you

to tell our listeners a little bit about how you got into this line of

work. Yes, both Martha and I worked in the

UK in the late nineties

for five and a half years and

we moved back in early 2000 and continues to work here

in Ireland and different areas of expertise. But

it was really at the start of lockdown

in 2020. I came across my old national insurance

card from the UK and there was a number in the back so I dialed

it and I said look, I wonder if there are any benefits? And

the girl at the other end eventually answered. She said how many

years were you there? I said five and a half. Oh, I'm terribly sorry. You

need ten to get any benefit. So I almost hung the phone up and

she whispered in my ear, she said but you can buy back 18

years. I said tell me more and that's what started it.

I discovered that I could buy back 18 years of

uk state benefit, state pension benefit for

less than 3000 pounds, and so could my wife.

So we both invested in that and we continued to

pay class two, which is the less expensive version

of this, until we hit our retirement age. So in total, by the time we

hit our retirement, we will have paid probably 7000

pounds in total. But that will mean that each of us will

get approximately ten to 11,000 pounds a

year. So that's somewhere between 20 and 22,000 pounds

a year in uk state pension on our

retirement between us. And that's in addition to our irish

state pension benefit, even for the same years, because they're treated as

AVC's. So firstly, that's fantastic, and

I can only imagine how happy you were to take that call.

I think for people maybe who are listening to this and aren't familiar with

the way that the social insurance systems work

generally, what you've alluded to there is really interesting that, you know, both the

UK and Ireland pay state pensions with reference

to essentially what you've put into the system. And

your business ultimately is allowing people to put more

into the system on a voluntary basis than they otherwise may have because of

their work record. So I suppose today, people listening who have ever

worked in the UK are people who may be interested in this topic.

Is that fair to say that you have to have worked in the UK to

be in the cohort? Is that a criteria that must have been met? Yes,

it is. It is. Their official line is that you need to

have three years consecutive working time in the

United Kingdom, be that anywhere in the United Kingdom, including Northern Ireland.

Is there a time limit for that since a certain date or just at all?

No, no, there's no time limit. There are time limits in terms of the age

of the people, and we predominantly deal with people who are pre retirement age, which

is age 65 and under. The root is a little bit different from

people who are 66 plus. It's quite a bit

different. Broadly speaking, if men born

before 1951 April and women born before

1953 April, they have no entitlement to the benefit because they are

captured in the old UK state pitch. But generally,

to answer your question, there is no real time limit. You could have worked there

in the seventies, eighties, nineties, two thousands and

2010s. It's amazing, isn't it? So

tell us a little bit about the people that you are working

with or the process. What does the process

look like? If somebody's listening to this and they're just not sure

if maybe they even fall into the category. What does it look like to kind

of go through with this? Technically, there are two elements

of the UK government you need to deal with. It is a

requirement, it's not a hard requirement, but it's a requirement of UK revenue that you

get estate, pension, forecast from the Department of Work and

Pensions. So that's one element, and the other is the full application to

UK revenue to HMRC. And the full

application, it's very simple, but on too

strangely complex. For instance, the main central

form is only a two page form, but the leaflet that goes

with it online runs at 37 pages. So

I see a lot of people. You can do this yourself, of course. I see

a lot of people do this, but they don't know what that they need to

send an appendix with it. They don't understand

that the way you answer certain questions will determine whether you're

in either of the two classifications. Let me explain the

classifications. Class two, which is what we've been

very successful, we're getting 90% plus of the people that we

deal with through class two, which is the least expensive option,

which is paying back every year, buying back for

165 pounds a year. So that's where the

3000 pounds for the 18 years come from. But if you

fail to convince the people in UK

revenue that you are entitled at last to, they will

assess you at class three, which for the same period of time is closer

to 15,000 pounds, to buy back those years than three.

Now, there are a plethora of reasons as to why they would

disallow you. So I suppose having somebody help you

navigate it sounds helpful, because even though

the process is relatively straightforward, it sounds like there are various

conditions that need to be considered along the way. Yes.

And simply put, if somebody's.

The key elements are you have to leave the UK pretty

much immediately after you finish your employment. And from

2006 until now, some or all of

those years, you've had to be what they call insurably employed

overseas, in the irish terms, that would be paying posi

in various other jurisdictions. It's a really, when you're

employed and paying tax and insurance in that country. And

this is a very important point, you've alluded to it, it's

actually done in isolation, to considering whether or not you are

entitled to a pension in that foreign jurisdiction. So taking your

example, or any example for somebody who has worked in the UK

previously, you can get a full irish state pension and a full uk state

pension. And it sounds like they're not impacted by each other.

That's very possible for the people that you have helped. Yeah. I

can't speak to the various jurisdictions around the world because I

don't know the rules in relation to all the pension

arrangements. But I know we started our business

with other irish people and it took me a long time to get

the Department of Social Protection in Ireland

to give me something in writing to confirm

that buying your uk state pension

years, that it wouldn't impact your contributory

PRSI social insurance pension in Ireland, even though it's for the

same year. The first question my wife asked me, she said, look, you can't pay

three grand to the UK government if all you're doing is

substituting those years for the years you're going to get in Ireland and you end

up with no net benefit, but it's treated as an

additional voluntary contribution. So it's

impossible to get both. If you meet the conditions, you can voluntarily pay

into the UK system. And did the Department of Social Protection, were they

happy that it didn't impact the entitlement here? I mean, in theory, if you've

put into both systems and you're not having a means tested

pension, you'd imagine they're in isolation. They are in

isolation, yeah. That's fantastic. There are means by which

you can combine the two, but I don't get into that.

In some respects, it might, with the benefit that you can get on the uk

side is probably in some respects better to keep it simple. I

would agree. So I suppose on that point, we often have questions from

clients there and where you have a partial PRSI

record in Ireland, so in other words, you don't have full entitlement, and you

may also have a partial one in the UK, maybe, where somebody

doesn't have the means to voluntarily contribute. The protocol that was

signed into force when Brexit happened essentially means that

there is an aggregation of contributions, so that

normally, if you wouldn't make it past the post in Ireland, because you don't, for

example, have 520 contributions, for example, they will

look at the number you've got in the UK and pay you a partial irish

pension and a partial UK one. That's a slightly different

scenario. And that can happen globally, I suppose. Well, with

Ireland and other international countries such as the US, we do have

reciprocal agreements, but you hit on a very valid point. And one thing

that I think is also interesting, and I don't know if this comes up often,

I suppose, particularly because of Martha's line of work previously, it'll be something that

you're very aware of is, you know, the value of having an

annuity. Essentially a PRSI or a uk state

contribution or state pension is like an annuity. It's x amount

of money that you have for life. And they are, as I understand it, quite

expensive in the market currently to buy on the open market.

The value in actually being able to purchase this, it's quite

good value for money is basically what I'm trying to say. Is that something that

your clients tend to kind of understand

or see? Yes, it is. And sometimes I

have a difficulty in terms of if somebody gets the class two

designation, they're very quick and rightly so, to pay the

3000 pounds and buy that back, because what you're buying is you're buying

18 years, which effectively is

18 years of a pension. I don't have the numbers in front of me, but

I'm pretty close. Even if you had three plus

18 as 21, that'll get you about current value, about

7.58 thousand pounds a year. So effectively, it's a six month payback, not

accounting for any tax. Now, where I have an issue

sometimes is for people who, for whatever reason,

they are denying class two and they are faced with class

three. It seems awfully expensive when compared to

class two, but it's still probably some of the best

value you can get to buy an annuity. But it's very difficult for them to

see that when they're coming away from, instead of paying 165 pounds

a year to buy a year back, they're paying 825. But it's probably

about a two and a half year payback. But equally, I think if they also

walked into their local financial planner and

tried to buy an annuity of that value, they would get a very,

very big shock as to what it would actually cost them, even

if they were doing it via a pension. But I can understand, I can understand

how people who think they might be entitled to class two

if in roughly the eight to 10% of people that I deal

with who don't get class two, they say, oh my God, it's very expensive, but

it's not. And it takes me a while to actually get them to

understand that. It's still remarkable investment.

What does working with your team

look like? Talk us through, because there's going to be a cohort of people here

who may have questions, but there also will be people listening, thinking, this is

interesting. I have family members, for example,

who I think need your services. What does it look like working with. You

effectively, just in terms of the processes. It's pretty much all done

online. Happily. We set up a system at the outset

that gets us into a situation where we're not dealing

with amounts of paper that we would otherwise deal with. So

pretty much everything we do is operated on

our platform. We ask people to submit the information into

our platform and that allows us to pre populate all the forms that are

required. It allows me to interrogate every case.

Oh, Martha. And to then

check what I know to be the critical aspects

and any difficulties that might be in the

application, to check to see if they've been filled out

correctly or if we can adjust something to

make it more palatable for the HMRC. And

then everything is done pretty much by docusign

requiring e signatures. Then I require a

again online, some appendices from everybody

to get their work record from

2006 or whenever they left the UK to date. Sometimes

I'll ask them if they can get, in the irish context, a PRSI

year by year statement, which is easy to get online,

to go with that as a convincer. Effectively,

for the international caseworkers, our objective all the

time is to make it easy for the international caseworkers in Newcastle upon

Tynee to tick the box and say class two. Yes.

Yeah, we know how to optimize the applications for people. That's

the key to it. Yeah. Experience counts for a lot with these things,

doesn't it? When you've seen things come across your

desk. Do people go to the website if they want to initiate

an application? Yes, it's all done through the website. And the

website is the fee. Our fee is

550 euro, which includes VAT. And that's unashamedly taken

at the outset. And that allows us to just go

ahead and process everything in a very fast

manner. Stephanie, one of the things that, particularly in

Ireland, has changed in the past three months, there

was a few radio programs that scared

the life out of everybody in Ireland about this thing coming to a shuddering

halt. This entire opportunity finishes on the 5 April

2025. But some broadcasters

have looked at this and they said, well, HMRC are taking about

eight to ten months to come back to people, which is true. And theres seven

months left. So its almost too late. And thats leading people at

the present moment in time to throw their hands up and say, look, im not

going to bother with this because im too late. That is not true. Okay, theres

still time. The applications are open until the fifth, but its going to concertina

together because as you get close to the deadline, they'll accept the

applications and when they get to assess them, they'll give eight

weeks from the date of the statement to make the payment. Okay. So it's still

open, even though it is closing quite soon. But the

deadline is the deadline for applications. Okay? So

therefore, if you're listening to this in advance of

April 2025, you still have time to act,

and you should do so because it does sound like once the window

closes, it is shutting. I know there has been

extensions, but it doesn't appear like there's going to be any

further. And this is obviously at quite a large cost to the

exchequer in the UK, so it's not going to be. I've been

asked to estimate that. It would be nice to estimate what it costs,

but I also think we're all living longer.

We are in a cost of living crisis, really. This

does require the ability to have some cash

immediately, which not everybody has. But if they do, it

is definitely worth considering doing this because it is a, to some

extent, it's an opportunity that's not going to be around forever and it's definitely worth

considering. Mel, thank you so much for stepping us through. I feel like we could

probably spend a lot longer talking about this issue

generally, but I think even what you've explained has been massively helpful

and should really incentivize people to visit the

website ukstatepensionabroad.com where they

can initiate an application and I assume

can converse with your team directly if they

have questions about the process from there on in. Yes. Fantastic.

Well, one thing I'd just like to say, steph, just that although applications are open

until the 5 April technically, because the fact that

everything is going to concentrate together at the very end, we

will probably close applications sometime in early

November because we're a two person team. If we have hundreds

of applications going in and coming out and have a sensitive

timeline on them within eight week to make a payment, we need

to make sure we manage that process correctly for people at the very end. Okay.

And it's going to get very tight. And what we do actually is,

and you asked about the process, is when people get their statement,

you have to be very careful in dealing with HMRC. As you know, they have

about 45 million taxpayers and if you're paying

them the money, it has to be done in a certain way.

And there are very, very strict parameters about that and also

very strict protocols about looking for

assurance from them by way of receipts,

specifics to make sure that your account has

been updated. And I.

It just means that we're probably going to have to shut up shop for new

applications in about eight weeks time. Okay. Because

otherwise it just won't work for us at the end. There'll be too many people

together at the same time. Well, it's been able to, you know, if you've made

a commitment and charge people a fee, you're basically saying we want to be able

to honor our existing clients and the. Yes, okay, that's really interesting.

Well, we'll prioritize release of this podcast

so that our listeners have as much time as possible. But look, thank you so

much for coming on. I know you're not currently in Ireland at the moment,

and it was a stretch to kind of find a time that worked to record

this, but it's been absolutely fantastic to talk to you more about it and

to learn a bit more. So thank you for joining us, and

anybody who wants to go to the website

ukstatepensionabroad.com will find more information in the show notes.

Thanks for joining us now. Thanks very much. Steph. Thank you.

Thanks for listening to tax bites for expats. Please do leave a

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remember to take professional tax advice specific to your

personal circumstances before acting or refraining from action

in connection with the matters dealt with in this series. The material

in this podcast is intended to give general guidance only.