Many people dream of retiring abroad or travelling long term. If you’re thinking of retiring abroad, it’s important to understand how it might affect your pensions.
What’s in this guide
- Can I get my pension if I live abroad?
- Do I pay tax on my UK pension if I live or move abroad?
- Moving before you begin taking income from your pension
- Can I save into a UK pension plan if I live abroad?
- Do you qualify for tax relief?
- What happens to my State Pension when I move abroad?
- Returning to the UK
Can I get my pension if I live abroad?
Personal or workplace pensions can be paid to you wherever you live.
You’ll be entitled to any built-in annual increases in the same way as if you were living in the UK.
If you’re thinking of moving abroad, make sure you talk to your pension scheme or provider before you move.
Some providers might only be able to pay into a UK bank account.
Brexit changes
If you already live abroad, you might've been told your UK bank account is closing.
For help on the steps you can take if you are affected by this and the latest information, see our guide Pension and retirement changes after Brexit
Other providers might pay into an overseas bank account if you ask. Be aware that there might be extra charges to pay.
And bear in mind that your pension income will be paid in pounds sterling. This means it will be affected by fluctuations in exchange rates when you convert it to your local currency.
You need to be prepared for your income to rise and fall because of this.
If rates go against you, it can seriously affect how much you have to live on.
Need more information on pensions?
Call us free on 0800 011 3797 or use our webchatOpens in a new window. One of our pension specialists will be happy to answer your questions.
Our help is impartial and free to use, whether that’s online or over the phone.
Opening times: Monday to Friday, 9am to 5pm. Closed on bank holidays.
Do I pay tax on my UK pension if I live or move abroad?
If you live abroad, you’re likely to be classed as a non-UK resident and may have a complex tax situation.
You might have to pay UK tax on your pension income. This is because it’s classed as UK income. You might also have to pay tax on it in the country you live in.
If it has a double-taxation agreementOpens in a new window with the UK, you can claim tax relief in the UK to avoid being taxed twice. Find out more about tax if you move abroadOpens in a new window at GOV.UK.
Overseas tax laws might prevent you from taking any money from your pension tax free. This can affect which pension options are best for you.
For example, if you haven’t taken your tax-free cash lump sum from your pension before you move, you might be taxed on it as income in the country you live in.
If you're considering moving abroad or are already living abroad, it’s worth getting specialist cross-border regulated advice on your pension and how it's taxed. You can use our tool to find a retirement adviser, but you may need to do further research find a local specialist in your country of residence.
To find out more about overseas tax lawsOpens in a new window visit GOV.UK
Moving before you begin taking income from your pension
If you move abroad before you start to take any pension income, you have two options:
- Stop paying into your pension and take your money at a later date – from age 55 at the earliest (this is due to change to 57 in 2028).
- Continue paying into your pension. But be aware that the amount of tax relief on your contributions might be limited.
It’s important to ask for regular updates on your pension if they’re not provided automatically.
When you decide to start taking money from your pension, you generally have the same options as you would if you were living in the UK.
If your pension provider doesn’t offer the payment option you want
Some pension providers won’t allow an overseas resident to set up a new policy. This could limit your ability to shop around.
Transferring pensions when moving abroad
It might be possible to transfer your UK pensions to a pension arrangement overseas if the pension plan is a Qualifying Recognised Overseas Pension Scheme (QROPS).
To qualify as a QROPS, certain conditions must be met.
It’s important to get regulated financial advice from an expert on pensions and overseas transfers before deciding.
Find out more in our guide Moving your UK pension overseas
Can I save into a UK pension plan if I live abroad?
You can live abroad and save into a UK pension scheme. But there are limits to the tax relief you can claim on your contributions.
Living abroad, or working for an employer who is based overseas, means tax relief on contributions might be limited – or not available at all.
Do you qualify for tax relief?
Tax relief on your contributions is limited to whichever of these amounts is higher:
- your relevant UK earnings chargeable to UK income tax for that tax year; or
- the basic amount of £3,600 where relief at source is provided.
The total amount of tax relief you can benefit from is also limited by the Annual Allowance. Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay a tax charge.
To get tax relief on your contributions, you must have been a relevant UK individual for that tax year. You are a UK relevant individual if:
- you have relevant UK earnings chargeable to UK Income Tax for that tax year
- you’re resident in the UK, or
- you were resident in the UK in one of the previous five tax years and, at the time you were resident ,you became a member of a UK registered pension scheme, or
- you’re a Crown Servant – or a spouse/civil partner of a Crown Servant – and have earnings subject to UK tax.
Find out more in our guide Tax relief and your pension
What happens to my State Pension when I move abroad?
Claiming and receiving State Pension when abroad
You can claim and receive a UK State Pension while living overseas.
But Pension Credit stops when you move overseas permanently. This is a means-tested benefit, which can top up your weekly income.
When you move, you need to notify the International Pension Centre, their contact details are at GOV.UKOpens in a new window
If you’re from Northern Ireland, you need to notify the Northern Ireland Pension Centre, their contact details are at nidirectOpens in a new window
You also need to contact HMRC to make sure you pay the right amount of tax, their contact details are at GOV.UKOpens in a new window
Your State Pension can be paid to a UK bank or building society account, or to an overseas account in the local currency.
You’ll need the international bank account number (IBAN) and bank identification code (BIC) numbers if you have an overseas account.
You’ll be paid in the local currency. That could mean the amount you get may change due to exchange rates.
Just as in the UK, you can choose to delay or stop taking your State Pension for a time and get extra State Pension.
If you move to a European Economic Area country on or after 1 January 2021, your right to some UK benefits might change. For the latest information, please go to GOV.UKOpens in a new window
Find out more about claiming State Pensions and benefits if you live or have lived abroad, at GOV.UKOpens in a new window
If you’re from Northern Ireland, find out more about your State Pension at nidirectOpens in a new window
Find out about your State Pension in our guide State Pension: an overview
Increases and tax once in payment
If you live abroad, you’re likely to be classed as a non-UK resident. This means you don’t usually pay UK tax on your State Pension.
But you might pay tax in the country you live.
If you live in the UK, your State Pension usually rises each year. But if you move overseas, you’re only entitled to an annual increase if you live in:
- Gibraltar or Switzerland
- A European Economic Area country
- A country that has a social security agreement with the UK.
If you move to a European Economic Area country on or after 1 January 2021, your right to some UK benefits may change. For the latest information, visit GOV.UKOpens in a new window
For a list of European Economic Area countriesOpens in a new window go to GOV.UK
If you move back to the UK, you will receive annual increases.
Impact before State Pension
You will not build up an entitlement to a UK State Pension if you live and work abroad and pay into another country’s social security system. But you can count relevant social security contributions made in EU countries towards meeting the qualifying conditions for a UK State Pension if you pay into the social security system of:
- a country in the European Economic Area
- Switzerland
- a country that has a social security agreement with the UK.
Example
- You worked in the UK for 5 years and built up 5 years of qualifying years on your National Insurance record by the time you reach State Pension age.
- You also worked in an EEA country for 20 years and paid contributions to that country’s state pension.
- You will meet the minimum qualifying number of years and be entitled to receive the new State Pension because of the time you worked overseas. But the amount you will receive under the new State Pension will only be based on the 5 years of National Insurance contributions you made in the UK.
If you move to a European Economic Area country on or after 1 January 2021, your right to some UK benefits may changeOpens in a new window. For the latest information please see the GOV.UK website.
For a list of European Economic Area countriesOpens in a new window go to GOV.UK
You might also be able to claim a State Pension from the country you’re living in if you’re paying into its state pension scheme.
Returning to the UK
If you return to the UK, you need to notify the International Pension Centre, their contact details are at GOV.UKOpens in a new window
If you’re from Northern Ireland, you need to notify the Northern Ireland Pension Centre, their contact details are at nidirectOpens in a new window
You also need to contact HMRC to make sure you pay the right amount of tax, their contact details are at GOV.UKOpens in a new window
The HMRC Residency helpline is 0300 200 3300 in the UK. Or call +44 135 535 9022 from outside the UK.
It’s also important that you notify your workplace or personal pension providers.
If your State Pension hasn’t been rising while you’ve been abroad and you remain in the UK for more than six months, it will be increased to the current rate. It will then start increasing again each year.
If you live abroad, you’re likely to be classed as a non-UK resident.
But you might have to pay UK tax on your pension income. This is because it’s classed as UK income. You might also have to pay tax on it in the country you live in.
If it has a double-taxation agreement with the UK, you can claim tax relief in the UK to avoid being taxed twice.
