What Happens When Drawing UK Pension As Expat Living Abroad

Published / Last Updated on 05/08/2020

You can still draw on UK pensions when living as an expat overseas.

Some but not all UK pension schemes can pay into an overseas bank account but most UK pensions require you to have a UK bank account.  If you do not have one, there are ways to open a UK bank account even when non-resident.

Taxation of your UK pension funds will depend upon what type of pension scheme you have and what the tax treaty is between the UK and the country that you are tax resident in.

Tax free lump sum

Some tax treaties will specify that any pension lump sum that would have been tax free in the UK, will still be paid out in the UK tax free and will remain tax free where you are tax resident other tax treaties may mean that even a tax free lump sum in the UK is taxable where you live.

Income, annuity or taxable drawdown payments

Most tax treaties will allow that you are only taxable in the country that you live in meaning that the UK will not tax you on the taxable income element and then you only pay tax where you are resident.  To do this, you will need to complete a HMRC Double Tax Individuals Form and this is then rubber stamped by the tax authorities where you live.  This form is then sent to HMRC and they will then either issue a tax refund of any tax that has been withheld in the UK or issue an NT (no tax) code to your pension scheme to allow the pension scheme to pay pension to you without deduction of UK taxes.

Non-Tax Treaty Countries

In most cases, HMRC will tax you as normal for taxable part of your pension and it is up to you to either offset that against tax where you live.  For countries where you already live tax free and there is no treaty, HMRC will usually tax you in UK as normal.

Government Pensions and State Pension Scheme

E.g. Civil Service, Armed Forces, State Pensions:  These, under all tax treaties tend to be taxed in the country where the pension is paid from and not where you are tax resident.

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