How is a UK pension taxed when you live overseas?

Full answer

The taxation of UK pension income for people living overseas depends on two things: the type of pension and the double taxation agreement (DTA) between the UK and your country of residence. Types of UK pension: 1. State Pension: paid gross by DWP, but subject to UK income tax if you are within the UK tax system. If you have an NT (no tax) code, it is paid without deduction. 2. Private and occupational pensions (defined benefit and defined contribution): pension providers withhold income tax at source under PAYE unless HMRC issues an NT (no tax) or reduced tax code. 3. Government service pensions: pensions from the public sector (civil service, NHS, armed forces, teachers, police, fire service). These are almost universally taxable only in the UK under DTAs -- the overseas country cannot tax them. Role of Double Taxation Agreements (DTAs): The UK has over 130 DTAs. Many DTAs give exclusive taxing rights on pension income to the country of residence (i.e. the overseas country), meaning UK income tax should not be deducted by the UK pension payer. Common examples: - Spain: private pension income taxed only in Spain (with exceptions for government service pensions). - Australia: private pension income taxed only in Australia. - USA: UK pensions are generally taxable in the USA for US-resident recipients; the UK may also tax under the UK-US treaty's specific provisions -- this one is complex. - Ireland: pension income is taxable only in Ireland for Irish residents. - France: private occupational pension income from the UK is taxable in France, not the UK. How to apply for an NT code: If your DTA exempts your UK pension from UK tax, apply to HMRC for an NT (no tax) code using the appropriate form -- for most countries this is form FD9 for pensions (available on gov.uk), or for some countries a different claim form may be required. The pension provider then pays the pension gross (no UK tax deducted) and you pay tax in your country of residence under local rules. If no DTA exists (e.g. living in a country with no UK treaty): UK income tax is withheld at source on private pension income at the UK personal allowance and rate band levels. Non-residents are entitled to the UK Personal Allowance (GBP 12,570 for 2026/27) if they are a national of an EEA country, a UK national, or if the DTA so provides -- though post-Brexit some EU DTA provisions changed. Those outside these categories may not get the personal allowance and pay UK tax on the full pension from GBP 1. State Pension and overseas living: the UK State Pension is not 'uprated' (adjusted for annual increases) if you live in certain countries without an uprating agreement (e.g. Canada, Australia, New Zealand, South Africa). Check gov.uk's list of countries where the State Pension is frozen. Self Assessment: non-UK residents receiving UK pension income who need to reclaim UK tax or make additional payments must generally file a UK Self Assessment return (form SA100 with supplementary pages). Once an NT code is in place, the return may not be required. Always take advice from a cross-border tax specialist and check the specific DTA with your country of residence.

Try the calculator