Foreign Pension Income UK Tax Reporting 2026 -- How to Declare

Receiving a pension from another country -- whether a state pension, an occupational scheme, or a personal pension -- is increasingly common in the UK. More than four million people born outside the UK now live here, and many have pension entitlements built up in their country of origin. UK nationals who worked abroad before returning home face the same issue. This guide explains how foreign pension income is taxed in the UK in 2026/27 and how to report it correctly.

The Basic Rule: Worldwide Income Taxation

UK resident individuals are subject to UK income tax on their worldwide income. This principle, known as the arising basis, means that any pension income you are entitled to -- wherever in the world the pension originates -- is brought into charge to UK income tax in the year it arises (even if you do not immediately receive it into a UK bank account).

The only exception is for non-domiciled individuals who have claimed the remittance basis (now the Foreign Income and Gains regime following the 2025 reforms), under which only income remitted to the UK is taxable. However, the remittance basis has been substantially restricted and the new FIG regime applies only to eligible new UK arrivals in their first four years. For most UK residents, the arising basis applies.

Types of Foreign Pension Income

Foreign State Pensions

Many countries operate state pension systems similar to the UK State Pension. If you have worked in another country and contributed to its state pension system, you may be entitled to a state pension from that country in retirement.

Common examples include:

• Irish State Pension (Contributory)
• German Gesetzliche Rentenversicherung (statutory pension)
• US Social Security benefits
• Canadian Old Age Security or Canada Pension Plan
• Australian Age Pension
• French pension de retraite

All of these are potentially taxable in the UK, subject to treaty provisions.

Foreign Occupational (Employer) Pensions

If you worked for a company in another country and built up occupational pension entitlements, those pension payments received in retirement are foreign pension income. This includes both defined benefit (final salary) schemes and defined contribution schemes.

Foreign Personal Pensions

Contributions you made to a personal pension plan in another country -- such as a 401(k) or IRA in the US, or a Superannuation fund in Australia -- generate retirement income that must be considered for UK tax purposes.

QROPS (Qualifying Recognised Overseas Pension Schemes)

If you transferred a UK pension to an overseas scheme before emigrating, and later return to the UK, the payments from that scheme may be subject to UK tax. The rules are highly complex and fall outside the scope of this general guide.

Double Tax Treaties and Pension Income

The UK has double tax treaties with over 130 countries. These treaties prevent double taxation by allocating the right to tax pension income between the UK and the source country.

The allocation of taxing rights for pensions varies significantly between treaties. The three main approaches are:

Residence-Only Taxation

Under some treaties, pension income is taxable only in the country of residence (the UK). The source country has no right to tax it. This means you pay UK tax on the pension and do not pay any tax in the source country.

Example: Under the UK-Ireland treaty, most Irish State Pension income received by a UK resident is taxable only in the UK (the country of residence). Ireland should not deduct tax.

If you are receiving an Irish State Pension with Irish PAYE deducted, you should claim a refund from the Irish Revenue Commissioners and report the gross amount to HMRC.

Source-Only Taxation

Some treaties (less common for general pensions) give the source country exclusive taxing rights. This means the source country taxes the pension and the UK exempts it from UK tax.

Government pensions (pensions paid by a foreign government to its former civil servants, military, or public sector employees) are commonly taxed only in the paying state under the government service article of most UK treaties.

Example: A UK resident receiving a German civil service pension -- paid by the German government for previous public service -- may be taxed only in Germany under the government services article of the UK-Germany treaty. The UK exempts this from UK tax but may use it to determine the rate applicable to other income (exemption with progression).

Shared Taxing Rights

Some treaties allow both countries to tax the same pension. In this case, the UK taxes the full amount but gives a credit for the foreign tax paid, limited to the UK tax on the same income.

US Social Security -- A Special Case

US Social Security benefits received by UK residents are specifically addressed in the UK-US Double Tax Convention (2001). Under Article 17, US Social Security benefits paid to a UK resident are taxable only in the UK.

However, the US also imposes a withholding tax on Social Security payments to non-resident aliens (including UK residents). This creates a conflict that the treaty resolves: UK residents should be exempt from US withholding tax on Social Security payments and should declare the full gross amount in the UK.

In practice, UK residents often have US withholding tax deducted. You should file a US claim for exemption (Form W-8BEN) with the Social Security Administration to stop future withholding, and claim a refund for past withholding. In the UK, you report the gross Social Security income on SA106.

How to Report: SA106 Foreign Income Pages

Foreign pension income is reported on the SA106 supplementary pages attached to your SA100 Self Assessment return.

The key boxes for foreign pension income are:

Box 6 -- Overseas pensions, social security benefits and royalties etc.: Enter the total of all foreign pension income received in the year, converted to GBP at the exchange rate for the date of receipt (or a HMRC-approved average rate for the year).

Box 7 -- Amount of foreign tax paid: Enter the total foreign tax deducted from the pension at source, converted to GBP.

Box 8 -- Amount eligible for UK tax credit relief: Usually the same as Box 7 unless you are not entitled to credit relief on some or all of the foreign tax.

You will also need to complete the foreign tax credit relief calculation on a separate page to determine the actual credit allowed.

Converting Foreign Pension to GBP

You must convert all foreign currency amounts to GBP. HMRC accepts:

• The exchange rate on the date of receipt.
• HMRC published average exchange rates for the tax year (available on gov.uk).
• Your bank's actual exchange rate if you convert the money when received.

Using consistent exchange rate methods across all income and expenses is good practice.

Worked Example: German State Pension

Klaus moved to the UK from Germany in 2018 and has been UK-resident since. He retired in 2025 and now receives:

• UK State Pension: GBP 241.30 per week (GBP 12,548 per year).
• German statutory pension: EUR 800 per month (EUR 9,600 per year).
• UK private pension: GBP 8,000 per year.

Total income before tax (assuming EUR/GBP rate of 0.86): GBP 12,548 + (GBP 8,256 German pension) + GBP 8,000 = GBP 28,804.

Under the UK-Germany treaty, the German statutory pension (from the state social security system, not a government service pension) is taxable in the UK under the residence principle. Germany may also impose some tax, which would then be creditable against UK tax.

UK tax calculation:

• Taxable income: GBP 28,804 - GBP 12,570 (personal allowance) = GBP 16,234.
• UK income tax at 20%: GBP 3,247.

If Germany has deducted EUR 400 (approximately GBP 344) in withholding tax from the pension:

• UK tax attributable to German pension: GBP 8,256 / GBP 28,804 x GBP 3,247 = GBP 931.
• Credit: GBP 344 (German tax cannot exceed UK tax on same income, and GBP 344 is less than GBP 931).
• Net UK tax: GBP 3,247 - GBP 344 = GBP 2,903.

Klaus reports the German pension on SA106 and claims the credit. His total tax burden is GBP 3,247 (UK share GBP 2,903 plus German share GBP 344), rather than GBP 3,247 + GBP 344 = GBP 3,591 if there were no relief.

Worked Example: Irish State Pension

Mary was born in Ireland, worked there for 30 years, and moved to the UK in 2010. She now receives:

• UK State Pension: GBP 12,548 (full new State Pension).
• Irish Contributory State Pension: EUR 14,000 per year (approximately GBP 12,040).
• Small UK occupational pension: GBP 5,000.

Total income: GBP 12,548 + GBP 12,040 + GBP 5,000 = GBP 29,588.

Under the UK-Ireland treaty, Irish state pension income of a UK resident is taxable only in the UK. Ireland should not apply PAYE to the payment. If it does, Mary can claim a refund from Revenue Ireland.

UK tax on GBP 29,588 - GBP 12,570 (personal allowance) = GBP 17,018. UK income tax at 20%: GBP 3,404.

Mary reports the Irish pension on SA106 and no foreign tax credit is needed (no Irish tax should have been deducted). She pays GBP 3,404 UK income tax in total.

Pension Lump Sums from Overseas Schemes

Some overseas pension schemes allow or require a lump sum payment at retirement rather than (or in addition to) a regular income. The UK tax treatment of foreign pension lump sums depends on:

• Whether any of the pension saving occurred while you were UK-resident (which would mean it falls under the UK's registered pension rules and lifetime allowance provisions).
• The treaty provisions in the source country.

In general, lump sums from overseas schemes that were built up while you were non-UK-resident may have different tax treatment. Specialist advice is essential for significant lump sums.

Australian Superannuation

Australian Superannuation (Super) is a particular area of complexity. Superannuation is a mandatory defined contribution pension. UK residents who lived in Australia and built up Super entitlements may be able to access that money from age 60 (or from preservation age if they have permanently retired).

Super payments to UK residents are generally:

• Taxable in Australia at up to 15% (or 0% for those over 60 drawing from a taxed element), and
• Also potentially taxable in the UK under the UK-Australia treaty.

The UK-Australia double tax treaty (signed 2003) allocates taxing rights for Super payments. Australian Super payments are generally taxable only in Australia when paid as an income stream. Lump sum withdrawals from Super have more complex treaty positions. UK residents with significant Australian Super should take specialist advice before accessing their funds.

Common Errors to Avoid

Not declaring foreign pensions at all: HMRC has data-sharing arrangements with many countries and access to international banking data. Undeclared foreign income is a compliance risk.

Reporting only the net amount after foreign withholding: You must report the gross amount and then claim credit for foreign tax. Reporting only the net understates your income.

Using an incorrect exchange rate: Use the rate on the date of receipt or HMRC's published average rates. Do not guess or use a rate from a different period.

Assuming all government pensions are treated the same: A German civil service pension (government service article) is treated differently from the German state social security pension. Check the treaty article that applies.

Forgetting to stop foreign withholding: If the treaty says the UK has sole taxing rights, the source country should not withhold. File the appropriate claim for exemption to avoid unnecessary complexity.

Conclusion

Foreign pension income is a real and growing issue for UK taxpayers. Whether you receive a state pension from Ireland, Germany, the US, or Australia, a government pension from a previous employer abroad, or income from a foreign occupational scheme, the income is almost certainly taxable in the UK. The double tax treaty between the UK and the source country will determine whether you also owe tax there, and whether you can claim a credit. Reporting correctly on SA106 is essential -- the penalties for late or incorrect returns apply equally to foreign income as to UK income.