Leaving the UK is one of the most significant events for your savings. Your ISA retains its UK tax-free status but you cannot add new money once abroad. Your UK pension can receive contributions of up to GBP 3,600 gross for the first five years of non-residence, but tax relief is restricted after that. Double tax treaties determine whether the UK or your new country taxes pension income. QROPS offers a transfer route for long-term expats. Here is the complete 2026/27 guide for UK expatriates navigating ISA and pension decisions before and after departure.
ISA Rules for Non-UK Residents
The ISA annual subscription limit for 2026/27 is GBP 20,000. This applies only to UK residents. From the moment you become non-UK resident, you cannot make any new contributions to an ISA. This is an absolute prohibition -- even a small subscription while non-resident invalidates the ISA subscription for that tax year.
What stays the same: your existing ISA funds remain in the ISA and continue to grow and generate income completely free of UK income tax and CGT. The ISA is not closed and does not lose its UK tax-exempt status simply because you leave. The wrapper remains intact indefinitely -- you just cannot put new money in.
Overseas taxation is a separate matter. Many countries treat UK ISAs as standard investment accounts and tax income and gains accordingly. The US is the most severe case: a UK ISA held by a US person may be classified as a Passive Foreign Investment Company (PFIC) if it holds funds rather than individual shares, triggering punitive mark-to-market or excess distribution tax treatment. Before moving to any country, obtain local tax advice about how the UK ISA will be treated under that country\'s domestic rules.
On returning to UK residence, you can begin subscribing to the ISA again from the next full tax year of UK residence. The existing balance is immediately available for new investments within the ISA wrapper.
UK Pension Contributions While Abroad: The Five-Year Rule
HMRC\'s rules on pension contributions for non-residents allow an individual to contribute to a UK registered pension scheme and receive basic rate tax relief for the first five tax years of non-residence, even with no UK earnings. The limit is the greater of (a) 100% of UK earnings in the tax year, or (b) GBP 3,600 gross. For someone with no UK income, the effective limit is GBP 3,600 gross (GBP 2,880 net contribution plus GBP 720 relief claimed by the provider).
After five complete tax years of non-UK residence with no UK earnings, tax relief on pension contributions stops. Contributions without relief can still be made but there is no UK tax advantage to doing so. If you have UK earnings at any point -- rental income, part-time UK employment -- you can contribute and receive relief up to 100% of those UK earnings, subject to the Annual Allowance of GBP 60,000 in 2026/27, regardless of how long you have been abroad.
QROPS: Transferring Your UK Pension Overseas
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a foreign pension arrangement approved by HMRC to receive transfers from UK registered pension schemes without triggering an immediate tax charge. QROPS can be useful for expats who plan to retire abroad and want their pension in the same jurisdiction as their retirement.
Since March 2017, an Overseas Transfer Charge (OTC) of 25% applies to most QROPS transfers unless one of two conditions is met: (a) the QROPS is in the same country as the member at the time of transfer, or (b) both the member and the QROPS are in the EEA. For a UK expat in Australia transferring to an Australian QROPS, the OTC is avoided. For a UK expat in Australia transferring to a QROPS in Malta, the OTC applies at 25% of the transfer value.
QROPS transfers are irreversible. Given this, QROPS is appropriate only for expats with high confidence in their long-term non-UK residency plans. For those who may return to the UK within five to ten years, maintaining the UK pension and drawing it in retirement is often simpler and less costly.
Double Tax Treaties and Pension Income
For expat pension planning, the most important question is: in which country is UK pension income taxable once you are non-resident? The answer depends on the specific double tax treaty between the UK and your country of residence. The UK has treaties with over 130 countries covering pension income. Most treaties allocate taxing rights to either the source country (UK) or the residence country, though the exact provisions differ.
Under the UK-USA treaty, US-resident recipients of UK pension income are taxed in the US. Under the UK-Australia treaty, UK pensions paid to Australian residents are taxable in Australia. Where a treaty exempts pension income from UK tax, apply to HMRC for an NT (no tax) code using form DT-Individual. Without an NT code, UK pension providers deduct PAYE at the basic rate by default. You can reclaim via a self-assessment return but the NT code avoids the cash-flow inconvenience.
Side-by-Side Comparison
Feature
ISA (non-resident)
UK Pension (non-resident)
Can you add new money while abroad?
No -- subscriptions prohibited for non-residents
GBP 3,600 gross per year for first 5 years; UK earnings needed thereafter
UK tax on income/gains while abroad
Zero UK tax -- ISA wrapper preserved
Growth sheltered within pension; UK tax on drawdown
Overseas country taxation
May be taxed as regular account; US PFIC risk
Drawdown taxed per double tax treaty; contributions may not be deductible abroad
Tax relief on contributions
N/A -- cannot contribute
20% basic rate on GBP 3,600 gross; stops after 5 years of non-residence
Double tax treaty interaction
Treaty may not recognise ISA exemption
Treaty determines where pension income is taxed on drawdown
Access before age 57 (from 2028)
Any time -- no minimum age
Age 55 (rising to 57 from 2028)
Transfer option for long-term expats
No overseas transfer mechanism
QROPS transfer available (subject to 25% OTC in many cases)
GBP 12,570 if entitled (UK citizen/applicable treaty); not automatic
Priority action before leaving UK
Maximise GBP 20,000 ISA in final UK tax year
Maximise Annual Allowance (GBP 60,000) plus 3-year carry-forward
What To Do Before Leaving the UK
First, subscribe to your ISA up to GBP 20,000 in the final UK tax year of residence. These funds will be sheltered from UK tax indefinitely. This is particularly valuable for stocks and shares ISAs, where future capital growth will be UK-tax-free regardless of how long you remain abroad.
Second, maximise pension contributions and carry-forward in the final UK tax year. You can carry forward up to three years of unused Annual Allowance (up to GBP 60,000 per year). If you have been under-contributing in recent years, this is the last opportunity to top up with full income tax relief at your UK marginal rate.
Third, obtain local tax advice for your destination country before departure. Understand how the destination country will treat UK ISA income, UK pension contributions and eventual UK pension drawdown. This should influence whether to maintain the ISA wrapper unchanged or restructure investments within it.
Fourth, consider QROPS only after taking detailed specialist advice. The 25% OTC applies in many cases and the transfer is irreversible. A QROPS may save tax on drawdown in some jurisdictions; in others the UK pension is actually more tax-efficient once double tax treaties are factored in.
State Pension and International Context
The UK State Pension in 2026/27 is GBP 241.30 per week (GBP 12,548 per year) at the full new rate. It is paid abroad in GBP and can be sent to a foreign bank account. The triple lock increase (highest of earnings growth, CPI inflation or 2.5%) applies only in countries with social security uprating agreements with the UK. In countries without such agreements -- including Canada, Australia and New Zealand for many expats -- the State Pension is frozen at the rate when you first claim or leave the UK. This frozen pension trap affects hundreds of thousands of UK expats and is a critical factor in long-term retirement income planning.
Frequently Asked Questions
Frequently Asked Questions
Can you keep your ISA when moving abroad?
Yes -- you can keep your existing ISA when you become non-resident. The ISA does not need to be closed and it retains its UK tax-free status: gains and income within the ISA remain free of UK income tax and CGT regardless of where you live. However, from the tax year in which you become non-resident, you cannot make any new subscriptions to the ISA until you return to UK tax residence. The ISA continues to shelter the existing funds and they grow tax-free within the UK tax framework. Even a small subscription while non-resident makes the ISA subscription invalid for that year and HMRC can void the ISA for that tax year.
Will your overseas country tax your UK ISA income and gains?
Possibly. While the UK does not tax ISA income and gains, your country of residence may treat the ISA as an ordinary investment account and tax income and gains under its domestic rules. The US does not recognise the ISA as a tax-exempt wrapper: a UK/US dual national or US person living abroad must report ISA income and gains on their US tax return, and the ISA may be treated as a Passive Foreign Investment Company (PFIC), triggering punitive US tax treatment. EU and other countries vary in how they treat foreign savings wrappers. Always check local tax rules in your country of residence before assuming ISA income is tax-free abroad -- the UK exemption does not travel with you.
Can you contribute to a UK pension while living abroad?
Yes, but with important limitations. During the first five tax years of non-residence, you can contribute up to GBP 3,600 gross per year to a UK pension and receive basic rate (20%) tax relief, even if you have no UK earnings. You contribute GBP 2,880 net and the pension provider claims GBP 720 basic rate relief, grossing the contribution up to GBP 3,600. After five complete tax years of non-UK residence, tax relief on UK pension contributions stops entirely unless you have UK earnings (such as rental income or employment income in the UK) -- in which case you can contribute up to 100% of your UK earnings and receive relief at the applicable UK rate, subject to the Annual Allowance of GBP 60,000 in 2026/27.
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What is QROPS and when should a UK expat consider it?
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a foreign pension arrangement that meets HMRC conditions and to which a UK pension can be transferred without triggering an overseas transfer charge. A QROPS transfer can make sense for expats who plan to remain abroad long-term and want their pension in the same country as their retirement. Since March 2017, an overseas transfer charge of 25% applies to most QROPS transfers unless the member and the QROPS are in the same country, or the member is in an EEA country and the QROPS is also in the EEA. QROPS transfers are irreversible -- always take specialist pension transfer advice before proceeding.
How do double tax treaties affect UK pension income paid to a non-resident?
The UK has double tax treaties with over 130 countries. For pensions, treaties typically provide that UK pension income is taxable either exclusively in the country of residence or solely in the UK depending on the treaty. Under the UK-USA treaty, US-resident recipients of UK pension income (including State Pension) are taxed in the US, not the UK. Under the UK-Australia treaty, UK pensions paid to Australian residents are taxable in Australia. Where a treaty exempts the pension from UK tax, apply to HMRC for an NT (no tax) code to receive the pension without UK PAYE deducted at source. HMRC form DT-Individual applies for most treaty NT code claims.
Is the UK State Pension paid abroad and is it uprated?
Yes -- the UK State Pension is paid regardless of where you live. In 2026/27 the full new State Pension is GBP 241.30 per week (GBP 12,548 per year). It can be paid to a foreign bank account. However, the triple lock annual increase applies only in countries with which the UK has a social security agreement covering uprating. In many countries -- including Canada, Australia and New Zealand for those who moved there before certain dates -- the State Pension is frozen at the rate payable when you first claim or leave the UK. Taxation of the State Pension overseas depends on the applicable double tax treaty.
What happens to your pension if you return to the UK?
If you return to UK tax residence, you can begin contributing to your UK pension again up to the Annual Allowance (GBP 60,000 in 2026/27) with full income tax relief at your marginal rate on contributions up to 100% of UK earnings. Your existing UK pension remains unaffected by your period of non-residence -- growth during the period abroad is sheltered within the wrapper. If you transferred to a QROPS while abroad, transferring back to a UK pension scheme triggers potential overseas transfer charges and is complex -- seek specialist advice. On return, ISAs can also be subscribed to again from the next tax year after re-establishing UK residence.
Should you max ISA and pension before leaving the UK?
Yes -- this is one of the most important pre-departure actions. Use your remaining ISA allowance (GBP 20,000 in 2026/27) as a final contribution in the tax year of departure: these funds grow tax-free indefinitely and you cannot add more once abroad. Also maximise your pension Annual Allowance (GBP 60,000 in 2026/27) and consider carrying forward up to three years of unused allowance (potentially up to GBP 180,000 in total carry-forward from 2023/24 to 2025/26). Pension contributions made before departure receive full income tax relief at your marginal UK rate. The combination of a maximally funded ISA and pension on departure is the most tax-efficient starting position for an expat.
What is the ISA annual subscription limit in 2026/27?
The ISA annual subscription limit in 2026/27 is GBP 20,000. This can be split across a cash ISA, stocks and shares ISA, innovative finance ISA and lifetime ISA (LISA, which has its own GBP 4,000 sub-limit within the GBP 20,000 overall). As a non-resident, you cannot make any subscriptions in the tax year of non-residence or subsequent years abroad. Your existing ISA balance is unaffected and continues to grow tax-free in the UK. If you are still UK resident for part of a tax year before leaving, you can subscribe up to GBP 20,000 in that tax year before departure (subject to having not already subscribed).
Does the UK Personal Allowance apply to pension income paid to a non-resident?
Non-residents are not automatically entitled to the UK Personal Allowance (GBP 12,570 in 2026/27). However, non-residents may claim the Personal Allowance if they are a UK citizen, a citizen of a qualifying EEA country (some treaty provisions preserve this right), a current or former UK Crown employee or their spouse, or resident in a country with a double tax treaty that gives entitlement to UK allowances. Without the Personal Allowance, UK pension income is taxed from the first pound at 20% basic rate. With it, the first GBP 12,570 of UK pension income is free of UK tax. Apply via HMRC form R43 or through a specialist adviser.
