Retiring Abroad

Receiving Your UK Pension Abroad

State Pension Abroad and Annual Increases ("Uprating")

UK State Pensions can be paid overseas if you meet the relevant National Insurance contribution thresholds. You can have your pension paid into either a UK or an overseas bank account, but bear in mind that bank charges and currency fluctuations can affect your payments.

Annual Increases

Your UK State Pension will only rise each year with inflation if you live in:

• The European Economic Area (EEA) or Switzerland.
• Gibraltar, Isle of Man, Jersey, or Guernsey.
• A limited set of countries that have a specific social security agreement with the UK which provides uprating (such as the USA, Israel, the Philippines, and Barbados).

NOTE: not every country with a social security agreement gets the annual increase. Popular retirement destinations like Australia, Canada, and New Zealand currently don't qualify for uprating, and your State Pension will remain frozen at the first paid rate. Agreements may change, so always check the official UK government list for the latest information.

Workplace and Private Pensions

Most UK workplace and private pensions can be paid abroad - just notify your provider of your move. Payments to foreign bank accounts are generally possible, but be aware of possible currency conversion fees, and the potential for exchange rate fluctuations to reduce the value of your income over time. Consider how you'll manage currency risk in your retirement plans.

QROPS Transfers:

Transferring your pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) may appeal to some, but strict rules apply.

• Since 2017, a 25% UK tax charge applies on most QROPS transfers, unless both you and the QROPS are in the same country, or both are in the EEA.
• Following Brexit, the EEA exemption could be removed or changed for those who move from the UK to the EU or EEA countries, so the situation remains under review.
• Always check for the latest rules and get advice from a UK-authorised adviser, as transferring a pension is complicated and may expose you to scams.

Tax Implications When Retiring Abroad

Double Taxation Agreements (DTAs)

DTAs are important in determining where your UK pension will be taxed. Their application varies greatly:

• Some DTAs allow the UK to keep taxing government pensions (e.g., civil service and certain public sector pensions) even if you no longer live in the UK.
• Other pensions may be taxed in your new country, the UK, or both, depending on the specific agreement.

Always check the specific DTA for your destination and pension type: HMRCs DTA guide.

Personal Allowance for Non-Residents

Not every non-UK resident is eligible for the UK personal allowance (the income you can earn each year before paying UK income tax). Eligibility generally extends to residents of the EEA and most Commonwealth countries, but some notable exceptions include Australia, New Zealand, and South Africa—unless their DTA allows it.

Get the latest details from HMRC: Personal Allowance for non-residents.

Tax Residency

You are required to tell HMRC you are leaving the UK by submitting their Form P85, which helps establish your non-resident status.

Statutory Residence Test:

Determining if you're a UK tax resident isn't as simple as counting days spent in the UK. The Statutory Residence Test includes:

• Automatic UK/overseas residence tests.
• Sufficient ties test (considering accommodation, work, family, and other links).

See HMRC guidance: Statutory Residence Test.

As a non-resident, you may still need to submit a UK Self Assessment tax return if you have specific sources of UK income. Additionally, you’ll likely be required to register for tax and report worldwide income in your country of residence.

Healthcare Abroad

Ordinarily, relocating abroad permanently means you lose access to NHS healthcare.

S1 Scheme:

• Available only if you receive a UK State Pension or specific UK benefits and are retiring to the EEA or Switzerland.
• The S1 registers you for state healthcare in your new country but doesn't cover every circumstance or all treatments.
• S1 eligibility and rights may evolve in light of ongoing UK-EU negotiations post-Brexit.

Refer to official NHS guidance for details: Healthcare abroad.

In most other countries, you will need to buy private health insurance, which can be a significant retirement cost.

UK Benefits

• Most means-tested benefits (such as Pension Credit, Housing Benefit) stop when you move abroad.
• The State Pension can continue to be paid to most overseas destinations.
• Some disability and health benefits (like Personal Independence Payment and Attendance Allowance) may be paid abroad temporarily or in very limited circumstances, but most are not available long-term after leaving the UK.
• Winter Fuel Payment and other supplemental benefits generally stop when you move abroad.

Check current eligibility at: GOV.UK - Benefits abroad.

Inheritance Tax and Domicile

Your liability for UK Inheritance Tax (IHT) is linked to domicile, a complex legal concept beyond simple residency. Even after years abroad, you may still be considered UK-domiciled, meaning your worldwide assets could be subject to UK IHT.

• Changing domicile is complicated, requiring legal evidence and a shift in your permanent home and intentions.
• International estate and inheritance planning is essential—seek specialist advice if you intend to settle abroad.
• You may also need to update your will to comply with laws in your new country.

Practical Steps Before You Go

• Notify all pension providers and HMRC (Form P85).
• Review the official State Pension uprating countries list for your chosen destination.
• Examine how your specific pensions are treated under the relevant DTA.
• Clarify personal allowance eligibility and government pension tax treatment.
• Consider and manage currency risk to your retirement income.
• Register for local tax in your new country.
• Confirm your NHS/S1 healthcare rights and buy appropriate insurance if needed.
• Update your estate planning and will - laws may be very different abroad.
• Check if you need to file UK Self Assessment as a non-resident.
• Confirm your UK bank accounts can remain open—some close expat accounts, especially after Brexit.