• Most pensioners retiring abroad will be concerned about what taxes they have to pay on the income they continue to have in the UK after they have relocated. There will also be questions about the impact on state benefits, such as the state retirement pension.



• The difficulties of dealing with both the tax system in the UK at the same time as the tax system in the new country of residence can make this a complex subject. the UK Revenue have specialist advisers in their HMRC Residency telephone no: 0845 070 0040 who can help you through this transition. You can also look on the HMRC Residency website for other related topics.



• However in the following paragraphs we cover some of the most important areas such as:

How are increases in state pension affected by where I Iive overseas?

How will my state pension be taxed?

How is my UK public sector pension taxed?

I receive an occupational pension - how will this be taxed?

How will my bank & building society interest be taxed when I am living abroad?

What happens if I let out my house in the UK?

What if I have overseas savings or investment income?

Do I have to pay both overseas and UK tax on my income?

How are increases in state pension affected by where I live overseas?

• Unless you are moving to an EEA country or Switzerland or one of certain other countries you will not get any annual increases in your state pension.

• You are a European Economic Area (EEA) national if you are a citizen or national of one of the following countries. If you have permanent residence in, but not citizenship of, any of these countries, you are not an EEA national:

• Austria, Belgium, Bulgaria, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

• Iceland, Liechtenstein and Norway are EEA member states, but they are not members of the European Union (EU).

• Switzerland is not a member of the EU or the EEA. However since 1 June 2002, Swiss nationals have had rights which are similar to those of nationals of EEA countries. The information in this area of the website applies to both EEA and Swiss nationals.

• HMRC Residency can advise you of the countries involved. The pension rate will remain at the level it was the day you left the UK or when you first qualified for the pension if you were already abroad.

• If you return or visit the UK for any reason you will get a higher rate of pension but this will be reduced again once you return abroad if your stay here was only temporary.

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How will my state pension be taxed?

• How your state pension will be taxed will depend upon where you relocate. It is most likely that the pension will be taxed in the country where you have moved to and not in the UK.

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How is my UK public sector pension taxed?

• If you are moving to a country having a tax treaty with the UK and your pension is paid in respect of UK Government or UK local authority service -these will usually be taxed in the UK and not the country where you are living.

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I receive an occupational pension - how will this be taxed?

• You may be retiring abroad with an occupational pension from the UK.
• Most occupational pensions will only be taxed in the country where the person receiving the pension or annuity is resident - this would be your new country if you were living there for an indefinite period.

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How will my bank & building society interest be taxed when I am living abroad?

• Normally if you have left the UK for a number of years you will only be liable to UK tax on savings income that arises here. For UK bank and building society interest the rate of tax taken off before you get it is 20%.
• As a non-resident you will normally receive your UK bank and building society interest with no tax taken off, but you will need to complete a form R105 downloadable here or obtainable from your tax office. A word of warning! Be careful that you check with your bank first as to whether they will accept the form. Because of the admin involved a number of banks will not accept a form R105 and HMRC have told us that it is not mandatory for them to do so.

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What happens if I let out my house in the UK?

• If you are not resident in the UK, the UK Revenue operate a special scheme called the Non Resident Landlords Scheme on the rent you will get from letting out your house.



• Under the scheme your tenant will collect the tax due on the rent and then pay it over to the Revenue.



• UK rental income is always taxed in the UK no matter where you live.



• Provided your tax affairs are up to date you can apply to HMRC to have your rents paid gross, that is with no tax taken off before you get them. If you own the UK property jointly with someone else - you will both need to fill in a form. You can download the application form NRL1 here or you can get it from HMRC Residency.



• Your tenant or letting agent will need to supply you with a certificate of tax deducted by 5 July for the previous year ended 31 March.



• You will then need to complete a UK self-assessment tax return and work out whether you will have any tax to pay. This tax is then available to set off against any overseas tax liability arising.

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What if I have overseas savings and investment income?

• How you are taxed will depend on where you are resident and the tax treaty (if any) between your new country and the UK. Generally if you are not resident in the UK, you will not be taxed here at all on any savings income arising overseas. This also includes rental income from overseas property.

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Do I have to pay both overseas and UK tax on my income?

• Depending on the law in the overseas country where your investment income is paid, they may also want to tax you on the income arising there. You may need to contact the local tax authorities in that country for more advice.
• Frequently, the UK will have a tax treaty with the country in question and you should be able to obtain relief where you have been doubly taxed.

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