It is usually a big decision to decide to retire abroad (outside the UK) and it is a stressful and complex time for any individual or family.
But it is a time when it will pay you to consider the tax situation that you will leave behind in the UK and the one that you will find in your destination country.
In the sections which follow we will aim to cover most tax-related things you need to think about before you go abroad and those things you need to do when you get there.
We cannot hope to cover all situations so we are using the position of a typical person who on retirement decides to leave the UK and to live abroad. For the purposes of these sections we will refer to the individual as a pensioner, even if they have not yet reached our state retirement age.
One of the frequent concerns that pensioners write to us about is their ability to get increases to their state retirement pension when they have retired abroad. The answer to this question is as follows:
- 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 (0845 300 0627) 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.
Now we will turn to those things which you need to think about before you leave the UK.