If you are retiring abroad, whatever pension you have in the UK would carry on and you would still get the same benefits as you approach the pension age.
However, what happens when you retire elsewhere and are looking to draw money from your pension in the UK?
This article highlights some considerations on what to expect around pension legislation and also gives pointers that can help you draw up an income from your pension in the UK.
The Basics
Fundamentally, UK pension legislations apply to all pensions within the state. There is a slight exception if you’re retiring abroad from the UK and have become a non-resident, presumably for tax purposes. In such a case, the UK tax law is enforceable once you’ve been able to receive an income from the state.
You can actually still receive up to £11,000 in personal allowances, tax-free. In practical terms, it means that you likely wouldn’t be paying tax on a significant part of your pension in the UK, especially when you’re receiving solely from the state. However, local income can still be taxed. In fact, how much actually gets taxed is determined by the actual pension amount.
How to Draw Up Income from your Pension?
Theoretically, if you are living abroad, you can draw up a higher fraction of your pension as income. The first 25% of the money will be free from tax, although the actual transaction depends on how much retirement money you had from the the start. However, the 25% can come under tax legislation in your country of residence, and it is worth keeping this in mind to avoid unforeseen tax charges.
Can I get my pension if I live abroad?
Pension withdrawal should be quick but you must take into account the differences and rules between UK regulations and that of your country of residence. Understanding this will enable you to become more tax-efficient as you withdraw from your pensions. Other unqiue scenarios exist, such as certain pension providers require only UK bank accounts for disbursement. It means you’ll have to check with your pension provider to make sure you can receive your pension even when you are living abroad.
Furthermore, if you live in a country with a Double Taxation Treaty with the UK, you won’t have to get taxed more than once. While the process is mainly straightforward, you might want to book a consultation session with a qualified pension expert. Their services can enable you to eliminate the grey areas you might be confused about regarding your pension income tax and compare your country of residence’s tax situation with that of the UK.
Final thoughts
It is possible to receive a pension in the UK while you reside abroad, especially if you recently moved after receiving the payment. However, you might want to keep a significant fraction of your pension and take out the rest in income withdrawal. The section above gives you an idea of how to draw income against income tax related to your country of residence. It also highlights the tax concessions you’re eligible for within the state and how you can fully take advantage of them.