UK Private Pension and Government Pension Taxes Living Overseas
Published / Last Updated on 06/08/2024
This article arose as we had a debate with an online contact about taxation of UK Government Pensions (funded from Government) e.g. State Pension, Military Pension, Civil Service Pension when living overseas.
The contact disagreed with my use of the term government backed pensions are "usually" taxable where the pension is derived from and not where you are tax resident whereas non-government funds private and company/workplace pensions are usually taxed where you are tax resident.
I suggested that he was wrong as it comes down to the individual tax treaty of each country with the UK as well as your nationality or dual nationality (if you have passports from both countries). By way of example, here are 3 EU countries:
Tax Resident in Portugal
- UK Non-Government Pensions (Article 17) - Taxable only in the Portugal (includes annuities).
- UK Government Pensions (Article 18) - Taxable only in UK unless the individual is a Portuguese national, without also being a UK national (dual Nationality).
Tax Resident in Germany
- UK Non-Government Pensions (Article 17) - Taxable only in the Germany (includes annuities).
- Section 3: Pensions paid to a Germany resident will be taxable only in UK where that pension is attributable in whole or in part to contributions which, for a period of more than 15 years, either:
- Did not form part of taxable income in UK.
- Were tax deductible in UK.
- Were tax relieved in some way in UK.
- The provisions of Article 17(3) will not apply if UK does not effectively tax the pension, if it has already clawed back the tax relief given for contributions or if the 15-year condition is fulfilled in both the UK and Germany.
- UK Government Pensions (Article 18) - Taxable only in UK unless the individual is a resident and national of Germany.
Tax Resident in Spain
- UK Non-Government Pensions (Article 17) - Taxable only in the Spain (includes annuities).
- UK Government Pensions (Article 18) - Taxable only in UK unless the individual is a resident and national of Spain.
Each Treaty is Different
If you live overseas but have UK pensions, you should always refer to
- The Tax Treaty between UK and the other country as they do differ.
- Refer to HMRC Double Tax Digest:
- See https://www.gov.uk/hmrc-internal-manuals/double-taxation-relief/dt2140pp for each country’s Tax Treaty (full treaty wording) and then the Treaty Summary (summarises UK Tax resident position but just transpose UK for your country if you are tax resident overseas).
