Foreign pension income

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Foreign pension income
  • Is it an overseas pension?
  • Is it exempt?
  • Is there a double tax treaty?
  • Tax status of the individual
  • UK resident and domiciled
  • UK resident and non-domiciled
  • Temporary non-residence ― year of departure pre-2013/14
  • Temporary non-residence ― year of departure 2013/14 onwards
  • Temporary non-residence ― year of return 2015/16 onwards
  • More...

Foreign pension income

Overseas pensions are those paid by or on behalf of a person outside the UK. For these purposes, the Isle of Man, Jersey and Guernsey are classed as overseas.

This note covers the taxation of income from such overseas pensions. Changes were made to the taxation of overseas pensions through FA 2017, Schs 3, 4. These take effect from 6 April 2017, and are discussed below as they apply to pension income.

For details of the other tax charges to consider when the individual takes a benefit from an overseas pension (or also on transferring pension funds overseas), see the Overseas pension schemes ― taxable events guidance note.

For information on the UK state pension, see the State pension guidance note. For details of UK private pensions, see the Private pension income guidance note.

Is it an overseas pension?

The first step is to check whether the pension is in fact foreign and that it is indeed a pension rather than some other form of savings scheme which might have a different tax treatment.

For example, the UK offers, since 6 April 2017, the lifetime ISA. See the Lifetime ISAs and help to buy ISAs guidance note. Lifetime ISAs are aimed at incentivising savings towards either a first house purchase or retirement, but they may not be regarded in other countries as a ‘pension’. The reverse may be true of other countries, such that overseas savings might not be regarded as a pension in the UK. You should therefore take care to check the scheme details.

You should also note that some overseas pensions are paid via a paying agent in the UK, but they are still foreign pensions. Conversely, some overseas pension schemes are registered in the UK, and that makes them UK pensions. If you are in any doubt, check with the pensions administrator.

Is it exempt?

The second step is to check whether the pension is exempt from UK tax. Exempt pensions include:

  1. foreign pensions which are similar to those paid to

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