Pension in Payment When Moving Abroad: What Changes and What to Do

Moving abroad once you have already started taking pension income is a common situation for British nationals retiring to sunnier climates or joining family overseas. The mechanics are different from moving abroad before you have started drawing your pension, and the action steps — particularly around tax — must be taken promptly to avoid unnecessary deductions.

This guide covers what changes, what you need to do, and what to be aware of in the key areas: tax treatment under double taxation treaties, the state pension, frozen pension countries, and your existing drawdown arrangement.

How Tax Treatment Changes When You Move Abroad

When you are UK-resident and drawing pension income, your pension provider deducts income tax at source under PAYE. Your tax code determines how much is deducted. This is straightforward because HMRC has full visibility of your income and you pay the relevant UK rates.

When you become non-UK resident, the position changes — but not automatically. Your pension provider does not know you have left the UK. It will continue to deduct UK income tax at your existing rate until you take action to change this. If you do nothing, you may end up paying UK tax on income that the double taxation treaty (DTT) gives your overseas country the right to tax instead.

Double Taxation Treaties and Pension Income

The UK has double taxation agreements with most major countries. Many of these treaties contain specific provisions about pension income — specifying which country has the right to tax it. The outcome varies by treaty:

• In some treaties, pension income is taxable only in the country of residence (the overseas country). This is the case, for example, under the UK-Spain treaty for private pension income.
• In others, the UK retains taxing rights over pension income regardless of residence, because the pension arose from UK employment or contributions.
• The state pension is treated differently in most treaties — often remaining taxable in the UK even where private pension income shifts to the overseas country.

You cannot assume which position applies without checking the specific treaty. HMRC publishes the text of all its double taxation agreements, and a regulated international pension adviser can interpret the relevant provisions for your situation.

Applying for the NT Tax Code

If your DTT gives taxing rights over your pension income to the overseas country, you are entitled to apply to HMRC for an NT (no tax) code. With this code, your pension provider will pay your pension gross — without any UK tax deducted — leaving you to account for tax in your new country of residence.

To apply for the NT code:

1. Complete form P85 (Leaving the UK — getting your tax right), which notifies HMRC of your departure and new address.
2. Complete the relevant DT Individual form for your destination country (each country has its own form — available on the HMRC website). This form applies for relief under the applicable DTT.
3. Submit both forms to HMRC's Centre for Non-Residents, generally by post or through your Government Gateway account.

HMRC typically takes four to eight weeks to process these applications. During this period, your pension provider will not yet have the NT code and will continue to deduct tax — in many cases at an emergency rate if your tax code has been disrupted by the change. Once HMRC issues the updated code, it will be sent to your pension provider directly.

Any tax over-deducted during this period can be reclaimed from HMRC — either at the end of the tax year or, in some cases, during the year. Keep records of payments and tax deducted.

Emergency Rate Deductions During Transition

The emergency tax rate in the UK assumes, on a monthly basis, that you are earning the same amount every month throughout the year. For pension withdrawals, this can result in a significant initial over-deduction. If you make a pension withdrawal while HMRC is processing your NT code application, contact your pension provider to discuss the tax code in use and, if necessary, submit a repayment claim directly to HMRC using form R43 (the claim form for non-residents).

State Pension Taxation When Living Abroad

The UK state pension is paid by the Department for Work and Pensions (DWP) regardless of where you live, provided you have sufficient qualifying National Insurance years. However, tax treatment varies.

Under most double taxation treaties, the state pension is classed as UK-source social security income and remains taxable in the UK, even when you live abroad. This means your state pension will normally be paid with UK tax deducted at source, or you will be required to declare it to HMRC. In a minority of treaties, taxing rights over state pension income are assigned to the country of residence.

For most UK expatriates drawing the state pension, the UK personal allowance (£12,570 in 2026/27) remains available if it is available under the relevant DTT. For EEA residents and nationals of certain treaty countries, the personal allowance can offset the state pension, meaning no UK tax is due on it unless you have other UK income. Non-EEA residents generally do not receive the UK personal allowance unless their specific DTT provides for it.

Frozen State Pension Countries

If you retire to certain countries, your UK state pension will be frozen — paid at the rate applicable at the time you first claimed it or arrived in that country, without any annual uprating.

The countries where the state pension is frozen include, among others:

• Australia
• Canada
• New Zealand
• South Africa
• India
• Pakistan
• Most remaining Commonwealth countries

In these countries, a person who claimed the state pension in 2010 and moved there that year will still be receiving the same nominal weekly amount in 2026, despite the triple lock having increased UK state pension payments substantially in the intervening years.

By contrast, residents of EEA countries, the United States (where a specific uprating treaty exists), and countries with other qualifying bilateral agreements continue to receive annual increases.

This is a significant financial consideration for anyone contemplating retirement in one of the frozen countries. A 65-year-old moving to Australia in 2026 who lives to 85 will miss out on two decades of triple lock increases. At compound growth rates, this can represent a very large cumulative loss compared with retiring to, say, France or Spain.

There is no mechanism to "unfreeze" a pension by moving to a non-frozen country once you have retired to a frozen country — though moving to a country where uprating applies will restart uprating from the point of arrival at the then-current rate.

Your SIPP Drawdown If You Move Abroad

If you are taking income from a UK Self-Invested Personal Pension (SIPP) under flexible drawdown arrangements and then move abroad, several practical points arise.

The SIPP Itself Remains Valid

A UK SIPP does not need to be converted, transferred, or closed when you leave the UK. The pension fund remains where it is, invested as before. You can continue to take drawdown income, adjust the income level, or pause withdrawals — all the normal flexibilities remain.

UK Tax Treatment Continues Until NT Code Is Applied

As with other pension income, your SIPP provider will continue to deduct UK income tax under PAYE until HMRC issues an updated tax code. If you believe the DTT gives taxing rights to your overseas country, apply for the NT code as described above.

Platform and Adviser Access Restrictions

Not all SIPP platforms will serve clients who have relocated to every overseas jurisdiction. Some platforms restrict services to clients who are resident in the UK or EEA. Others are willing to continue serving non-EEA residents but may impose restrictions on the types of investments available or require an FCA-regulated UK adviser to remain involved.

Similarly, if you have a UK financial adviser who manages your SIPP, their FCA authorisation covers them to advise UK residents and, in most cases, clients in the EEA — but they may not be authorised to advise clients resident outside the EEA. You should confirm your adviser's authorisation position before you leave.

If your existing adviser cannot continue to serve you, you will need to appoint a new adviser — ideally an international pension specialist with appropriate authorisation in both the UK and your destination country.

Contributions After Departure

Once you are non-UK resident and have started drawdown, continuing to make contributions is not normally relevant — but note that as a drawdown pension holder you are subject to the Money Purchase Annual Allowance (MPAA) of £10,000, which applies as soon as you flexibly access your pension. This severely limits any future contributions even if you return to the UK and have UK earnings again.

Converting to QROPS

Some expatriates in drawdown consider whether to transfer their SIPP to a Qualifying Recognised Overseas Pension Scheme (QROPS). This can sometimes offer tax advantages — particularly if your new country of residence has lower tax rates on pension income — but the Overseas Transfer Charge of 25% now applies in many circumstances. Full analysis of the QROPS question requires specialist advice.

Action Steps When Your Pension Is Already in Payment

1. Notify HMRC of your departure using form P85 before or shortly after you leave.
2. Apply for DTT relief using the relevant DT Individual form if your new country has a treaty that gives it taxing rights over pension income.
3. Inform your pension provider that you have moved abroad — they need your new address for correspondence and, once HMRC issues the NT code, they will act on it.
4. Check your state pension position — whether it will be frozen, whether UK or overseas tax applies, and whether the personal allowance reduces or eliminates any UK tax.
5. Confirm platform and adviser access — verify that your SIPP platform will continue to service you in your destination country and that your adviser remains authorised.
6. Keep records of all tax deductions during the transition so you can reclaim any over-deductions.

How Global Investments Can Help

Global Investments specialises in pension planning for British nationals living abroad. Our advisers can review your existing pension arrangements, assess the relevant double taxation treaty for your destination country, manage the NT code application process, and confirm the most efficient structure for your pension income in retirement overseas.

We work with clients at every stage of retirement — including those who have already started drawing pension income before relocating. Whether your priority is minimising unnecessary UK tax deductions, understanding your state pension position, or ensuring continuity of your SIPP drawdown, our team is equipped to help.

Pension income and tax rules can change, and this guide reflects the position as at 2026. The value of pension investments can fall as well as rise, and you should seek regulated financial advice before making decisions about your pension.