UK pension drawdown for British expats is governed by two parallel systems: the UK rules that determine how you can access the money, and the country-of-residence rules that determine how it’s taxed once it lands. The interaction between the two is governed by the relevant double taxation treaty (DTT) between the UK and your country of residence — and the outcomes vary materially by destination. Some countries tax UK pension income at their domestic rates with UK relief; others give the UK primary taxing rights for certain pension types; a few have no DTT covering personal pensions at all.
This guide explains how UK pension drawdown works, the country-of-residence taxation framework, the role of the UK–country DTT, and country-by-country notes for the destinations our cluster covers. For the related framework articles, see UK tax residency for expats, UK inheritance tax for expats and the UK pension abroad currency guide.
UK Pension Access Rules — The Foundation
UK pension drawdown is available from the Normal Minimum Pension Age (NMPA), currently 55 and rising to 57 from 6 April 2028. The UK rules don’t care where you live when you draw — a UK pension can be drawn while you’re resident anywhere in the world, with the UK side of the transaction handled by your UK pension provider exactly as it would be for a UK resident.
Three main UK pension access methods apply, with the same options available to expats as to UK residents:
- Flexi-Access Drawdown (FAD) — the most common modern approach. Take 25% as a tax-free lump sum (subject to the Lump Sum Allowance, currently £268,275) and move the remaining 75% into drawdown to draw income flexibly.
- Uncrystallised Funds Pension Lump Sum (UFPLS) — take ad hoc lump sums where 25% of each is tax-free and 75% is taxable.
- Annuity — exchange the pension pot for a guaranteed income for life. Less common in modern UK retirement planning but still relevant for some expats prioritising income certainty.
Defined benefit (final salary) pensions follow their own rules, with scheme-specific options around lump sums and income. The country-of-residence taxation framework explained below applies to whichever method you use.
The Two-Country Tax Question
When you draw a UK pension while living abroad, two countries have a potential claim on the income: the UK (because the pension is UK-source) and your country of residence (because you live there). The double taxation treaty between the two countries determines who has primary taxing rights and how relief is given.
For most personal UK pensions (SIPP, personal pension, modern workplace defined contribution), most UK DTTs follow the OECD Model and give the country of residence primary taxing rights. The mechanics typically work like this:
- You apply to HMRC for a NT (No Tax) coding on the pension, supported by a certificate of residence from your country of residence.
- The UK pension provider pays the income gross of UK tax.
- You declare the income in your country of residence and pay tax there at the local rate.
- If the country of residence tax is lower than the UK’s would have been, you keep the difference; if higher, you pay it.
Government-service pensions are usually treated separately under the DTT — most UK–country DTTs give the UK primary taxing rights on pensions paid for past UK government service, regardless of where the recipient lives. NHS pensions, civil service pensions, teacher pensions and armed forces pensions often fall into this category.
The above is the general framework. The exact wording of each treaty matters. Personal pensions, government-service pensions, lump sums versus regular income, and pensions in payment versus pensions still being accumulated can each be treated differently.
Tax-Free Lump Sums Across Borders
The UK’s 25% tax-free lump sum (Pension Commencement Lump Sum) is one of the more distinctive features of UK pension access. Few other tax systems treat this lump sum as tax-free in their own rules — your country of residence may well tax the “tax-free” lump sum at its domestic rate.
The interaction is destination-specific:
- Some countries (e.g. Spain, France) tax the lump sum as ordinary pension income.
- Others (e.g. Portugal under specific regimes, the UAE) may treat it more favourably or not tax it at all.
- Where the country-of-residence treats the lump sum differently than the UK does, the lump-sum question is often the most material single planning decision in the move.
Many UK expats time their pension lump sum carefully — sometimes drawing it before they become tax resident in the destination country, sometimes after, depending on the specific treaty and domestic rules. Specialist guidance is essential.
Country-by-Country Notes
What follows is a high-level summary of the UK pension drawdown position in the destinations our cluster covers. Each individual case is fact-specific and the rules change — always confirm the current position with a UK-qualified pension specialist working alongside a tax adviser in your country of residence.
Spain
Personal UK pensions are typically taxed in Spain under the UK–Spain DTT, with the UK paying the income gross of UK tax once an NT coding is in place. Spanish pension income is taxed at the savings tax rates (currently 19–28%) or the general income tax rates depending on the type of receipt. Government-service pensions remain UK-taxable in most cases. The 25% lump sum is generally treated as Spanish-taxable pension income.
France
The UK–France DTT typically gives France primary taxing rights on personal UK pensions, with French income tax at progressive rates plus social contributions (CSG/CRDS) where applicable. Government-service pensions remain UK-taxable. France has historically allowed UK-style 25% lump sums to be taxed at a flat rate under certain conditions — the rules have evolved and current treatment should be confirmed for any specific case.
Portugal
The UK–Portugal DTT gives Portugal primary taxing rights on personal UK pensions for Portuguese residents. The post-2024 IFICI tax regime (replacing the old NHR) has changed the treatment of foreign pension income for new arrivals — confirm your specific eligibility and treatment with a Portuguese tax adviser.
Italy
Personal UK pensions are typically taxed in Italy at progressive rates. Italy operates a flat-tax regime for foreign pensioners moving to certain southern Italian regions (a 7% flat rate for new tax residents in qualifying southern villages, available for up to ten years), which has attracted UK retirees. Eligibility is detailed and should be confirmed before relying on it.
Greece
Greece operates a 7% flat-tax regime for new tax-resident retirees on foreign-source pension income, available for up to fifteen years. Eligibility requires a recent move from a country with which Greece has a tax cooperation agreement — the UK qualifies. The regime has made Greece materially more attractive for UK retirees with substantial pension income.
Malta
Malta is a major QROPS jurisdiction, and many UK pensions have been transferred to Maltese schemes over the years. For UK pensions retained in the UK, the UK–Malta DTT typically gives Malta primary taxing rights. The Malta Permanent Residence Programme and Malta Retirement Programme offer specific tax frameworks for foreign pension income at attractive flat rates, subject to eligibility.
Ireland
The UK–Ireland DTT typically gives Ireland primary taxing rights on personal UK pensions for Irish residents. Irish income tax rates apply at the standard scale. Ireland is a QROPS jurisdiction, but Irish QROPS transfers carry their own complexity. The Common Travel Area does not change the pension tax position — Irish residents are taxed on UK pensions in Ireland regardless of how easy the move was.
Switzerland
The UK–Switzerland DTT typically gives Switzerland primary taxing rights on personal UK pensions for Swiss residents. Swiss federal and cantonal taxes apply, with significant cantonal variation. Switzerland is not a QROPS jurisdiction, so transfers in are not available; most UK retirees in Switzerland leave their pensions in the UK and draw to a Swiss bank account.
Dubai (UAE)
The UAE has no personal income tax and — importantly — there is no UK–UAE double taxation treaty covering personal pensions. The UAE’s domestic rules don’t tax UK pension income, but the absence of a DTT means HMRC continues to treat the income as UK-taxable in the standard way unless other reliefs apply. The position is more nuanced than “move to Dubai and pay no pension tax” — specialist guidance is essential before relying on the UAE for UK pension drawdown planning.
Australia
The UK–Australia DTT typically gives Australia primary taxing rights on personal UK pensions for Australian residents. Australia is a QROPS jurisdiction for those over UK pension access age (currently 55, rising to 57 in April 2028) — transfers below that age are generally not permitted. Government-service pensions remain UK-taxable. Australian rules treat foreign pension lump sums in their own way; specialist advice is essential.
Canada
The UK–Canada DTT typically gives Canada primary taxing rights on personal UK pensions for Canadian residents. Canada is not a QROPS jurisdiction, so UK pensions cannot be transferred to Canadian RRSPs. Most UK pensioners in Canada leave the pension in the UK and draw income to a Canadian bank account, with Canadian tax applying at federal and provincial rates.
QROPS — Should You Transfer Your UK Pension?
Qualifying Recognised Overseas Pension Schemes (QROPS) are foreign pension schemes that meet HMRC’s recognition criteria, allowing UK pensions to be transferred without immediate UK tax penalty. The QROPS landscape has narrowed materially in recent years following successive UK reforms.
Current QROPS jurisdictions of practical relevance to UK expats include Malta, Ireland, Australia (post-pension-age only), Gibraltar, the Isle of Man and Jersey. Major destinations like the USA, Canada, Switzerland, France, Spain and the UAE are not QROPS jurisdictions — UK pensions cannot be transferred to local pension schemes there.
Three structural points worth knowing:
- Overseas Transfer Charge — a 25% UK tax can apply on QROPS transfers in defined circumstances (broadly, where the recipient is not resident in the same country as the QROPS or in the EEA at the time of transfer). The exact rules have changed materially since 2017 and again under more recent reforms.
- Reporting obligations — QROPS providers are required to report payments to HMRC for ten years after transfer, and UK tax can apply on payments to UK residents during that window.
- Cost-benefit — QROPS transfers carry meaningful one-off costs (set-up, legal, advice) and ongoing fees. The benefit needs to be material to justify the cost. Many UK expats end up better served by leaving the pension in the UK and drawing income internationally.
QROPS decisions are firmly in the territory of regulated UK pension specialists who hold pension transfer authorisation. This is not territory for general tax advisers or unregulated international planners.
The Currency Side of UK Pension Drawdown
The currency leg of UK pension drawdown is a recurring cost that compounds across the decades of retirement. A UK SIPP paying £2,500 a month gross, drawn for 25 years, runs through £750,000 of GBP-to-foreign-currency conversion. A 2.5% bank FX margin on every conversion costs around £625 a year, or £15,000 across the retirement.
The setups that work for UK expat pension drawdown:
- Regular payment plan — a recurring monthly conversion at near-interbank rates. Pension provider pays GBP into your UK account, the specialist converts a fixed amount to your local currency on a set day each month. Over a 25-year retirement, this is the single biggest currency saving available to most UK expats.
- Forward contract for known liabilities — a forward contract locks in today’s rate for a payment up to 12 months ahead. Useful for scheduled UK obligations or annual planning.
- Lump sum timing — if you’re taking a 25% lump sum at retirement, the GBP/foreign-currency timing on the conversion is material. Many UK expats coordinate the lump sum drawdown with rate planning rather than treating it as a single-day execution.
Cambridge Currencies works exclusively with FCA-authorised payment partners (Currencycloud and ScioPay). Client funds are held in fully safeguarded segregated client accounts. See our companion guides on keeping a UK bank account while living abroad and the UK pension abroad currency guide.
Common Mistakes UK Pension Drawdown Expats Make
Drawing without an NT coding. Without an NT coding from HMRC, your UK provider will deduct UK income tax at source, leaving you to claim it back through the country-of-residence DTT process. Months of cash flow can be tied up unnecessarily.
Assuming the 25% lump sum is tax-free everywhere. The UK treats it as tax-free; many other countries don’t. Plan the lump sum decision around the destination country’s rules, not the UK’s.
Misunderstanding government-service pensions. NHS, civil service, teacher and armed forces pensions are usually UK-taxable regardless of where you live, under the relevant DTT. Don’t apply the personal-pension framework to government-service pensions.
Treating QROPS as the default. Many UK expats are better served leaving the pension in the UK. The QROPS sector has historically been over-sold by some intermediaries; specialist advice from a regulated UK pension transfer specialist is essential.
Ignoring the April 2027 IHT change. Most defined contribution pension assets will be brought into the UK IHT estate from April 2027. For UK expats whose pension is a major component of their estate, this is a planning trigger.
Defaulting to the bank for monthly conversion. The 2–4% margin on every conversion compounds to tens of thousands across a retirement. A regular payment plan with a specialist eliminates this cost.
Frequently Asked Questions
Can I draw my UK pension while living abroad?
Yes. The UK rules don’t restrict pension drawdown by residence. Your UK provider will pay you regardless of where you live, with the country-of-residence rules determining how the income is taxed.
Will I pay UK tax on my pension if I live abroad?
It depends on the UK–country DTT. Most modern DTTs give the country of residence primary taxing rights on personal UK pensions, with an HMRC NT coding allowing the UK provider to pay gross. Government-service pensions are usually UK-taxable regardless of residence.
Is the 25% UK tax-free lump sum tax-free abroad?
Not necessarily. The UK treats it as tax-free, but most other countries treat it as ordinary pension income under their domestic rules. Plan the lump sum decision around the destination country’s tax treatment, not the UK’s.
What is QROPS?
Qualifying Recognised Overseas Pension Schemes. Foreign pension schemes that meet HMRC criteria, allowing UK pensions to be transferred without immediate UK tax penalty. Major QROPS jurisdictions include Malta, Ireland and Australia (over pension age). The USA, Canada, Switzerland, France, Spain and the UAE are not QROPS jurisdictions.
Should I transfer my UK pension to a QROPS?
It depends on individual circumstances. QROPS transfers carry meaningful costs and ongoing fees, plus a 25% Overseas Transfer Charge in defined circumstances. Many UK expats are better served leaving the pension in the UK and drawing income internationally. The decision is firmly in the territory of regulated UK pension transfer specialists.
When can I access my UK pension?
From the Normal Minimum Pension Age, currently 55, rising to 57 from 6 April 2028. Defined benefit pensions follow scheme-specific rules; some schemes have protected lower retirement ages.
Are UK pensions affected by the April 2027 IHT changes?
Yes. From April 2027, most unused defined contribution pension assets will be brought into the UK Inheritance Tax estate. This is a material planning change for UK expats whose pensions are a large component of their estate. See our UK inheritance tax for expats guide.
Drawing your UK pension as an expat and want to make sure your monthly currency transfers are running efficiently? Speak to a Cambridge Currencies specialist by phone — we’ll walk you through a regular payment plan, lump sum timing and forward contracts where useful. Request a free quote today. All transfers are completed by phone with a dedicated specialist. We work exclusively with FCA-authorised payment partners.
This guide is for informational purposes only and does not constitute financial, legal or tax guidance. UK pension rules, double taxation treaties, QROPS regulations and country-of-residence tax treatment all change. Always seek independent professional guidance from a regulated UK pension specialist (with pension transfer authorisation where relevant), ideally working alongside a tax adviser in your country of residence.
