non UK resident with UK pension plan

If you know your tax situation then why are you asking on the internet about it?

Tell your pension providers that you are not tax resident in the UK. They will not deduct income tax. You can take the lot free of UK income tax provided you do not become a tax resident in the UK for the next three or so years.

Whether they offer the options needed for you to do this and whether they are willing to use them for a non-UK resident depends on the firm, as do the charges. You'll need to check with them to find out. A transfer to another scheme is possible but most UK schemes will not accept new foreign customers, though some will. AJ Bell has at least one product that does, though it does require payments to go to a UK bank account.

moneyguy2016 wrote: »

I spoke to the service provider and after more research, the withdrawal will be subject to the 25/75 rule and tax will be withheld irrespective of whether I am a UK tax resident or not, as a PAYE contribution. Moreover, the tax will be withheld at the emergency code rates, and even subsequent withdrawals will incur this emergency rate even when the code is updated.

That's the basic position but typically not the true final position, which varies depending on your place of tax residence. To get started have a read of The ultimate pension freedom: Retire in Portugal and reduce your tax the key part of which for your question is:

"Britain has double tax treaties with most countries around the world that prevent you from having to pay tax in both of the jurisdictions. These treaties stipulate that your personal pension, which includes employer schemes and personal accounts such as Sipps (self-invested personal pensions), and your state pension, are only taxable in the country in which you live."

So if you live in a country with a 0% income tax rate on foreign pension income and that country has a typical tax treaty with Britain, 0% is the income tax rate due on the taxable 75%.

The Portugal case is perhaps most prominently known and allows "new arrivals who become tax resident to take all foreign sources of income such as pensions tax free for the first 10 years". You can read more about the Portugal situation and the related Uk legislation in the topic Extracting pension pots: the Portugal plan but the relevant UK rules aren't specific to Portugal. Portugal and some other countries also covered in Retire abroad? The country offering tax-free pensions.

On the UK end, see the government page Tax on your UK income if you live abroad to get started. Assuming that you're in a country with a relevant tax treaty you would could inform HMRC so a correct tax code can be issued to the pension provider or claim back the overpaid income tax (all of it) with a tax return or R43 form. For a tax code to be issued at least one (small ideally) payment would need to be made so that HMRC has the appropriate PAYE reference information to send one to them.

Hopefully that will point you in the right general direction, and hopefully you're in a country with a tax treaty with the relevant term about income being taxable in the country of residence, not country of origin.

Don't be surprised about pension providers getting this wrong, if you are in such a country, it's a relatively niche area.

Hopefully the reason why dunstonh mentioned the need to know your country of tax residence is more apparent now, it really does end up mattering greatly for your situation. Indeed, if you're comfortable disclosing it you would be well served by editing your first post and going to advanced editing then changing the title to include it so those familiar with that specific country are more likely to notice it. Mentioning AJ Bell would also be desirable since there's an extremely well informed poster who may notice the post and comment on what they would want/be able to do in your situation.

Well, it's a bit of a potential loophole but if you read the other topic here about Portugal that I linked to you'll find that it's specifically covered in UK legislation so that those who have left the UK can do it, with that return to the UK within a few years and you have to pay the tax originally due bit the aspect that closes the ability to use it as a loophole rather than if genuinely not UK resident like you. For you it's just things working as the government intended when the legislation was introduced.