SIPP when I leave the UK

JWise

I am going to live abroad possibly permanently but I may return - I am not due to retire for 10 years and may decide then. I have a SIPP but it is a small amount.

When I leave I will no longer be employed in the UK and will run my own business abroad, but there are no tax top ups or other provision for personal pensions.

My only UK income will be from a buy-to-let proeprty and I will pay tax on the rental income.

Can I contribute to my SIPP after I leave the UK? If I ever return to the UK later I would want to have more than the State Pension (I will continue to pay voluntary NI)

jamesd

You must be UK resident in the year in which you make the contributions. If that applies then you can use the normal lower of earned income or £40,000 a year or if no earned income can pay in £3,600 gross of basic rate tax relief.

In addition, you must consider the tax regime of the place that will be your residence. It is possible that that place will not consider a UK pension to be tax exempt and you may have to pay tax on income and/or capital gains within the pension, including everything in it already. The United States has a particularly unpleasant tax regime for foreign collective investments.

JWise

jamesd wrote: »

You must be UK resident in the year in which you make the contributions. If that applies then you can use the normal lower of earned income or £40,000 a year or if no earned income can pay in £3,600 gross of basic rate tax relief.

In addition, you must consider the tax regime of the place that will be your residence. It is possible that that place will not consider a UK pension to be tax exempt and you may have to pay tax on income and/or capital gains within the pension, including everything in it already. The United States has a particularly unpleasant tax regime for foreign collective investments.

You can only pay into your SIPP if you are UK resident? So anyone who goes abroad and is not employed by a UK company with a pension scheme only has the UK State Pension to live off if they return to retire in the UK (unless they have other savings)?

Your_Hero

JWise wrote: »

You can only pay into your SIPP if you are UK resident? So anyone who goes abroad and is not employed by a UK company with a pension scheme only has the UK State Pension to live off if they return to retire in the UK?

Of course, since a pension give you tax-relief it is only meant for UK residents who have relevant earnings. This doesn't mean you can't save for your retirement - a pension is only one way of planning for retirement.


You can continue to save in offshore accounts for tax-efficiency and perhaps when you return to the UK you can pay that into your pension if you want/are eligible to.

JWise

Your_Hero wrote: »

Of course, since a pension give you tax-relief it is only meant for UK residents who have relevant earnings. This doesn't mean you can't save for your retirement - a pension is only one way of planning for retirement.


You can continue to save in offshore accounts for tax-efficiency and perhaps when you return to the UK you can pay that into your pension if you want/are eligible to.

Thank you.

jamesd

Britain isn't the only country with a pension system. You may find that you will have available to you pension schemes that could be transferred to the UK and you should have at least somewhere to invest that you can use to provide for retirement income in some way. You just happen to know the UK system at the moment, not that of wherever you'll be going to.

Since I mentioned the US already, it has Social Security that provides its equivalent of the UK state pension and also has Individual Retirement Accounts (IRA) and the Roth IRA that is similar to the ISA here, as well as 401(k) plans. In addition it has some types of employer operated defined benefit schemes, though those do not have the degree of protection afforded to such plans here, notably being vulnerable to employer insolvency and restructuring under bankruptcy, something that also applies to local and regional government defined benefit schemes there.