Tax liabilities on Pension when retiring abroad

Johnnyboy11

twister_teddy said:

NedS said:

Deleted_User said:

HMRC will allocate a NT tax code to you, (when you tell them you are no longer tax resident), the pension payments will be paid gross normally to a UK bank account (for the main SIPP providers), and as others have said you will have to pay tax in the country of tax residency.

So is there anything stopping someone retiring to Portugal and taking up tax residency there, withdrawing the full amount of their SIPP tax free (paid into a UK bank account), and then later moving back to the UK and thus completely avoided paying any tax on their SIPP withdraws? For those with larger SIPPs, the tax savings alone would probably pay for a little place in Portugal. Can't be that simple can it?

That's a great question. Apart from Portugal what other countries have relaxed tax rules for UK retirees pension withdrawal. 

Cyprus is worth a look: https://www.blevinsfranks.com/news/article/living-in-cyprus-financial-benefits

"Foreign pension income receives special treatment here – you choose how it is taxed each year:

• At a flat rate of 5% on the excess of €3,420 (this sum being exempt); or
• At the normal scale rates of income tax.

One particular advantage for British retirees is that, under the UK/Cyprus double tax treaty, most pension income is taxable solely in Cyprus. "

twister_teddy

Thank you 

ratechaser

I think this might be considered aggressive tax avoidance or some such catch all malarkey. Otherwise I'd expect that hordes of wealthy retirees might decamp to the Algarve for a couple of years, empty their pensions and hop back home again. I would be one of them.

But I've been told that this is a quite specialised area of tax law/planning that needs professional advice, so when my time comes in a few years, I'll be damn sure that I take it before playing fast and loose with a 7 figure pension pot.

Of course, if it really is that simple and has legitimately worked for anyone else here, I'm all ears...

nigelbb

If you are tax resident in France you can liquidate your whole pension pot & pay a flat rate 7.5%. It's a bit of a grey area as to whether you can still do this after withdrawing the 25% TFLS in the UK before becoming tax resident in France. This might be worthwhile as income with your money spread over multiple SIPPs & you liquidate one per year.