Expat Pay Into UK Pension

Published / Last Updated on 22/10/2014

Can an expat pay into a UK pension? Video explains the rules on UK pensions when overseas and the 5 year relevant individuals rule including tax relief even if not tax resident.

Transcript

“Hello there.  Today the subject for this video is expatriates and pension planning in the United Kingdom.

Can I pay into a UK pension if I live outside of the United Kingdom?  That's the question. 

Okay, first things first, if you move overseas and you wish to take out a new UK pension you probably won't be allowed to do that because UK pensions are regulated in the United Kingdom and they are authorised for sale to, to distribute to UK residents because we get tax relief etc  So you need to be a taxpayer.

If you have an existing pension scheme, then that may continue for a period, for a period of time. Where when you've moved overseas, you remain for basically five years what is known as a ‘relevant individual’ so you are relevant to HMRC for tax purposes.

You may not be paying income tax in the United Kingdom because you’ve moved overseas.  However, if you have an existing pension scheme in place then you can still contribute to that pension scheme for up to 5 years and you will receive income tax relief. 

Now usually, there may be circumstances when you can pay more, but usually, for a British National who has a pension in the UK and was paying into it before when they move overseas they can continue to pay into that pension scheme for up to 5 years. [And] the maximum contribution is usually a gross pension contribution of £3,600 per annum, where tax relief basic rate tax is granted at 20%. 

So you physically pay £2,880 into a pension scheme and your pension company collects the tax relief at source and you have a gross contribution going into your pension of £3,600.  So in simplistic terms, you write a cheque for £2,880 and immediately on day 1 your pension fund is worth £3,600.  That's what the contribution was with automatic tax relief.  That can continue for 5 years and then, that's when it stops. 

So don't forget if you're heading overseas:

Can I still pay into a UK pension?  The answer is yes.  Usually for up to 5 years and you receive tax relief even though you're not a taxpayer any more in the UK.

There are other options as well.  If you move outside that five years or you want to do something different then, there are alternative types of pensions where you can save offshore in the usual suspect places: the Isle of Mans, the Jerseys, the Guernseys, places like that. 

But, you'll need to take professional advice on that because it very much depends upon where you live it may be that you contribute locally to a pension scheme.

So in very basic summary, if you are relevant individual, [for] five years you can pay into  your UK pension £2,880,  gross £3,600.  You receive tax relief even though you’re not pay tax in the UK anymore and then considerations outside of that:

  1. paying into a pension scheme locally in the country that you live or
  2. looking at alternative types of retirement savings vehicles offshore

As ever do contact me if you're going expat or thinking of going expat and want to still think about and contribute to pensions. Thanks very much for watching.”



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