Pension Considerations for British Expats
We provide independent guidance on whether a transfer is appropriate, balancing tax considerations, investment flexibility, and long-term retirement goals.
If you have paid sufficient National Insurance contributions, you may still be entitled to the UK State Pension - even while living abroad. However, eligibility for inflation-linked increases depends on where you retire. For example, retirees in the EU or countries with reciprocal agreements may receive annual increases, while those in other regions may see their pension frozen at the initial payment level.
British expats often hold a mix of defined benefit and defined contribution pensions from their time working in the UK. Deciding whether to transfer, consolidate, or retain these pensions requires careful consideration of:
- Future access to funds
- Currency exposure and investment flexibility
- Charges and benefits compared to international solutions
For those seeking greater control over investments, SIPPs can be a valuable tool. They allow a broad range of investment choices, but also demand ongoing management and regulatory awareness.
QROPS may be suitable for some expats, particularly those who have permanently left the UK and want to manage pensions in a tax-efficient way overseas. Suitability depends on your location, long-term plans, and the evolving regulatory landscape.
Inheritance Tax (IHT) Implications for British Expats
A common misconception among expats is that leaving the UK means leaving IHT behind. Your worldwide estate may remain within the UK IHT net if you are considered “domiciled” in the UK - a status that often persists long after moving abroad.
Effective estate planning ensures your assets pass to your heirs efficiently and in line with your wishes. This may involve structuring investments, making lifetime gifts, or using trusts.
Key considerations include:
Domicile status
Distinct from tax residency, domicile determines your IHT exposure.
40% liability
Without planning, estates above the nil-rate band may face a 40% tax on death.
Double exposure
In some cases, overseas assets may be taxed both locally and in the UK.
Reliefs and exemptions
Spousal exemptions, trusts, and other planning structures can reduce liabilities.
Managing UK Property and Investments from Abroad
Many British expats retain property in the UK, whether as an investment, family home, or rental asset. This brings considerations such as:
- Ongoing UK tax liabilities (Income Tax, Capital Gains Tax, and potential IHT exposure)
- Currency exchange risk when repatriating rental income
- Practical management of tenants, mortgages, and maintenance from overseas
Similarly, UK-based savings and investments may be subject to UK tax rules even if you are non-resident. Reviewing your portfolio and exploring international alternatives can improve efficiency and simplify administration.
Tax Residency and Double Taxation Issues
Where you are tax resident is a central factor in your wealth planning. Each country has its own rules, and the UK Statutory Residence Test (SRT) can make determining residency more complex than expected.
Double taxation treaties (DTTs) between the UK and other countries can help ensure you are not taxed twice on the same income. However, misinterpreting residency or DTT provisions can result in costly mistakes.
We help you assess residency status, interpret treaty provisions, and structure your assets to minimise exposure while remaining compliant in every jurisdiction.
Case Study: British Family Retiring in Spain
John and Sarah, both in their late 50s, moved to Spain after decades of working in London. They held:
- Two defined contribution pensions
- A UK family home now rented out
- Investments in UK ISAs
- Plans to leave their estate to their children
Challenges they faced included:
- Accessing UK pensions in a tax-efficient way in Spain
- Avoiding double taxation on their rental income
- Understanding how their worldwide estate would be treated for IHT
- Managing fluctuating exchange rates on retirement income
With Hoxton Wealth’s guidance, they consolidated pensions into a structure aligned with their Spanish residency, ensured the DTT prevented double taxation, and put an estate plan in place to mitigate IHT exposure. Today, they enjoy their retirement with financial clarity and peace of mind.
Why British Expats Choose Hoxton Wealth
Specialist expertise
in UK and international financial planning
Global presence
with advisers across major expat hubs
Technology-enabled advice
with advisers across major expat hubs
Personalised strategies
tailored to your goals, residency, and family situation
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Planning your retirement as a British expat requires foresight, expertise, and tailored strategies. At Hoxton Wealth, we bring the experience and global reach to support you every step of the way.
FAQs
Yes. If you are considered UK-domiciled, your worldwide estate may remain subject to UK IHT, even if you live abroad.
In some cases, yes - through recognised schemes such as QROPS. However, suitability depends on your location, plans, and regulatory rules.
Most expats are entitled to receive it, but whether it increases annually depends on where you live.
They prevent the same income being taxed twice, but careful planning is needed to apply them correctly.
Residency affects where you pay tax annually, while domicile determines long-term ties and IHT exposure.
Important Information & Disclaimers
This page is for informational and educational purposes only and does not constitute financial, tax, legal, or investment advice. The scenarios and examples provided are illustrative only and do not represent a personal recommendation.
Hoxton Wealth and its affiliated companies are authorised and regulated in multiple jurisdictions. For licensing details, please visit: https://hoxtonwealth.com/licencing
This content is intended only for individuals located outside the United Kingdom, United States, European Union, and Australia. It is not directed at or intended to be accessed by persons resident in those jurisdictions.
Always consult a suitably qualified and regulated professional in your country of residence before making financial decisions.
