Living abroad – and what it could mean for taking your pension

Retiring abroad: what happens to your UK pension?

Many people dream of retiring abroad – often somewhere sunnier, and sometimes with a more favourable tax regime. In recent years, there has been a sharp rise in Britons moving to Dubai, attracted by its warm climate and tax‑free income. Others are looking further afield to financial hubs such as Singapore and Hong Kong.

But if you’re planning to live overseas, what does that mean for your UK pension when you start drawing benefits? Below, we look at three popular expat destinations and how UK pension income is treated in each.

At a glance

The number of Britons in Dubai has skyrocketed. It’s estimated that around 240,000 British nationals now live and work in the UAE, up from about 100,000 in 2010.¹ ²
Interest in Singapore is also rising. Relocation platform Relo.ai reports that inquiries from the UK about moving to Singapore increased by 42% between Q1 2023 and Q2 2025.³
The 2024 Budget announcement that most pension pots will be subject to inheritance tax (IHT) from April 2027 has prompted some retirees to consider spending their pensions more quickly. St. James’s Place has seen more expats in Dubai accessing their UK pension funds to help reduce potential IHT exposure.

Dubai – how UK pensions are taxed

The United Arab Emirates (UAE) does not currently levy personal income tax, which is a significant draw for many expats. But what happens if you’re a British national living in Dubai and you start taking benefits from a UK pension?

According to Tony Smith, Head of Tax, Technical & Advice Delivery – Asia & Middle East at St. James’s Place, the starting point is that a UK pension usually is subject to UK tax, regardless of where the pension holder lives.

However, you also need to consider:

The tax rules in your country of residence, and
Any double taxation agreement (DTA) between the UK and that country.

For UAE residents, the DTA between the UK and the UAE states that “pensions and other similar remuneration paid to a resident of a Contracting State shall be taxable only in that State”. In practice, this means:

UK pension income can be paid gross, and
There is no tax liability in either the UK or the UAE on that pension income.

To benefit from this, pension holders need to:

Obtain a tax residence certificate in the UAE, and
Submit this with a DTA claim form to HMRC, so that a tax code can be issued and no UK tax is deducted at source.

Singapore – how UK pensions are taxed

Singapore operates a different system. In general, income derived from outside Singapore is not taxed in Singapore.

This means:

UK pension income is not taxed in Singapore, but
It remains taxable in the UK.

British expats living in Singapore will usually:

Be able to take 25% of their UK pension tax‑free (the pension commencement lump sum, or PCLS), and
Pay UK income tax on the remaining 75%, based on their UK tax position.

Hong Kong – how UK pensions are taxed

In Hong Kong, the position is broadly similar to Singapore.

Hong Kong has a territorial tax system, which generally taxes only income arising in Hong Kong. UK pension income is therefore:

Not subject to tax in Hong Kong, but
Taxable in the UK.

After taking the 25% PCLS, the remaining 75% of the pension is subject to UK income tax at the pension holder’s highest marginal rate.

Tony Smith notes that the key difference between jurisdictions such as the UAE, Singapore and Hong Kong often lies in the wording of their DTAs with the UK, so it is important to check those carefully.⁴

Changes to IHT and expat pension withdrawals

From April 2027, most pensions will fall within the scope of UK inheritance tax, following changes announced in the 2024 Budget. Expats are usually liable for IHT on their UK assets – and this will soon include unused UK pension funds.

This has prompted some expats to consider drawing on their UK pensions earlier than planned:

Taking money out of a UK pension and moving it offshore can reduce UK IHT exposure.
However, any income tax arising from those withdrawals must be carefully weighed against the potential IHT saving.

This strategy can be beautiful for those living in jurisdictions with a favourable DTA, such as the UAE, where UK pension income can be received without UK income tax.

By contrast, in Singapore or Hong Kong, withdrawals from a UK pension remain subject to UK income tax, which can result in a significant tax bill if large amounts are taken in a short period.

Tony notes that St. James’s Place is seeing many clients in the UAE accessing their UK pensions not only to manage IHT exposure, but also because there is no UK income tax liability on that income under the DTA. More broadly, the UAE’s tax environment remains attractive to UK nationals.

Five pension tips for expats

Check your scheme rules
Confirm what your pension scheme allows in terms of taking benefits as a non‑UK resident, including death benefits and options for beneficiaries.
Understand your tax position
Make sure you understand how UK pension benefits will be taxed in your country of residence, and review the relevant DTA between that country and the UK.
Be aware of temporary non‑residence rules
Flexi‑access drawdown (FAD) payments can be caught by temporary non‑residence provisions. If you enter FAD and take income, that income may be taxable when you return to the UK if:
- You return within five years of leaving, and
- You were UK tax resident for four out of the seven years before departure.
  This applies to income in excess of £100,000.
Don’t spend too quickly
If you draw pension benefits to take advantage of a lower tax regime and/or reduce UK IHT exposure, be careful not to erode your retirement savings too fast and leave yourself short later in life.
Seek professional advice
Tony’s key recommendation is that expats take both financial advice and tax advice, ideally from professionals with cross‑border experience.

Important information

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and may fall as well as rise. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

For more information on how retiring abroad and drawing a UK pension could affect your tax position and long‑term plans, please get in touch with Berkshire Financial Planning for expert financial advice.

Sources

UK Parliament – 19 November 2024
2 Middle East Monitor – 15 July 2024
3 RELO – October 2025
4 According to Tony Smith, in Hong Kong, the terms of the DTA state that “pensions and other similar remuneration (including a lump sum payment) arising in a Contracting Party and paid to a resident of the other Contracting Party in consideration of past employment or self-employment and social security pensions shall be taxable only in the first-mentioned Party”. In Singapore, “the terms of the DTA state that, pensions and other similar remuneration paid in consideration of past employment or self-employment and any payments made under the social security legislation of either Contracting State, and any annuity paid to an individual who is a resident of a Contracting State and is subject to tax in respect thereof in that State, shall be taxable only in that State”. October 2025.