Tax breaks
Overseas pension and tax
Income from UK pension arrangements is subject to UK income tax. It is collected as a withholding tax at 20%. This tax is applied to everyone in receipt of UK pension income whether or not they live in the UK and with no exemption for foreign nationals.Transferring UK pension rights to an overseas pension scheme means that UK income tax on pension income can be legitimately avoided.
UK pension rights that are transferred to an overseas pension are also taken outside the UK inheritance tax net, which can result in a significant succession planning benefit. One form of UK pension arrangement levies a combined 82% tax and penalty charge on the death of the pension plan holder!