One of the most common worries for British retirees is being taxed twice on their pension — once in the UK and again in their new country. The good news: for almost every country on earth, a double tax treaty prevents this. But understanding how the rules work, which country has taxing rights, and how to claim the right exemptions from your pension provider is essential planning. This guide covers everything for 2026.

Will I pay UK tax on my pension if I retire abroad?

The short answer: almost certainly not, once you become tax-resident abroad. Here is how it works:

1. Tax residence moves with you. Once you are resident in another country for more than 183 days per year (the standard test), you become tax-resident there and cease to be UK tax-resident — subject to the UK's Statutory Residence Test (SRT).

1. Double tax treaties allocate taxing rights. The UK has over 130 double taxation agreements (DTAs) in force. Every country featured on this site has a DTA with the UK. Under these treaties, your pension income is generally taxable in the country where you live, not in the UK.

1. The UK State Pension exception: it is always paid gross by the DWP — no UK tax is deducted at source regardless of where you live. You declare it in your country of residence and pay local tax there.

1. UK government service pensions: under most DTAs, civil service pensions, armed forces pensions, teacher pensions, police and NHS pensions remain taxable in the UK only (the source country rule). These are an exception to the general treaty principle.

The NT (No Tax) PAYE code — essential for private pension holders

If you receive a UK workplace pension, SIPP, or defined-benefit pension paid by a UK provider (Aviva, Legal & General, Royal London, etc.), that provider will continue to deduct UK income tax at source under PAYE — unless you obtain an NT (No Tax) code from HMRC.

Without an NT code, you are being taxed in the UK on income the treaty has already assigned to your new country. You would have to claim a UK tax refund each year (form R43) — slow and inefficient.

How to get an NT code:

1. Complete HMRC form DT-Individual (available on GOV.UK)
2. This form asks for your DTA country, type of pension, and confirmation of tax residence
3. Send to HMRC Centre for Non-Residents, BX9 1AN (or via the relevant overseas section)
4. Allow 3–4 months for processing — submit before you move ideally
5. HMRC issues a NT tax code directly to your pension provider, who then pays your pension gross from the following tax year

Important: continue to complete a UK Self Assessment tax return if you have UK income sources (rental income, UK dividends, capital gains on UK property).

UK State Pension: always paid gross

The State Pension is different from private pensions. The DWP always pays it without deducting income tax, regardless of where you live. You declare it in your country of residence as foreign pension income and pay local tax there.

Exception: if you remain UK-resident (not retiring abroad but spending summers abroad), your State Pension counts toward your UK income tax calculation as usual.

How each country taxes your UK pension

Portugal

The UK–Portugal DTA assigns most pension-source taxing rights to the country of residence (Portugal). Portugal's standard progressive income tax (IRS) applies:

There is a personal allowance of approximately €4,104. A retiree on £20,000 total pension (≈€23,500) would pay roughly €2,800/year in Portuguese income tax.

Note: Portugal's NHR (Non-Habitual Resident) regime charged 10% on foreign pension income — it closed to new entrants from 1 January 2024. Existing NHR holders keep the 10% rate until their 10-year period expires.

Spain

The UK–Spain DTA (2013) generally assigns taxing rights to Spain as the country of residence. Spanish IRPF progressive rates apply (see our Spain guide).

Effective rate for a £20,000/year retiree: approximately 10–12%, after Spain's personal allowance and pension deduction.

Cyprus — the standout 5% regime

Cyprus's Article 20 Income Tax Law allows foreign pension recipients to elect to pay a flat 5% tax on all foreign pension income above €3,420/year (approximately £2,890). This replaces the standard progressive Cypriot tax rates.

For a retiree on £15,000/year total pension income:

• Taxable amount: £15,000 − £2,890 = £12,110
• Tax payable: 5% × £12,110 = £606/year

Compare with UK basic rate (20%): £15,000 × 20% = £3,000/year — Cyprus saves nearly £2,400/year.

The 5% regime has no expiry date — unlike Portugal's old NHR or Greece's 15-year scheme.

UK government service pensions (civil service, military, teachers, police): the UK–Cyprus DTA retains UK taxing rights for these. The 5% option applies only to State and private pensions.

Greece — 7% for 15 years (Article 5B)

Greece introduced a 7% flat tax on all foreign income for new tax residents who transfer their residence from outside the EU/EEA. The regime lasts 15 years (Law 4714/2020, Article 5B).

This applies to ALL foreign income: pension, investment, rental — not just pension income. A retiree with £15,000 pension + £5,000 investment income (total £20,000) pays:

• 7% × £20,000 = £1,400/year

The income threshold for the Greek FIP visa (Financially Independent Persons) is €42,000/year — which rules out many State Pension-only retirees. But those with significant private pensions who qualify for the visa benefit enormously from the 7% regime.

Italy — 7% in qualifying southern regions

Italy offers a similar scheme to Greece: a 7% flat rate on all foreign income (Article 24-ter TUIR) for retirees who establish residence in:

• Any municipality in Sicily, Calabria, Campania, Basilicata, Molise, Puglia, Sardinia or Abruzzo with a population under 20,000 (expanded to 20,000 in 2026 from 15,000)

The scheme lasts 10 years and applies to all foreign pension and investment income.

Italy's Elective Residence Visa requires €32,000/year of passive income — lower than Greece.

France

The UK–France DTA assigns pension taxing rights to France as country of residence. French progressive income tax applies:

A £20,000 pension retiree would pay approximately €1,200–1,800/year in French income tax after the 10% pension deduction and personal circumstances.

Plus: France also levies social charges (CSG/CRDS) on pension income — but these are substantially reduced for retirees on lower incomes, and UK State Pension recipients with an S1 card are generally exempt from the health portion of CSG.

Malta

Malta's Malta Retirement Programme (MRP) requires a minimum annual tax of €7,500 (approximately £6,300) on foreign pension income remitted to Malta. If your pension is above €71,000/year, you pay 15% on the excess. This makes Malta interesting only for mid-to-high pension earners.

Outside Europe (Thailand, Panama, Mexico, Costa Rica)

These countries use territorial tax systems — they tax only income arising within the country. UK pensions, being foreign-source income, are not taxed locally at all in Panama, Costa Rica and Mexico. Thailand taxes foreign income brought into Thailand in the same tax year (from 2024), but pensions from abroad are generally not remitted as current-year income if managed carefully.

However: UK tax may still apply if you retain UK tax residence or have UK income sources.

Double tax treaty summary table

How to structure your tax affairs before leaving

1. Complete HMRC form P85 — Leaving the UK declaration. Submit when your departure is confirmed
2. Apply for NT code via DT-Individual — if you have any UK private pension providers
3. Notify DWP International Pension Centre — so your State Pension can be paid to a new account
4. Review your will — most EU countries and international destinations require a local will; property outside the UK typically needs a local will covering that jurisdiction
5. Check IHT exposure — UK Inheritance Tax follows domicile, not residence. The 2025 Finance Bill changed the IHT test to a "long-term resident" rule based on 10/20 UK tax year tests. Take professional advice if your estate is above the threshold (£325,000 single, £650,000 with spouse transfer)
6. Capital Gains Tax: if you sell UK property after becoming non-resident, UK CGT still applies to that property. Report via the UK's 60-day CGT return

*Last reviewed: May 2026. Tax rates and treaty positions confirmed against HMRC, Cyprus Revenue Department, Spanish AEAT and Portuguese AT guidance. This is general information — take qualified cross-border tax advice for your personal circumstances.*

Related guides:

• Cyprus vs Spain pension tax comparison
• Portugal D7 visa guide
• Best countries to retire from the UK
• Use the destination wizard to find your best match

Related topics:

Find your ideal retirement country

Answer 7 quick questions about your budget, climate and lifestyle — and we will rank the 12 countries against your situation.