UK tax for expats: PAYE, National Insurance, and the numbers.
Become UK tax resident and the UK taxes your worldwide income. But new arrivals get something Portugal and Spain don't offer: four tax years with no UK tax on foreign income and gains. Here's how it works in 2026/27 — and what you keep owing back home, whether you're coming from the US, Canada, or Australia.
Figures verified 3 July 2026
The key numbers · 2026/27
Tax residency trigger: 183+ days in a tax year — automatic, under the Statutory Residence Test
Income tax (England/Wales/NI): 20% / 40% / 45%; personal allowance £12,570, frozen to April 2031
FIG regime: 4 tax years with no UK tax on foreign income and gains for qualifying new arrivals
Foreign pension income: taxed at UK progressive rates (20–45%) — treaty determines what's taxed where
Inheritance tax: 40%; worldwide assets in scope once you've been resident 10 of the last 20 tax years
New State Pension: £241.30/week (2026/27) · US FEIE 2026: US $132,900 · FBAR trigger: US $10,000
Roth IRA: treaty-protected in the UK — qualified distributions exempt (US–UK Exchange of Notes)
Are you UK tax resident?
The Statutory Residence Test decides. Spend 183 or more days in the UK in a tax year and you're automatically resident. Fewer than 16 days and you're automatically not (46 if you were non-resident for the prior three years). In between, a "sufficient ties" test counts your connections — home, family, work — against your day count (HMRC RDR3). Most people who move here full-time are resident from arrival. Plan on it.
2026/27 income tax bands
These are the rates for England, Wales and Northern Ireland (HMRC):
Taxable income (above allowance)
Band
Rate
Up to £12,570
Personal allowance
0%
£12,571 – £50,270
Basic
20%
£50,271 – £125,140
Higher
40%
Above £125,140
Additional
45%
The personal allowance is frozen at £12,570 until April 2031 (Autumn Budget 2025), and tapers away £1 for every £2 of income over £100,000 — it's gone entirely at £125,140.
Scotland sets its own income tax. Six bands in 2026/27: 19%, 20% and 21% at the bottom, then 42% from £43,663, 45% from £75,001, and a 48% top rate (mygov.scot). If you're weighing Edinburgh against England, run both sets of numbers.
The FIG regime: four tax-free years
This is the UK's big draw for new arrivals. Since 6 April 2025 (it replaced the old "non-dom" rules), anyone who has been non-UK-resident for 10 consecutive years can elect, for their first four tax years of residence, to pay no UK tax on foreign income and gains — pensions, dividends, interest, capital gains arising outside the UK (HMRC). Nearly every genuinely new arrival passes the 10-year test.
The mechanics: you claim year by year through Self Assessment, and the claim deadline is 31 January in the second year after the tax year ends — a 2026/27 claim is due by 31 January 2029 (HMRC HS266). Claiming costs you that year's personal allowance and capital gains exempt amount — usually a trivial price against four years of sheltered foreign income. UK-source income (a UK salary, UK rent) is taxed normally throughout.
Use the window deliberately. Four years of UK-tax-free foreign gains is a planning opportunity — for realising gains, restructuring, or drawing down accounts. Americans note: the IRS taxes you regardless. The FIG regime removes the UK layer, not the US one.
Your pension & retirement income
How the UK taxes the money you've already earned.
The UK taxes foreign pension income at progressive rates (20–45%) as pension income. But the treaty with your home country determines who taxes what — and the FIG regime can shelter foreign pensions entirely for your first four years. Pick where your pension comes from.
Social Security: taxable only in the UK (Art. 17(3)) — the saving clause exception means the US genuinely stops taxing it
WEP repealed: Social Security Fairness Act (Jan 2025) — a UK State Pension no longer reduces your US Social Security
401(k) / Traditional IRA: taxable in the UK as pension income; US citizens file 1040 + FTC
Roth IRA: treaty-protected — qualified distributions exempt in the UK under the Exchange of Notes
Lump sums: HMRC changed position March 2025 — now asserts UK tax on US plan lump sums (DT19853)
Government & military pensions: taxable only in the US (Art. 19)
Social Security — taxable only in the UK
Article 17(3) of the US–UK treaty gives the UK exclusive taxing rights on US Social Security once you're UK resident. Crucially, Social Security is listed as a saving-clause exception (Art. 1(4)), which means the US genuinely surrenders its right to tax — unlike most other pension provisions, where the US retains the right to tax its citizens regardless. The practical result: US Social Security is taxed only in the UK at progressive rates, and you report it on your UK Self Assessment return.
This is one of the most favourable Social Security treaty provisions anywhere. In most countries (Portugal, Spain, France), the US retains at least a partial right to tax.
WEP is dead — UK State Pension no longer reduces US Social Security
The Windfall Elimination Provision was repealed by the Social Security Fairness Act, signed 5 January 2025 (retroactive to January 2024). A UK State Pension — or any other foreign pension based on non-covered employment — no longer reduces your US Social Security benefit. SSA completed adjustments for over 3.1 million beneficiaries by mid-2025. If you were previously affected, check your benefit statement.
The Government Pension Offset (GPO) was also repealed in the same Act. If your spouse's Social Security benefit was previously reduced because you receive a UK government pension, that offset is gone too.
401(k) and Traditional IRA withdrawals
Article 17(1) treats periodic pension distributions as taxable in the UK. But the treaty's saving clause (Art. 1(4)) preserves the US right to tax its own citizens on the same income. The practical result: the UK taxes at progressive rates (20–45%), the US also taxes it on your 1040, and you claim a Foreign Tax Credit on whichever side has the lower bill.
UK rates at typical retirement income levels (£30,000–£80,000) generally exceed US effective rates, so the FTC usually eliminates US tax entirely — but you still file. The FIG regime can remove the UK layer entirely for your first four years (see below).
Roth IRA — treaty-protected in the UK
This is where the UK stands out. The US–UK treaty's Exchange of Notes explicitly lists Roth IRAs (section 408A plans) as covered pension schemes. Under Article 18(1), distributions from a covered scheme that would be exempt in the country where the scheme is established are also exempt in the other country. Since qualified Roth distributions are tax-free in the US, the UK must also treat them as exempt.
This makes the UK one of the best countries in the world for Americans with Roth accounts — Portugal, Spain, France, and most other countries don't recognise the Roth wrapper at all and tax the growth at full progressive rates.
The accumulation phase too: Article 18(1) also provides that income accruing within the Roth IRA is not taxed in the UK until (and to the extent) a distribution is made. Growth inside the Roth is sheltered from UK tax while it stays in the account — the same treatment as in the US.
Lump sums — the March 2025 bombshell
HMRC changed its position on 12 March 2025. Updated guidance (DT19853) now asserts UK tax on lump-sum distributions from US pension plans paid to UK residents, with credit for any US tax paid. Previously, lump sums were widely understood to be exempt from UK tax under the treaty. The estimated uplift in global tax liability is 8–11% of the lump sum. This is actively contested by practitioners.
The mirror problem also exists: the IRS may not fully respect the UK's 25% Pension Commencement Lump Sum as tax-free for US citizens. Both directions are now uncertain ground. Do not take any lump sum — from a US plan or a UK plan — without cross-border specialist advice.
Government and military pensions
Article 19 gives the US exclusive taxing rights on government pensions — FERS, CSRS, military retirement pay, state and local government pensions. The UK cannot tax them. You still declare them on your UK Self Assessment return, but no UK tax is due.
Exception: if you hold both US and UK nationality, the exclusion does not apply — the pension is taxable in both states, with credit relief.
The FIG regime — four tax-free years for US pensions
If you've been non-UK-resident for at least 10 consecutive tax years, the FIG regime exempts your foreign income — including US pension income — from UK tax for your first four tax years of UK residence. US pension withdrawals, Social Security, and investment income from the US all qualify as foreign income.
The trade-off: claiming FIG costs you the £12,570 personal allowance and the £3,000 CGT annual exempt amount for that year. On any meaningful US pension income, the trade-off is overwhelmingly positive. But note: US citizens still owe US tax on everything, FIG or not — the regime removes the UK layer, not the US one.
ISAs — the PFIC trap for Americans
The IRS doesn't recognise the ISA wrapper. Income inside is US-taxable, and pooled funds held within an ISA are PFICs — Passive Foreign Investment Companies. Form 8621 is required for each PFIC, and the default tax treatment is punitive (the "excess distribution" method). US persons generally avoid non-US pooled funds altogether, ISAs included.
Workarounds: cash ISAs (no PFIC issue with cash); direct shareholdings in individual stocks (not PFICs); or simply don't use ISAs and invest through US-based accounts. Get advice before opening any UK investment wrapper.
What you still owe the US — the full picture
Obligation
Detail
Annual filing
Yes — forever. Form 1040 required annually regardless of where you live.
FEIE
US $132,900 for 2026 — but does not apply to pension income. Only earned income qualifies.
Foreign Tax Credit
Form 1116. UK tax paid credits against US tax on the same income. The primary relief mechanism for retirees.
FBAR
FinCEN Form 114 if foreign accounts exceed US $10,000 aggregate at any point. Due April 15 (auto-extension to Oct 15).
FATCA
Form 8938 if foreign assets exceed US $200,000 year-end (single, living abroad) or US $300,000 at any point. MFJ: US $400k/US $600k.
Totalization
US–UK agreement since 1985. Prevents double social security contributions; allows combining NI and SS credits for benefit eligibility.
Treaty: Canada–UK Convention (1978, as amended) · HMRC DT4610
CPP / OAS: taxable only in the UK (Art. 17) — no Canadian withholding for UK residents
Annuities: Canada may withhold up to 10% (Art. 17(2))
RRSP/RRIF periodic: 90% taxable in the UK; 10% treated as return of capital
RRSP lump sums: 25% Canadian withholding — treaty may not reduce it
OAS export: requires 20+ years Canadian residence after age 18
No benefit totalization: UK years don't count toward OAS/CPP; Canadian years don't count toward UK State Pension
CPP / QPP
Under Article 17 of the Canada–UK treaty, CPP and QPP pensions paid to a UK resident are taxable only in the UK. Canada does not withhold tax. The UK taxes the full amount at progressive rates (20–45%) as pension income.
If you qualify for FIG (10 consecutive years non-UK-resident), CPP/QPP is foreign income and exempt from UK tax for your first four tax years of residence.
OAS (Old Age Security)
Same treaty treatment as CPP — taxable only in the UK. But OAS has its own export rules:
20+ years of Canadian residence after age 18: OAS is paid indefinitely regardless of where you live.
Less than 20 years: OAS stops 6 months after you leave Canada. UK residence years don't count toward the 20-year threshold.
The OAS clawback still applies: if your worldwide net income exceeds CAD $93,454 (2025 threshold, adjusted annually), OAS is clawed back at 15 cents per dollar. Full clawback at roughly CAD $152,000 (ages 65–74). File Form T1136 (OASRI) annually.
GIS is lost. The Guaranteed Income Supplement stops 6 months after you leave Canada. No treaty or agreement overrides this.
RRSP / RRIF withdrawals
Canada withholds 25% on RRSP lump-sum withdrawals from non-residents — and the treaty may not reduce this. For RRIF periodic withdrawals, the treaty reduces the Canadian withholding rate significantly (often to zero for payments below the minimum amount).
The UK taxes RRSP/RRIF withdrawals as pension income, but allows a 10% deduction — only 90% of the payment is taxable. This reflects the UK's treatment of the original contributions as return of capital.
Strategy: convert your RRSP to a RRIF before emigrating. Periodic RRIF withdrawals attract lower Canadian withholding than RRSP lump sums, and the UK's 90% inclusion rate is more favourable than full taxation.
Employer DB pensions
Article 17 applies: taxable only in the UK. Canadian government employee pensions (federal, provincial, municipal) are treated the same as private pensions under this treaty — unlike the US–UK treaty, there is no special government-pension article giving Canada exclusive rights.
TFSA — the UK doesn't recognise it
The TFSA's tax-free status is a purely Canadian construct. The UK treats the TFSA as a regular investment account. Dividends, interest, and capital gains are taxable in the UK at normal rates. Canada doesn't tax TFSA income, so there's no Foreign Tax Credit available. You can't make new TFSA contributions as a non-resident (1% per month penalty).
Departure tax — the hidden bill from Canada
Under Section 128.1(4) of Canada's Income Tax Act, ceasing Canadian residency triggers a deemed disposition of most property at fair market value. Capital gains are taxable in Canada immediately.
You can elect to defer the tax via Form T1244, but security may be required. File by April 30 of the year after emigration.
No benefit totalization
Unlike the US, Canada and the UK have no benefit-totalization arrangement that lets you combine contribution years across systems. UK National Insurance years do not count toward CPP or OAS eligibility, and Canadian contribution years do not count toward the UK State Pension. If you split your career between the two countries, you may end up with partial entitlements in each and a full pension in neither.
Voluntary Class 3 NI contributions (£17.75/week from April 2026) can fill UK gaps if you're eligible. For CPP, only Canadian earnings during your contributory period determine the benefit amount.
25% tax-free lump sum (PCLS): up to £268,275 standard limit
Scotland: top rate 48% from £125,140 · six bands · up to 3 points higher than England/Wales
IHT: 40% above nil-rate band — worldwide assets in scope after 10 of 20 tax years UK resident
UK State Pension
The new State Pension is £241.30 per week (£12,548/year) in 2026/27 after a 4.8% triple-lock rise. You need 10 qualifying NI years for any pension, 35 for the full amount. The State Pension is taxable income but is paid gross — no tax deducted at source. It uses up most of the £12,570 personal allowance, so any other pension income is taxed from the first pound.
Each qualifying NI year adds roughly 1/35th to your entitlement — about £358/year in pension. At £17.75/week (£923/year) for voluntary Class 3 contributions from April 2026, the payback period is under 3 years. If you have gaps, filling them is usually excellent value.
Voluntary NI — the 2026 change
From 6 April 2026, Class 2 voluntary NI contributions for people living abroad are permanently closed. Only Class 3 is available: £17.75/week (£923/year) — roughly 5x the old Class 2 rate. Eligibility now requires either 10 continuous years of UK residence or 10 qualifying NI years (previously only 3 years required).
Workplace pensions (DB and DC)
Defined benefit pensions (final salary, career average) and defined contribution pots are taxed as pension income at progressive rates. Auto-enrolment contributions (currently 8% minimum: 5% employee, 3% employer) go into DC schemes. Employer contributions don't count toward your personal Annual Allowance.
SIPP and personal pension drawdown
From age 57 (rising to 57 in 2028, aligned with State Pension age minus 10), you can access DC pots flexibly. The first 25% is tax-free (the PCLS, up to £268,275 standard limit). The rest is taxed as pension income at progressive rates. The Money Purchase Annual Allowance of £10,000 applies once you've flexibly accessed any DC benefits — limiting further tax-relieved contributions.
The FIG regime and returning expats
If you're a British citizen returning to the UK after 10+ consecutive tax years abroad, you qualify for the FIG regime. Your foreign income — including any overseas pensions — is exempt from UK tax for your first four years of residence. UK pensions (State Pension, workplace pensions from UK employers) are UK-source income and taxed normally, but any foreign pensions you've built up during your time abroad are foreign income and qualify for relief.
Scotland
If you live in Scotland, you pay Scottish income tax rates on your pension income. The 2026/27 rates run from 19% (starter) to 48% (top rate above £125,140), with six bands. The difference from England/Wales rates can be 2–3 percentage points at certain income levels. Pension income from any source — State, workplace, personal — is taxed at Scottish rates if Scotland is your main UK home.
IHT — the 10-of-20-years clock
Since April 2025, inheritance tax is residence-based. Once you've been UK resident for 10 of the last 20 tax years, your worldwide estate is in scope at 40% above the nil-rate band (£325,000 + £175,000 residence nil-rate band, both frozen to April 2031). DC pension pots were previously IHT-exempt — from April 2027 they will be included in the estate for IHT purposes (announced in the October 2024 Budget).
Treaty: Australia–UK Convention (2003, as amended) · GOV.UK
Age Pension: exportable to the UK, but may be proportionally reduced based on Australian working-life residency
Superannuation (age 60+): tax-free in Australia — but the UK taxes it at progressive rates (20–45%)
UK State Pension: FROZEN in Australia — but fully uprated if you move to the UK instead
SMSF: maintaining from abroad is high-risk — central management and control test
CGT on departure from Australia: deemed disposition of most assets
Reciprocal healthcare: yes — Australia and the UK have a healthcare agreement
The frozen pension — and why the UK beats Australia for UK pensioners
If you hold a UK State Pension and live in Australia, your pension is frozen at the rate when you first claim or leave the UK — no annual increases, ever. Over a 20-year retirement, the freeze costs roughly £195,000 compared to someone in the UK. Around 250,000 UK pensioners in Australia are affected.
Move to the UK instead and your State Pension is fully uprated under the triple lock. If you're an Australian with UK pension entitlements weighing the UK against staying in Australia, this is a significant financial factor — worth tens of thousands over a retirement.
Australian Age Pension
The Age Pension is payable overseas indefinitely, but the rate may be reduced after 26 weeks based on your Australian Working Life Residency (AWLR). If your AWLR is 35+ years, you receive the full rate. Below 35 years, it's proportional: (AWLR months / 420) x maximum rate.
Several supplements are lost or reduced overseas: Rent Assistance stops after 26 weeks, Energy Supplement after 6 weeks, and Pension Supplement drops to the basic rate after 6 weeks.
The UK taxes the full Age Pension at progressive rates as pension income. Tax paid in Australia (if any) is credited against UK tax under the treaty.
Superannuation — the 0%-to-45% gap
This is the biggest issue for Australian retirees moving to the UK. In Australia, super withdrawals after age 60 from a taxed fund are completely tax-free — both lump sums and income streams. The UK doesn't recognise this.
The UK taxes super withdrawals as pension income at progressive rates (20–45%). Because Australia charges no tax on the withdrawal, there's no Foreign Tax Credit available to offset the UK tax. You go from 0% to up to 45% simply by changing where you live.
The FIG regime helps — but only for four years. If you qualify (10 consecutive years non-UK-resident), super withdrawals are foreign income and exempt from UK tax during the four-year window. After that, full UK rates apply. Use those four years deliberately.
Self-managed super funds (SMSF)
Maintaining an SMSF from abroad is high-risk. Three tests must be satisfied: the establishment-or-assets test, the central management and control test, and the active member test. A temporary-absence concession allows up to 2 years outside Australia for the central management test, but beyond that, strategic decisions must "ordinarily" be made in Australia.
If the SMSF fails these tests, it loses complying status and is taxed at 45% instead of the concessional 15%. Consider rolling into a retail or industry fund before moving permanently, or appointing an Australian-resident trustee with appropriate powers.
Government and military superannuation
Under Article 18 of the Australia–UK treaty, government pensions (CSS, PSS, military super) are taxable only in Australia. The UK exempts them — you declare them on your UK return with the treaty exemption noted, but no UK tax is due. This is the reverse of private super, which the UK can tax.
CGT on departure from Australia
Australia's CGT Event I1 deems all assets (except "taxable Australian property," primarily real estate) to be disposed at market value when you cease residency. You can elect to disregard the event, but your assets then become Taxable Australian Property and the 50% CGT discount is apportioned based on days as a resident versus total ownership.
The main residence exemption trap: from 1 July 2020, non-residents at the time of sale generally lose the main residence CGT exemption. Sell your Australian home before leaving to preserve the full exemption. Narrow life-event exceptions may apply.
The timing play for Australians
Because super withdrawals go from 0% (Australia) to up to 45% (UK), the pre-residency window is more valuable for Australians than almost any other nationality:
Take super lump sums while still Australian tax resident (0% after age 60)
Sell the Australian home before departure (preserves main residence exemption)
Crystallise capital gains while still in Australia (50% discount available)
Roll SMSF into a retail fund if maintaining compliance from the UK is impractical
Once in the UK, use the FIG regime's four-year window for any remaining foreign income
Reciprocal healthcare
Unlike many country pairs, Australia and the UK have a reciprocal healthcare agreement covering medically necessary treatment. This provides a healthcare bridge while you establish NHS registration. It does not replace full NHS access once you're a UK resident — register with a GP as soon as you arrive.
Key numbers · South African pension in the UK · 2026
Treaty: UK–SA Convention (2002), in force since Dec 2002 · full text (GOV.UK)
Private pensions (RAs, preservation, provident): taxable only in the UK (Art. 17) — SA should not withhold
Government pensions (GEPF): taxable only in South Africa (Art. 18(2)) — unless you hold UK nationality
SA pension lump sums: UK has taxing rights under Art. 17 — but SARS still deducts at source; claim refund
FIG regime: 4 tax years with no UK tax on SA pension income for qualifying new arrivals
Tax emigration from SARS: must be confirmed non-resident for 3 uninterrupted years before withdrawing RAs
IHT: worldwide estate in scope after 10 of 20 tax years UK resident — SA assets included
The SA–UK corridor — the biggest expat flow
South Africa has one of the largest expat populations in the UK — over 200,000 SA-born residents at the last census, and many more with SA pension entitlements. The 2002 UK–SA treaty is well-tested and cleanly drawn. Article 17 gives the UK exclusive taxing rights on private pensions paid to UK residents. SA has no saving clause — once SARS confirms you as non-resident, SA stops taxing worldwide income. The result: your SA private pension is taxed only in the UK at progressive rates (20–45%), with no SA withholding once your fund administrator has your updated details.
Private pensions — retirement annuities, provident and preservation funds
Article 17(1) is explicit: pensions and other similar remuneration paid in consideration of past employment, and any annuity paid, to an individual who is a resident of the UK shall be taxable only in the UK. This covers retirement annuities, preservation fund drawdowns, provident fund payments, and living annuities.
The UK taxes the full amount as pension income at progressive rates: 20% (basic), 40% (higher), 45% (additional). The personal allowance (£12,570) applies, so a modest SA pension may fall largely within the tax-free band.
SARS still deducts at source. In practice, SARS applies its standard retirement lump-sum tax tables or PAYE rates to payments from SA funds, even when the treaty allocates taxing rights exclusively to the UK. You need to claim a refund from SARS for tax incorrectly withheld — previously via the RST02 form (discontinued April 2025), now through the tax directive process or mutual agreement procedure. Factor this delay into your cash-flow planning.
GEPF — government pensions stay in SA
Article 18(2)(a) gives South Africa exclusive taxing rights on pensions paid in respect of government service — GEPF, NHPF, and other public-sector pension funds. The UK cannot tax them. You declare them on your UK Self Assessment return with the treaty exemption noted, but no UK tax is due.
Exception under Art. 18(2)(b): if you are a resident of the UK and a UK national, the GEPF pension becomes taxable only in the UK instead. This is relevant for SA expats who have taken British citizenship — their GEPF pension shifts from SA-only taxation to UK-only taxation.
Lump-sum withdrawals — the practical problem
SA pension lump sums are a known friction point. The treaty gives the UK taxing rights under Art. 17. But SARS deducts tax at source using its lump-sum tax tables (0% on the first ZAR 550,000, then 18%, 27%, 36%). HMRC also seeks to tax the full amount. You end up temporarily double-taxed until you successfully reclaim from SARS — a process that can take 6–18 months.
Strategy: where possible, draw pension income as periodic payments rather than lump sums. Periodic payments are easier to process under the treaty, fund administrators are more familiar with the non-resident procedures, and SARS is less likely to withhold incorrectly.
The FIG regime — four tax-free years for SA pensions
If you've been non-UK-resident for at least 10 consecutive tax years before arriving, the FIG regime exempts your foreign income — including SA pension income — from UK tax for your first four tax years of UK residence. This is powerful for SA retirees:
SA private pension: foreign income. Exempt from UK tax under FIG for 4 years. SA also doesn't tax (non-resident). Total tax: 0%.
After FIG expires (year 5+): UK taxes at progressive rates (20–45%). Still no SA tax on private pensions.
GEPF: taxable only in SA regardless of FIG — FIG doesn't change the treaty allocation.
The trade-off: claiming FIG costs you the £12,570 personal allowance and £3,000 CGT exempt amount for that year. On any meaningful SA pension income, the trade-off is overwhelmingly positive.
Tax emigration — the three-year wait
Since 1 March 2021, SARS — not the Reserve Bank — determines your non-resident status for retirement fund purposes. To withdraw your retirement annuity or preservation fund before retirement age:
Complete tax emigration through SARS (cease to be SA tax resident)
Remain non-resident for 3 uninterrupted years
Obtain a Non-Resident Tax Status Confirmation Letter from SARS
Apply for a tax directive from SARS for the withdrawal
GEPF members can access their full benefit on resignation from government service regardless — no three-year wait.
The two-pot system — from 1 September 2024
Component
What happens
Vested component
Accumulated savings as at 31 Aug 2024. Subject to the 3-year non-resident waiting period for RAs and preservation funds.
Savings component
One-third of contributions from 1 Sep 2024 onward, plus seed capital (10% of pre-Sep 2024 savings, capped at ZAR 30,000). One withdrawal per tax year, minimum ZAR 2,000.
Retirement component
Two-thirds of contributions from 1 Sep 2024. Only accessible at retirement (age 55+).
Savings-component withdrawals are taxed in the UK as pension income (or exempt under FIG for the first four years). SARS may also withhold — reclaim via the treaty.
Exchange control — getting money out of SA
Single Discretionary Allowance (SDA): ZAR 2 million per calendar year (doubled from ZAR 1 million in March 2026). No SARS approval needed.
Foreign Investment Allowance (FIA): ZAR 10 million per calendar year with a SARS Tax Compliance Status (TCS) PIN.
Non-resident transfers: once SARS has confirmed non-resident status, retirement fund lump sums and other capital can be transferred via your authorised dealer (bank) with the appropriate tax clearance.
Regular pension/annuity income (not lump sums) can be transferred offshore without using your SDA or FIA allowances.
IHT — the 10-year clock starts on arrival
Once you've been UK resident for 10 of the last 20 tax years, your worldwide estate — including SA property, investments, and retirement fund death benefits — falls within UK inheritance tax at 40%. SA assets are included. SA doesn't have estate duty on assets held by non-residents outside SA, but the UK's IHT net is worldwide once you're a long-term resident.
From April 2027, DC pension pots (including SA living annuities held on UK platforms, if applicable) will be included in the estate for IHT purposes. Plan early — the 10-year runway is long but finite.
What you still owe SARS
Obligation
Detail
Tax emigration
Notify SARS of your change in tax residency. Complete a "cease to be resident" directive. The 3-year clock starts only after SARS confirms.
Exit charge
Deemed disposal of worldwide assets (excluding immovable property and retirement funds) at market value on cessation of residency. CGT at up to 18% effective rate.
SA-source income
Rental income from SA property, SA dividends, and income from SA permanent establishments remain taxable in SA. Dividends withholding: 20%.
GEPF pension
Taxed in SA under the treaty (unless you hold UK nationality — then UK only).
UK State Pension
If you worked in the UK and built NI years, the UK State Pension is UK-source income — taxed in the UK, not affected by SA obligations.
The UK taxes worldwide income of tax residents — including foreign pensions
Foreign pension income is taxed at progressive rates (20–45%) as pension income
Tax treaties determine whether your home country can also tax — check the UK's treaty list
The FIG regime can exempt foreign pension income for your first 4 years of UK residence (10+ years non-UK-resident required)
IHT: worldwide estate in scope after 10 of 20 tax years UK resident
The general framework
The UK has tax treaties with over 130 countries. The pension provisions typically follow the OECD Model Convention: private pensions taxable only in the country of residence (the UK), government pensions often taxable only in the paying state. But details vary — some treaties have specific provisions for social security, lump sums, or particular pension types.
The FIG regime is the big planning tool regardless of your source country. If you've been non-UK-resident for 10 consecutive tax years, your foreign pension income is exempt from UK tax for your first four years. This applies universally — it's not treaty-dependent.
We're adding detailed pension guides for more source countries. If yours isn't covered yet, get in touch and we'll connect you with a cross-border tax adviser who works with your nationality in the UK.
This section is general information, not tax advice. Cross-border pension taxation is personal — the interaction between treaties, domestic law, pension type, timing, and your individual circumstances means no two situations are identical. Engage a professional licensed in both countries before triggering residency or drawing down any retirement account.
Investments: CGT, dividends, savings, ISAs
Income type
Allowance (2026/27)
Rate
Capital gains
£3,000 exempt amount
18% basic-rate / 24% higher-rate (HMRC)
Dividends
£500 allowance
10.75% / 35.75% / 39.35% — basic and higher rates rose 2 points on 6 April 2026 (HMRC)
Savings interest
£1,000 basic / £500 higher / nil additional
Income tax rates; savings and property rates rise 2 points from April 2027 (announced, pending)
ISA
£20,000/yr
Tax-free in the UK. From 6 April 2027 the cash-ISA portion is capped at £12,000 for under-65s — 65+ keep the full £20,000 (HM Treasury)
The US-person ISA trap. The IRS doesn't recognise the ISA wrapper: income inside is US-taxable, and pooled funds held inside are PFICs — Form 8621 and punitive tax treatment. US persons generally avoid non-US pooled funds altogether, ISAs included. Cash ISAs and direct shareholdings are the usual workarounds; take advice first.
Inheritance tax: the 10-year clock
Since 6 April 2025 IHT is residence-based. Once you've been UK resident for 10 of the last 20 tax years you're a "long-term resident" and your worldwide estate is in scope. Before that, only UK assets are. The rate is 40% above the nil-rate band of £325,000 plus the £175,000 residence band — roughly US $660,000 combined, both frozen to April 2031 (HMRC). Leave the UK later and an "IHT tail" follows you for 3–10 years.
The planning window: a 60-year-old arriving in 2026 has roughly 10 years before their worldwide estate enters UK IHT scope. That's a long runway — but only if you use it. Estate planning done in year one is worth far more than estate planning done in year nine.
State Pension & totalization: GOV.UK; SSA; WEP repeal: SSA
This page is general information, not tax advice. Cross-border taxation is personal — engage a professional licensed on both sides before acting. Dollar figures use GBP/USD ≈ US $1.32 (1 July 2026); rates fluctuate daily.
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