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UK: Changes to pension tax to affect expats
| Published: | 25 Feb at 6 PM |
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British retirees looking to cash in their pensions could benefit because of changes to the rules regarding withdrawing lump sums that will be introduced in April.
The new regulations do not require a person to buy an annuity, while an added bonus for those wanting to take out large amounts before moving overseas is that there will be a reduction to the tax charge imposed – which currently stands at 55 per cent – when withdrawing cash from a pension pot.
As of April this year, anybody aged 55 or above will have more freedom to withdraw their money as and when they like without facing high tax charges. A quarter of the pension fund will be tax-free, while the remainder will be taxed at Britain’s marginal rate as long as the person is a tax resident in the country.
The new rules could be majorly beneficial to expats who potentially could withdraw their pension without incurring any tax charges and use the tax regulations in their country of residence to their advantage. A number of the most popular destinations among British retirees – such as Cyprus, Malta and Portugal – have tax systems that would likely reduce the charges for lump sums.
The new regulations do not require a person to buy an annuity, while an added bonus for those wanting to take out large amounts before moving overseas is that there will be a reduction to the tax charge imposed – which currently stands at 55 per cent – when withdrawing cash from a pension pot.
As of April this year, anybody aged 55 or above will have more freedom to withdraw their money as and when they like without facing high tax charges. A quarter of the pension fund will be tax-free, while the remainder will be taxed at Britain’s marginal rate as long as the person is a tax resident in the country.
The new rules could be majorly beneficial to expats who potentially could withdraw their pension without incurring any tax charges and use the tax regulations in their country of residence to their advantage. A number of the most popular destinations among British retirees – such as Cyprus, Malta and Portugal – have tax systems that would likely reduce the charges for lump sums.
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