How does a double taxation agreement decide where your pension is taxed?
A double taxation agreement allocates taxing rights between two countries, and for pensions the allocation is not uniform. Most UK treaties give private pension income to the country of residence, keep government service pensions taxable in the UK, and treat the State Pension differently from one treaty to the next — so the answer depends on which treaty applies.
- Private pensions: usually taxable only in the country of residence.
- Government service pensions: usually remain taxable in the UK, regardless of residence.
- The State Pension: varies by treaty — residence in some, the UK in others.
- The mechanism: relief is claimed, not automatic, and the paperwork differs by country.
01 Three kinds of pension, three answers
Most UK double taxation agreements follow the OECD model in giving exclusive taxing rights over private pensions — occupational schemes, personal pensions and SIPPs — to the country where the recipient is resident. Someone resident in Spain drawing a UK SIPP is generally taxed in Spain and not in the UK.
Government service pensions are usually the exception. Pensions paid for service to the UK government or a local authority typically remain taxable in the UK regardless of where the recipient lives, unless the recipient is both a resident and a national of the other state.
The State Pension is the one that varies most. Some treaties treat it like a private pension and give it to the country of residence; others leave it taxable in the UK. There is no single answer that holds across countries.
Source: Tax treaties
02 How relief is actually obtained
Treaty relief is claimed rather than applied automatically. Where the treaty gives taxing rights to the country of residence, HMRC has to be asked to pay the pension without UK tax deducted, usually through a form certified by the other country's tax authority. Until that is processed, UK tax is deducted and has to be reclaimed.
That lag is the practical problem. The certification step depends on the other country's administration, and several months of double deduction is common. Planning cash flow around a clean switchover on the day of departure is optimistic.
Where both countries do tax the same income, relief for the foreign tax paid is given by credit — you pay the higher of the two rates overall rather than both in full.
Shows: the total tax on pension income where two countries tax it and credit relief applies. Ignores: the specific treaty, allowances in either country, and the timing of any reclaim.
On the defaults above, the worked example shows £6,600. Credit relief means you bear the higher of the two, not both — £6,600 rather than £11,100.
03 What to check before moving
Find the treaty with the destination country and read its pension article, which is usually a page or less. Establish which of your income sources falls into which category, because a household with a State Pension, a private pension and a local authority pension can have three different answers.
Then check the other country's own rules, because the treaty allocates rights and does not set rates. A pension taxable in the country of residence is taxed at that country's rates, which can be higher or lower than the UK's and may treat lump sums very differently — the UK's 25% tax-free cash is not tax free everywhere.
And check the residence position first, because none of this applies until the Statutory Residence Test says you have left.
The mistake I see is treating 'where do I pay tax' as one question when it is three. A household leaving the UK with a State Pension, a company pension and a teacher's pension can find all three treated differently by the same treaty. Read the pension article — it is genuinely short — and sort your income sources into its categories before assuming anything. And expect the switchover to be slow: relief is claimed through a form the other country has to certify, and several months of UK tax being deducted and reclaimed is the normal experience rather than a mistake.
FAQ
Will my UK State Pension be taxed abroad?
The treaty decides. Some UK treaties treat the State Pension like a private pension and give it to the country of residence; others leave it taxable in the UK. There is no general answer, which is why the specific treaty has to be read.
What about a public sector pension?
Government service pensions usually remain taxable in the UK regardless of where you live, unless you are both resident and a national of the other country. That is the most common exception in UK treaties.
Is my 25% tax-free lump sum tax free abroad?
Not necessarily. The UK treats it as tax free; the country of residence applies its own rules and may tax it as income. Taking the lump sum before or after a move is therefore a decision with real consequences.
Sources
Regulator references
- Tax treaties · HM Revenue and Customs · 2025The double taxation agreements that decide which country taxes a pension.Last verified: 2026-09-07
- Tax on UK income if you live abroad: taxed twice · GOV.UK · 2025How to claim relief where two countries both tax the same income.Last verified: 2026-09-07
- Tax on your UK income if you live abroad · GOV.UK · 2025How UK-source pension income is taxed once residence changes.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.