Claiming Pension Tax Relief As An Expat

Lisa Smith, BA (Hons), CeFA

Expats can claim pension tax relief as long as they are still resident in the UK.

Residence is a matter of fact rather than choice and depends on the result of the statutory residence test.

Expats who are not resident in the UK cannot claim pension tax relief

How do I check my residence status?

The Statutory Residence Test is a series of questions about the time someone has spent in spends over recent tax years, family ties, employment and if an expat has a main home in the country.

Click here for a copy of a flow chart explaining the test

I am UK resident – how do I claim tax relief on pension contributions?

Tax relief is automatic if an expat has pension contributions deducted from gross pay (before tax) by an employer or if the pension provider claims basic rate relief (20%) and adds the money to a pension fund.

Typically, the expat will have a self-invested personal pension (SIPP), personal pension or a workplace scheme for automatic basic rate tax relief.

I am a higher rate taxpayer – can I claim extra relief?

Yes, higher rate (40%) and additional rate (45%) taxpayers can claim the extra relief by filing a self-assessment tax return.

My partner pays into my pension – can I claim relief?

Yes, the contributions automatically pick up the 20% basic tax boost

Can I claim tax relief if I don’t pay tax?

Yes. You can contribute £2,880 a year to a pension, which is topped up for you at the basic rate (20%)

Can I claim tax a relief on a QROPS?

No. Non-residents should join a Qualifying Recognised Overseas Pension Scheme, which disqualifies them from claiming tax relief as a UK resident

What are the claim limits?

Pension contributions are limited to £40,000 a year including tax relief with some exceptions.

If an expat has triggered drawdown, the annual cap drops to £10,000. Some high earners also see their annual contribution limit taper off to £10,000, too, depending on how much they earn in a year.

The lifetime limit for claiming tax relief on contributions is a pot of £1 million and this covers all the pensions an expat may have, not each fund.

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