Tax on Overseas Pensions in the UK Explained

If you are UK tax resident, you are generally taxed in the UK on your worldwide income — and that includes most pensions paid from overseas. Since 6 April 2017, foreign pension income has been taxable in the UK on the same basis as a UK pension, with 100% of the income assessable (an older rule that exempted 10% of foreign pension income was withdrawn).

In practice this means your overseas pension is added to your other income and taxed at your normal rates, using your personal allowance and tax bands in the usual way — the same rates set out in our article on how pension withdrawals are taxed in the UK. Whether you are UK resident for a tax year is determined by the Statutory Residence Test, and HMRC's guidance on tax on foreign income on gov.uk explains how residence is worked out.

The general rule is only the starting point, because the UK has double taxation agreements (DTAs) with more than 130 countries, and a DTA can override it. These treaties exist to stop the same income being taxed twice, and they allocate "taxing rights" between the two countries.

For most private and workplace pensions, the treaty typically gives the taxing right to the country where you are resident — so a UK resident is usually taxed in the UK on a foreign private pension. Government and civil-service pensions are often treated differently: under many treaties they remain taxable only in the country that pays them, and may be exempt from UK tax (though they can still affect your UK tax position). Because each treaty is different, the treatment of your specific pension depends on the agreement with the country concerned, which is why our article on QROPS and this one both stress taking advice where the position is unclear.

If tax has correctly been deducted abroad on a pension that is also taxable in the UK, you should not end up paying full tax twice. The main mechanism is Foreign Tax Credit Relief, which lets you set the overseas tax you have paid against your UK tax bill on the same income, up to the amount of UK tax due on it.

Where a treaty gives sole taxing rights to one country, you may instead be able to reclaim tax wrongly deducted in the other. The rules can be intricate, and the relief is only as much as the UK tax on that slice of income — so keeping records of foreign tax paid is important. Our article on how financial advice works in the UK can help if you are considering professional support for a cross-border tax position.

Foreign pension income is not usually taxed at source through UK PAYE, so you generally need to declare it yourself through Self Assessment, using the foreign income pages of the tax return. You report the gross pension, any foreign tax paid, and claim any Foreign Tax Credit Relief due.

Keeping good records — annual statements from the overseas provider and evidence of foreign tax — makes this far easier and helps if HMRC asks questions. If your only income were a modest foreign pension you might have little or no UK tax to pay after your personal allowance, but you may still need to report it. HMRC's Self Assessment guidance on gov.uk sets out who must file and the deadlines.

The way the UK taxes people who move here changed from 6 April 2025, when the old "non-domiciled" remittance basis was replaced by a new residence-based regime for foreign income and gains. Under the new rules, individuals who become UK resident after a period of non-residence may qualify for a period of relief on certain foreign income and gains when they first arrive, after which worldwide income — including overseas pensions — is taxed in the normal way.

These rules are complex and depend on your residence history, so if you have recently moved to the UK, or are planning to, it is worth checking your position carefully. This is an area where regulated advice may be appropriate, and you can confirm an adviser's credentials using our guide to verifying a financial adviser is FCA authorised.