Double Taxation and SIPPs: What If You Retire Abroad?
By Team SalaryCalculate · 7/15/2025
Retiring abroad with a Self-Invested Personal Pension (SIPP) can offer an appealing mix of lifestyle and financial freedom. But what happens when two tax systems are involved? Can you be taxed twice on your pension income? And how can you minimise the risk?
In this guide, we’ll explain how double taxation works, how UK tax treaties can help, and what to consider if you plan to draw your SIPP while living overseas.
What Is Double Taxation?
Double taxation occurs when two different countries try to tax the same income — in this case, your SIPP withdrawals. For UK residents retiring abroad, this can happen if:
- The UK taxes your pension as the source country, and
- Your new country of residence also taxes that same income.
Fortunately, the UK has signed double taxation agreements (DTAs) with many countries, designed to prevent this.
How Do Double Taxation Treaties Work?
Double taxation treaties determine:
- Which country has taxing rights over UK pension income
- Whether tax paid in one country can be offset in the other
- How to claim tax relief or exemption
In most treaties, UK pensions are only taxable in the country of residence, meaning if you live abroad, the UK won’t tax your SIPP income — provided you’re classed as non-resident and you claim treaty relief.
🔍 Example: If you retire to Spain, the UK-Spain tax treaty means your SIPP is only taxable in Spain, not in the UK.
Countries With UK Double Taxation Treaties
The UK has treaties with over 130 countries, including:
- Spain
- Portugal
- Australia
- France
- Germany
- Thailand
- USA
- Canada
You can check the full list on the UK government website: UK Double Taxation Treaties
⚠️ Some countries (like Brazil or certain Gulf states) do not have tax treaties with the UK, which can make double taxation more likely unless local exemptions apply.
How to Avoid Double Taxation on Your SIPP
Here are the key steps to avoid being taxed twice on your SIPP income:
1. Establish Non-UK Tax Residency
HMRC treats you as a UK tax resident based on the Statutory Residence Test. If you’re no longer UK tax resident, the UK may stop taxing your pension income — especially if the treaty grants taxing rights to your new country.
2. Claim Treaty Relief With Form DT-Individual
If you're receiving a UK SIPP abroad and the treaty states the UK shouldn't tax it, you must apply to HMRC using form DT-Individual to get relief at source or claim a refund of UK tax withheld.
3. Understand Local Tax Rules
Some countries tax foreign pensions differently — some treat them as income, others give partial exemptions, and a few exempt them entirely (like Portugal’s NHR regime for a time). Consult a local tax advisor.
How Are SIPPs Taxed in Common Expat Destinations?
| Country | Treaty with UK | UK SIPP Taxed in UK? | Notes |
| Spain | ✅ Yes | ❌ No | Taxed only in Spain under treaty |
| Portugal | ✅ Yes | ❌ No | NHR may offer tax breaks on pensions |
| Australia | ✅ Yes | ❌ No | Taxed in Australia only |
| France | ✅ Yes | ❌ No | Complex rules on lump sums |
| UAE | ❌ No | ✅ Possibly | No DTA – risk of double taxation |
Tax on SIPP Lump Sums Abroad
UK tax rules allow you to take 25% of your SIPP as a tax-free lump sum. However, some countries don’t recognise this exemption.
For example, while the UK won’t tax your tax-free lump sum, Spain or France might — so you could still pay local tax on the full amount.
Always check if your new country of residence recognises UK pension lump sum rules.
Do You Still Get Tax Relief on Contributions If You Move Abroad?
If you become non-UK resident, you may no longer get tax relief on new SIPP contributions unless:
- You’ve had relevant UK earnings in the current tax year
- You contribute within the £3,600 gross limit for non-residents
Final Tips for Managing a SIPP Abroad
- ✅ Check treaty terms before retiring overseas
- ✅ Apply for DTA relief with HMRC
- ✅ Consult both UK and local tax advisers
- ✅ Understand your local country’s tax treatment of UK pensions
- ✅ Factor in currency exchange, transfer costs, and SIPP provider policies
Summary: Can You Retire Abroad With a SIPP and Avoid Double Tax?
Yes — if your destination country has a double taxation agreement with the UK and you take the correct steps, you can often avoid being taxed twice. However, you may still be taxed locally, and the rules vary country to country.
Planning ahead with proper advice ensures you get the most from your pension without unexpected tax bills.
