You left the UK. Your pension didn't.

Living overseas doesn't automatically take a UK pension outside UK Inheritance Tax - and from 6 April 2027, most unused pension funds come within that framework. Carla Smart, Private Wealth Partner and Group Head of Pensions, spends half an hour on what that means where you live, and on the question behind it: keep the pension, transfer it, or start taking benefits.

When:

Wednesday, November 4, 2026

Time:

6.00PM GMT, 7.00PM CEST, 9.00PM GST

Two things decide where you stand. Neither is your postcode.

The change is law. The planning window is open.

Many British expats assume that once they live abroad, a UK pension sits outside UK Inheritance Tax. For a lot of people, it does not.

What decides it is your residence history - broadly, whether you have been UK resident in at least ten of the previous twenty tax years, a status that can continue for a period after you leave - and where your pension is actually established. A UK scheme and an overseas arrangement can be treated differently.

From 6 April 2027, under the Finance Act 2026, most unused pension funds and pension death benefits are taken into account for UK Inheritance Tax. Scheme discretion alone no longer keeps them outside the calculation, and an expression of wishes does not change the tax position.

Being within scope does not mean every estate will pay tax. Exemptions and allowances still matter. But for anyone who built a plan around the old treatment, the assumption needs revisiting.

And there is a second layer that only applies to you. Where you live decides how the money is taxed when you take it - and that can change the answer more than the size of the pension.

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Same pension. Different country. Different outcome

A UK national, aged 60, with a £750,000 SIPP, living permanently overseas. Nothing about the pension changes in what follows. Only the country does.

UAE - no personal income tax on pension withdrawals, which is exactly why the timing of a later move to Europe matters.

Switzerland - under the treaty, a qualifying lump sum from a UK scheme is taxable only in the UK. A Swiss pension capital payment can be treated differently.

France - income tax and potentially social charges, with a specific election on qualifying capital payments if the conditions are met.

Spain & Portugal - the UK's tax-free cash is not guaranteed the same treatment locally once you are resident.

Cyprus - a resident can elect for a flat 5% income tax on foreign pension income above €5,000 a year.

Illustrative only. Rates as at October 2026. Local tax advice should be obtained where appropriate.

Carla Smart

Private Wealth Partner & Group Head of Pensions

Carla leads pensions across the Skybound Wealth group and advises internationally mobile clients on UK pensions, cross-border retirement income and estate planning. She works daily with clients who built a pension in the UK and a life somewhere else - from the UAE to Switzerland, France, Spain, Portugal and Cyprus.

Send anything you'd like Carla to address to: carla.smart@skyboundwealth.com

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