UK Pension Tax For Expats: How An NT Tax Code Can Help Avoid Double Taxation
Last updated June 2026
NT Tax Code
If you’re a UK expat receiving income from a UK pension, understanding the No Tax (NT) tax code is crucial.
This tax code allows you to receive your pension income without UK tax deductions at source, provided you meet the eligibility criteria.
Many UK pension providers apply PAYE (Pay As You Earn) tax deductions by default, even if you’re a non-resident.
To prevent this and avoid unnecessary tax reclaim processes, you need to apply for an NT tax code from HM Revenue & Customs (HMRC).
This guide explains everything you need to know about the NT tax code, how to apply for it, common pitfalls to avoid, and real-life case studies of expats who have successfully navigated the process.
TL;DR
An NT (No Tax) code is a tax code from HMRC that stops UK pension providers from deducting UK tax at source when you live outside the UK. It’s especially useful for expats living in countries with a Double Taxation Agreement (DTA), because it lets pension income be taxed where you reside rather than automatically under UK PAYE. You must apply for it — it isn’t automatic — and even with an NT code you’ll still declare and pay tax in your country of residence.
What is an NT Tax Code?
The NT (No Tax) code is a tax code issued by HMRC to individuals living outside the UK.
It is available to those who receive taxable UK income but are entitled to have their income paid without UK tax deductions due to a Double Taxation Agreement (DTA) between the UK and their country of residence.
Key points about the NT tax code:
- It applies to UK pension income (such as SIPPs and defined benefit pensions) for non-residents.
- It prevents tax from being deducted at source by the pension provider.
- You must apply for it manually – it is not issued automatically.
- It does not mean you don’t pay tax at all – tax is still due in your country of residence.
>>> Did you know? There are currently over one million British living abroad and receiving pensions, with Spain, Australia, and France among the top destinations.
Why Do You Need an NT Tax Code?
If you don’t have an NT tax code, your pension provider will deduct tax at source under the UK PAYE system.
In addition, in the majority of cases, schemes paying out a single or ad-hoc withdrawal, or making the first payment of a regular pension, will use an emergency tax code on a month 1 (M1) basis.
This doesn’t take into account any previous payments made in the current tax year.
Income tax is calculated using 1/12th of the standard personal allowance and 1/12th of the basic rate and higher rate tax bands.
Anything above that is subject to additional rate tax.
The emergency tax code for the 2024/25 and 2025/26 tax years is 1257L.
This will give a tax-free amount of £1,047.50 (£12,570/12), and the rest of the payment will be taxable.
Example
Mike is retired and lives in Poland.
He crystallised £50,000 from his Scottish Widows SIPP in March 2025, taking tax-free cash of £10,000, and drawing pension income of £40,000 under flexi-access drawdown.
Using the emergency tax code 1257L M1, Mike’s pension income will be taxed as follows:
| Tax Band* | Amount for 1 month | Rate of tax* | Tax |
|---|---|---|---|
| Personal allowance | £1,047.50 | 0% | £0.00 |
| Basic rate | £3,141.67 | 20% | £628.33 |
| Higher rate | £7,286.67 | 40% | £2,914.67 |
| Additional rate | £28,524.16 | 45% | £12,835.87 |
| Total | £40,000.00 | £16,378.72 |
* Based on UK income tax rates and bands (except Scotland).
This results in the pension income being taxed at an effective rate of 40.9% (£16,378.72 / £40,000).
While Mike can reclaim this tax, the process is time-consuming and frustrating.
Many expats prefer to apply for an NT tax code in advance to avoid this hassle.
Double Taxation Agreements (DTAs) and NT Tax Code Eligibility
A Double Taxation Agreement (DTA) is a treaty between two countries that prevents individuals from being taxed twice on the same income.
The UK has DTAs with many countries, allowing pensions to be taxed only in the country of residence.
Countries with DTAs that typically allow NT tax codes include:
🇦🇺 Australia
🇨🇦 Canada
🇦🇪 Dubai
🇫🇷 France
🇵🇱 Poland
🇵🇹 Portugal
🇪🇸 Spain
If you are unsure whether your country has a DTA with the UK, you can check the official HMRC DTA list.
Who Needs an NT Tax Code?
Here’s a breakdown of when an NT tax code is needed:
✔️ You are non-resident in the UK for tax purposes.
✔️ You have a pension income from a UK pension scheme.
✔️ You live in a country with a DTA with the UK that allows pensions to be taxed only in your country of residence.
Comparison Table: UK Tax Deduction vs. NT Code Benefits
| Scenario | UK Tax Deducted? | Action Needed |
|---|---|---|
| Receiving UK pension with NT tax code | No tax deducted | Declare income in country of residence |
| Receiving UK pension without NT tax code | Tax deducted at PAYE rates | File UK tax return to reclaim |
| Living in a country without a DTA | UK tax deducted | May not be eligible to reclaim UK tax |
Case Studies: Real Experiences with NT Tax Codes
Case Study 1: Steve’s Costly Mistake
Steve, a 59-year-old British expat living in Dubai, decided to take advantage of the local nil tax rate by drawing down 100% of his pension fund.
However, he didn’t realise he needed to apply for an NT tax code before making the withdrawal.
When he received his pension proceeds, he was shocked to find that his pension provider had automatically deducted UK tax at an emergency rate.
To reclaim this, Steve had to file a UK tax return, a process that took several months.
Case Study 2: Sue’s Smart Planning
Sue, a retiree living in Spain, took the right steps early and successfully obtained an NT tax code before drawing from her UK pension.
She followed the correct procedure:
- Confirming her tax residency in Spain by obtaining the required certificate.
- Making a small taxable withdrawal to establish a PAYE record.
- Completing the DT-Individual form and getting it certified by the Spanish tax authorities.
- Submitting everything to HMRC.
As a result, her NT tax code was in place before she made her first full pension withdrawal.
This meant she received her pension without UK tax deductions and declared it as income in Spain.
Sue avoided the stress of reclaiming overpaid tax and had full control over her pension income.
How to apply for an NT tax code
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Applying for an NT tax code can save UK expats thousands in unnecessary tax deductions.
Common NT Code Mistakes
- Assuming it happens automatically.
- Becoming non-resident but never informing HMRC by completing form P85.
- Believing an NT code means “tax free”.
- Taking a large pension withdrawal before the code is issued.
- Not understanding local taxation rules.
- Assuming every pension qualifies.
NT Tax Codes
FAQs
An NT tax code (No Tax code) is issued by HMRC to non-residents receiving UK income, such as pensions, so that tax is not deducted at source. You qualify if you live in a country with a Double Taxation Agreement (DTA) with the UK and are tax resident abroad.
You must:
- Confirm your tax residency in your new country.
- Make a nominal withdrawal from your pension to create a PAYE record.
- Complete the HMRC DT-Individual form (or equivalent).
- Obtain certification from your local tax authority.
- Submit your application to HMRC and wait for approval.
It typically takes 12-16 weeks, though it can take longer if there are processing delays at HMRC. Expats should apply well in advance of needing to withdraw pension income.
Without an NT tax code:
- Your pension provider deducts UK tax at source (PAYE).
- You may be taxed at an emergency tax rate, which could be up to 40%.
- You’ll have to file a UK tax return to reclaim any overpaid tax.
No. It only stops UK tax deductions. You still have to declare your pension income in your country of residence and pay tax there.
No. NT tax codes mainly apply to pension income (SIPPs, personal pensions, and defined benefit pensions). Other UK income—such as rental income—may still be taxable in the UK.
If this happens:
- Contact HMRC to confirm the NT tax code.
- Ensure your pension provider has the correct details on file.
Real People, Real Results
“Taxation, pensions, inheritance, capital gains and investing are areas that need qualified and expert advice. I would certainly be lost without him. If you are an expat looking for sound financial advice, then you would do well to reach out to Ross.”
— Malcolm Ridge
More TestimonialsFurther Reading
🔗 What Happens to Your UK Pension If You Move Abroad?
🔗 Inheritance Tax on Pensions for British Expats: May 2026 Update
🔗 Retiring Abroad: The Complete UK Expat Guide
🔗 Should I Consolidate My Pensions? A Guide for British Expats
The Bottom Line
An NT tax code can be an extremely valuable tool for British expats receiving income from a UK pension.
In the right circumstances, it can prevent unnecessary UK tax from being deducted and help ensure your pension is taxed in the country that has the legal right to tax it under the relevant Double Taxation Agreement.
However, obtaining an NT code is not as simple as informing your pension provider that you have moved abroad.
Your eligibility will depend on factors such as your country of residence, your tax residency status, the type of pension you receive and the terms of the applicable tax treaty.
Even where an NT code is available, it is important to remember that this does not mean your pension income is tax-free. In most cases, the income will still be taxable somewhere.
The good news is that with the correct planning and paperwork, expats can avoid being taxed twice on the same income and ensure their retirement finances are structured as efficiently as possible.
If you are living overseas and UK tax is being deducted from your pension, or you are planning a move abroad and want to understand how your pensions will be taxed, it is worth seeking advice before making any major decisions.
A little planning upfront can often save a great deal of time, cost and frustration later on.
Talk to an Expert
For many British expats, securing an NT tax code on a UK pension feels like the missing piece of the puzzle. But understanding who qualifies, how to apply, how double tax treaties work and what happens if you move again can be confusing — and costly if you get it wrong.
I’m Ross Naylor, a UK-qualified Chartered Financial Planner and Pension Transfer Specialist with nearly 30 years’ experience helping expats coordinate UK pensions, NT codes and overseas tax rules so they’re not taxed twice on the same income.
I firmly believe your location in the world should never be a barrier to expert, impartial and transparent financial advice you can trust.
An NT tax code is often just one part of a much bigger picture. Over the years, I have helped more than 250 expat families make sense of the complexities, avoid costly mistakes and ensure their pensions and investments support the life they want to lead.
Book a confidential consultation