Can I save into a UK pension plan if I live abroad?
Yes, you can live abroad and save into a UK pension scheme.
However, there are limits to the tax relief you can claim on your contributions.
If you move overseas, for the next 5 tax years you can still make pension contributions of up to £3,600 a year and get tax relief.
This assumes you have no earnings taxed in the UK. If you continue to have earnings taxed in the UK, tax relievable contributions can be based on these earnings, or £3,600 a year if greater.
The contributions must be made to a pension scheme you were a member of before you left the UK.
What happens after 5 years?
As far as HMRC are concerned, contributions can continue indefinitely after that at any level but with no tax relief.
However, many pension providers won’t accept member contributions that don’t get tax relief, so you would have to stop collecting contributions after 5 years.
If you return to the UK for any time during a tax year, that ‘resets the clock’ for the 5 tax year rule.
I have been abroad for a couple of years already and just found out about this. Can I go back and make up for those missed years?
Unfortunately not. It works on a “use it or lose it” basis. You can take advantage of the allowance for any of the 5 years that you have left though.
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▪️Ross has been a financial adviser for the past 26 years.
▪️He specialises in working with British expats over age 50 who are looking to optimise their finances for retirement.
▪️He is qualified as a financial adviser both in the UK, as a Chartered Financial Planner®, and in the EU, as a European Financial Planner®.
▪️Ross has been an expat himself for 22 years and currently lives in Warsaw, Poland with his wife and 2 children.