Is It Really Tax-Free When Moving Your Pension to Gibraltar or Dubai?

Is It Really Tax-Free When Moving Your Pension to Gibraltar or Dubai

If you are a non-UK resident or someone moving abroad, there are several things you can do with your UK pension plan.

  • Leave your pensions in the UK pension plan
  • Transfer it to a Qualifying Recognised Overseas Pension Scheme (QROPS)
  • Pay into a UK Pension Scheme from wherever you are overseas

Among these options, the second one offers an opportunity where you can cash in your pension with little to no tax. Yes, it is possible. But you must tread carefully, as there are pitfalls along the way.

Do you want to take your pension somewhere with a low tax rate?

Gibraltar and Dubai are two excellent options with tax rates at 2.5% and 0%. So if you decide to withdraw your entire pension pot amounting to £500,000 in your new country of residence, you can enjoy a tax saving of £150,000 or more. But here’s the catch – if you return to the UK within the following 5 years, you will be charged the full tax amount. HMRC will never allow you to transfer your money and withdraw it tax-free in Gibraltar or Dubai. According to the tax director at accountants Grant Thornton, Mike Warburton, returning to the UK in less than five years after you left will place you under the temporary non-resident rules. So if you want to enjoy a low to zero tax pension withdrawal, you must live in the country you moved in for the next five years, before returning to the UK. For more information on the tax rules on cashing in your private pension, refer to tax experts. Avoid costly mistakes at all cost. If you need to find out more about tax on your UK pension speak with one of our tax agents at

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