I am moving to Spain and I want to make UK personal pension contributions
Is this permitted and what are the restrictions?
Will I still receive tax relief?
Providing that you are a relevant UK individual (definitions below) then you can continue pension contributions for up to 5 full tax years after the tax year you leave the UK. This means that, even if you have no UK earnings once you leave the UK, you can continue to pay up to £2,880 a year (currently), with a gross pension credit of £3,600, for 5 full tax years after leaving the UK. There are more details on how you qualify to make contributions in the text below taken from HMRC’s Pensions Tax Manual. Importantly, any contributions must be made to a plan taken out prior to leaving the UK. In other words, you cannot open a new UK pension plan having left the UK.
We have solutions for people who have left the UK but continue to work and wish to fund a retirement plan. We also help clients position their existing pension funds in the most tax efficient way, creating flexibility whilst providing access to investment experts to maximise the benefits you will receive.
Relevant UK individuals and active members*
Section 189 Finance Act 2004
An individual is a relevant UK individual for a tax year if they:
- have relevant UK earnings chargeable to income tax for that tax year,
- are resident in the United Kingdom at some time during that tax year,
- were resident in the UK at some time during the five tax years immediately before the tax year in question and they were also resident in the UK when they joined the pension scheme, or
- have for that tax year general earnings from overseas Crown employment subject to UK tax (as defined by section 28 of the Income Tax (Earnings and Pensions) Act 2003), or
- is the spouse or civil partner of an individual who has for the tax year general earnings from overseas Crown employment subject to UK tax (as defined by section 28 of the Income Tax (Earnings and Pensions) Act 2003)
Relevant UK earnings are explained under Earnings that attract tax relief in the above tax manual.
Members who move overseas
An individual who is a member of a registered pension scheme and is no longer resident in the UK is a relevant UK individual for a tax year if they were resident in the UK both:
- at some time during the five tax years before that year
- when the individual became a member of the pension scheme
These individuals may also qualify for tax relief on contributions up to the ‘basic amount’ of £3,600.
*Source UK government
The above article was kindly provided by John Hayward from The Spectrum IFA Group and originally posted at: https://www.spectrum-ifa.com/moving-to-spain-uk-pension-contributions/