A pension paid from abroad to a UK resident is taxable in the UK under section 573 of the Income Tax (Earnings and Pensions) Act 2003, and since 6 April 2017 the whole amount is taxable: the old rule that taxed only 90% was repealed. Most treaties give the UK, as the country of residence, the right to tax ordinary private and occupational pensions, but government service pensions are usually taxable only by the country that pays them unless you are a national of the UK as well as resident here.

Which overseas pensions are caught?

Section 573 of ITEPA 2003 applies to any pension paid by or on behalf of a person outside the UK to a person who is UK resident. Section 574 widens “pension” to include annuities from overseas schemes, payments that would be income withdrawal or drawdown if the scheme were a UK registered scheme, certain lump sums and voluntary pensions paid by a former employer. GOV.UK confirms that UK residents pay tax on foreign pension payments, including unauthorised payments such as early payments and some lump sums.

The SA106 Foreign notes add the practical boundaries:

  • Foreign state and social security pensions are reported alongside other overseas pensions, but foreign benefits that match certain UK benefits, including Attendance Allowance, Disability Living Allowance, Maternity Allowance, Guardian’s Allowance, Child Benefit and Universal Credit, are left out.
  • Pensions or lump sums from foreign schemes that are registered in the UK do not go on the Foreign pages; they go in the UK pensions section of the main return.
  • Pensions and annuities paid in the UK by a foreign pension provider are included.

UK State Pension is a separate topic, covered in how the State Pension is taxed.

What happened to the 10% deduction?

For many years section 575(2) of ITEPA 2003 taxed only 90% of a foreign pension, so recipients effectively received a 10% deduction. Paragraph 2 of Schedule 3 to the Finance Act 2017 omitted section 575(2), along with the matching 90% rules for foreign annuities in section 613(3) and foreign voluntary annual payments in section 635(3). The change has effect for 2017 to 2018 and later years. Section 575(1) now taxes the full amount of the pension income arising in the tax year.

So for 2026 to 2027 there is no 10% deduction to claim. Anyone still reducing a foreign pension by 10% on their return is underdeclaring. The only statutory adjustment of a similar kind is for a split year: under section 575(1A), an individual who arrives in or leaves the UK part way through a year is taxed only on pension income arising in the UK part of that year.

How do double taxation treaties allocate pensions?

The SA106 notes state that under most treaties a pension paid for past employment is taxable only in the country of residence, but that some treaties let the source country tax it as well, so the treaty must be checked before any credit claim. HMRC’s Double Taxation Relief Manual summarises each treaty. Two examples show the usual pattern:

Treaty Other pensions Government pensions
UK and Spain (DT17552) Taxable only in the UK (Article 17) Taxable only in Spain unless the individual is a resident and national of the UK (Article 18)
UK and France (DT7264) Taxable only in the UK (Articles 17 and 23) Taxable only in France unless the individual is a resident and national of the UK and not also a national of France (Article 18)

The government pensions article is the important exception. A former Spanish civil servant who retires to the UK and is not a British national will normally pay tax on that pension only in Spain, and the UK will not tax it. A British national resident here would usually be taxed only in the UK. HMRC’s notes on the Spanish treaty also point out that Spain takes exempt income into account when setting the rate on other income, a common feature of treaties elsewhere.

Where a treaty gives the UK the sole right to tax, GOV.UK says you should apply to the foreign authority for relief before the tax is taken, using its form certified by HMRC or a certificate of residence. Credit relief in the UK is not available for tax the treaty says should not have been charged.

Which foreign pensions are exempt anyway?

The SA106 notes list foreign pensions that are wholly or partly exempt from UK tax:

  • war widows’ pensions where the death in service was before 6 April 2005, and some pensions to other dependants of deceased forces and Merchant Navy personnel;
  • the award element of a pension paid for a work related illness or injury;
  • certain pensions and annuities under German or Austrian law (if you started receiving one in the year, attach a copy of the award, the “Bescheid”);
  • pensions and annuities under the Netherlands’ Wet uitkeringen vervolgingsslachtoffers 1940 to 1945 scheme;
  • certain beneficiaries’ annuities or income withdrawals bought from unused or drawdown funds.

Separately, the France treaty summary notes that some French pensions, such as those paid because of persecution or for illness or injury after armed forces service, are exempt in both countries.

How do you report a foreign pension?

Report it in the overseas pensions, social security benefits and royalties section of the Foreign pages, using the same columns as other foreign income. Column B is the gross pension in pounds, converted at the rate when it arose, and column C any foreign tax. If part of the pension is exempt, column F is column B less the exempt amount (less the foreign tax too, if you are not claiming credit). If a treaty makes the pension taxable only abroad, leave it out of the taxable figures and give the payer, the pension and the treaty in the “Any other information” box.

Two further points from the notes. If a payment includes arrears for an earlier year, you can set those arrears against the year they relate to, which may be better if your rate was lower then. And if you are a qualifying new resident claiming under the foreign income and gains regime, certain pension income is not eligible for relief; HMRC’s helpsheet HS266 lists which. The general mechanics of the Foreign pages are set out in declaring foreign income on a tax return.

What does this look like in practice?

Illustration only. Tom, a British national living in England, receives a private occupational pension from a former employer in Spain and a separate Spanish government pension from a period working for the Spanish state. Under Article 17 the private pension is taxable only in the UK, so he asks the Spanish authority, with HMRC certification, to pay it without Spanish tax, and reports the full amount in pounds on his Foreign pages with no 10% reduction. Under Article 18 the government pension is taxable only in the UK because he is resident in and a national of the UK, so it is also reported in full. Had Tom been a Spanish national without British nationality, that second pension would be taxable only in Spain and he would note it in “Any other information” instead.

What are the common mistakes?

  • Still deducting 10% from the pension, a relief that ended after 2016 to 2017.
  • Claiming credit for foreign tax that the treaty says the source country should not have charged, rather than reclaiming it there.
  • Treating every government pension as exempt in the UK without checking nationality under the treaty.
  • Reporting payments from a UK registered foreign scheme on the Foreign pages.
  • Forgetting that lump sums from overseas schemes can be taxable as pension income; transfers to overseas schemes have their own rules, covered in the overseas transfer charge.

If you are moving the other way, see leaving the UK: tax steps and form P85.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.