Do You Still Pay UK Tax When You Live Abroad?

The simple answer is: it depends on your residency status and the type of income you have.

• If you are considered UK tax resident, you pay tax on worldwide income.

• If you are non-resident for tax purposes, you usually pay UK tax only on income that comes from the UK (for example, rental income, UK pensions, or interest from UK banks).

How HMRC Decides if You’re UK Resident or Non-Resident

The UK uses the Statutory Residence Test (SRT) to decide your tax status. Here is a link to the Government website about this - https://tinyurl.com/4x4jurys  This test looks at:

1. Days spent in the UK – usually, if you spend 183 days or more in the UK in a tax year, you’re classed as UK resident.

2. Connections to the UK – family, property, work ties, etc.

3. Automatic overseas tests – you may be non-resident if you spend fewer than 16–46 days in the UK (depending on your circumstances) and you’ve worked or lived abroad for a full tax year.

Most retirees who move abroad permanently and spend little time in the UK are considered non-resident.

Types of Income and How They Are Taxed

Let’s look at the main sources of income for retirees and whether UK tax applies when you’re abroad.

1. UK State Pension

• Your State Pension is taxable in the UK.

• However, whether you pay tax on it depends on your total income and allowances.

• You’ll still get your pension paid wherever you live, though it may not increase annually (more on that below).

2. UK Private Pensions

• Payments from private or workplace pensions are usually taxable in the UK.

• You may also owe tax in your country of residence, depending on local rules and tax treaties.

3. UK Rental Income

• If you keep and rent out your UK property, you must pay UK tax on rental income.

• You may need to register with the Non-Resident Landlord Scheme if you live abroad. Here is a link to the UK Government website regarding NRLS - https://tinyurl.com/2ap9npjr

4. UK Bank Interest & Dividends

• Interest from UK banks and dividends from UK companies are generally taxable in the UK.

5. Overseas Income

• If you are non-resident, overseas income (such as a pension from Vietnam or rental income in Hanoi) is not taxed in the UK.

• It may, however, be taxed locally in Vietnam.

Double Taxation Treaties

The UK has agreements with many countries to stop you being taxed twice on the same income. These are called Double Taxation Treaties (DTTs).

• Vietnam has a DTT with the UK.

• This means, for example, that if your UK pension is taxed in the UK, Vietnam should not tax it again (though you may need to declare it locally).

• You can often claim a tax credit or exemption if tax has already been paid in one country.

Always check the exact terms of the treaty, as rules vary depending on income type.

Tax-Free Allowances When You Live Abroad

Even if you retire abroad, you may still be entitled to the UK Personal Allowance (the amount of income you can earn before paying tax).

• For 2025/26, the allowance is £12,570.

• Not everyone abroad qualifies — but UK citizens usually do, unless they live in certain non-treaty countries.

• This means you could have up to £12,570 of UK income tax-free each year.

Reporting and Paying UK Tax from Abroad

1. Register with HMRC as non-resident using form P85 when you leave the UK.

2. Each year, you may need to complete a Self-Assessment tax return if you have taxable UK income.

3. Pay any tax due online or through an agent.

Tip: Many retirees hire an accountant who specialises in expat tax to avoid mistakes.

Special Case: Your State Pension Abroad

A big question for UK retirees is: Will my State Pension increase each year if I live abroad?

• If you retire in the EU, EEA, or countries with special agreements, your pension rises annually (the “triple lock” increase).

• If you retire in Vietnam, your pension will not increase. You’ll receive the same amount each year for life. Doesn’t seem right, but rules is rules!!

This makes financial planning crucial — inflation could reduce the value of your pension over time.

Inheritance Tax and Property Abroad

Even if you live abroad, you may still be liable for UK Inheritance Tax (IHT) if you remain “domiciled” in the UK.

• Domicile is different from residency. Most UK-born retirees keep a UK domicile unless they take steps to change it.

• This means UK IHT may apply to your estate, including overseas assets.

Common Mistakes to Avoid

1. Assuming no UK tax applies – many expats wrongly believe leaving the UK means no tax responsibility.

2. Forgetting about rental income – HMRC always expects to see tax returns from landlords, even abroad.

3. Not checking pension payment rules – some pensions cannot be paid into foreign bank accounts.

4. Failing to consider exchange rates – transferring money from the UK to Vietnam can result in fluctuating income.

5. Ignoring IHT rules – your estate could face a big tax bill if you don’t plan.

FAQs

Q: Do I have to pay UK tax if I live in Vietnam permanently?
Yes, on UK income such as pensions and rental income. You won’t usually pay UK tax on income earned in Vietnam.

Q: Can I get my UK pension paid directly into a Vietnamese bank account?
Yes, through the International Pension Centre. But you may get better rates by having it paid into a UK account and transferring funds yourself.

Q: Will Vietnam tax my UK pension?
Under the UK-Vietnam Double Taxation Treaty, pensions are generally taxed only in the UK.

Q: Do I still file a tax return if all my UK income is under the allowance?
Not usually, unless you have rental income or HMRC specifically requests it.

Q: Can I become non-resident for tax but still spend time in the UK?
Yes, as long as you meet the rules of the Statutory Residence Test.

Conclusion

So, do you pay tax in the UK if you retire abroad?

• Yes, if you have UK income (pensions, rental income, bank interest, dividends).

• No, if your income comes solely from your new country and you’re officially non-resident.

For UK retirees in places like Vietnam, this usually means:

• Paying UK tax on pensions and rental income.

• Relying on the UK-Vietnam Double Taxation Treaty to avoid being taxed twice.

• Watching out for the frozen State Pension rule.

The key is careful planning. Inform HMRC of your move, understand your residency status, and get advice on pensions and inheritance. That way, your retirement income will stretch further — and you can enjoy your new life abroad without tax headaches.