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By Fiona Moore, for ExpatBriefing.com
24 February, 2015
Major changes to the tax treatment of private pension lump sums will come into effect in April 2015 and may be especially relevant for those who want to use the cash to relocate abroad.
Changes to UK rules will remove the requirement that a person purchase an annuity. In addition, the 55 percent tax charge that individuals can face when withdrawing all the money from a pension pot will be reduced. From April 2015, people aged 55 and over will be more free to withdraw their fund as they wish without incurring heavy taxes. 25 percent of the pot will remain tax-free and the rest will be taxed at the UK marginal rate, if the person is tax resident in the UK.
These changes may have a significant impact for expats who have the possibility to cash in their pension free of tax and to use the tax rules applicable in their foreign jurisdictions in their favor. Many popular retirement destinations, including Portugal, Cyprus, and Malta, have tax systems that could reduce the tax charge for such lump sums.
UK expats will need to carefully consider how the new rules will affect them, seeking advice, if necessary, on the treatment of the lump sum when remitted to the expat's new home state.
Tags: Individuals | Tax | Malta | Portugal | Retirement | United Kingdom | Social Security | Cyprus | Individual Income Tax | Expats | Investment | Pensions | Invest | Lifestyle | Investment | Lifestyle | Pensions
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