UK expats living overseas are withdrawing more money from their UK pensions to avoid upcoming changes to inheritance tax (IHT), according to St James’s Place (SJP) Wealth Management.
Tony Smith, head of tax, technical & advice delivery – Asia & Middle East at SJP, said the wealth manager is seeing many clients living in the United Arab Emirates (UAE) accessing their UK pensions to escape a potential IHT liability.
“The Budget change has prompted some expats to consider realising UK pension assets, as removing funds from the UK will reduce their UK IHT exposure immediately,” Smith said.
“This strategy is particularly attractive for clients resident in a jurisdiction with an advantageous double taxation treaty, such as the UAE.”
He said the fact that there is no income tax liability in the UAE makes it a very attractive reason for clients to withdraw their UK pensions and spend them abroad.
“We are seeing many clients accessing their UK pension funds from the UAE, not just to benefit from an IHT reduction, but because there is no UK income tax liability,” he said.
“More widely, the UAE is an attractive location for all tax purposes and we are seeing that reflected in the number of people from the UK choosing to relocate here.”
However, he said this does not apply to clients in locations like Hong Kong or Singapore, as pension withdrawals are subject to UK income tax in those countries.
