State pensioners told move to four countries or face £8,320 stealth tax under LabourRetirees are set to be hit by a state pension stealth tax – but they could save up to £8,000 by relocating to four countries. According to the Pensions and Lifetime Savings Association, a single pensioner requires £52,220 annually for a comfortable retirement standard.
This income level pushes retirees into the 40 per cent higher rate tax bracket, resulting in an £8,320 annual tax bill. But older people could escape the tax by moving to a string of countries: Greece, the UAE, Cyprus and Italy.
Greece in the European Union offers new tax residents a flat seven per cent rate on all foreign-sourced income, including pensions, for up to 15 years. The country could save retirees approximately £4,665 annually compared to remaining in Britain, the Telegraph reported.
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“This can mean tax savings of around £4,000 on a £50,000 pension, and £20,000 on a £100,000 pension,” according to Federica Grazi, founder of Mitos Relocation Solutions.
Cyprus offers a flat five per cent rate on foreign pension income above €3,420 (around £3,500), which can deliver annual savings of up to £5,854 for those with higher incomes.
And it exempts the first €19,500 (approximately £21,400) from tax. Grazi told MoneyWeek: “Both can result in significant savings. Someone with a £100,000 income could potentially save up to £22,500 in tax compared to remaining in the UK.”
Italy offers retirees a seven per cent flat tax rate on foreign income in underpopulated southern regions such as Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicily and Sardinia.
On Dubai and places like that, David Denton of Quilter Cheviot warns that “low-tax environments, such as the UAE, can come with hidden costs – mandatory health insurance being a prime example – effectively functioning as indirect taxation.”
Denton advises: “Retirees should consider taking their pension lump sum before leaving the UK, as this feature is typically unavailable abroad. This benefit could effectively be lost if not accessed beforehand.”