Retiring abroad from the UK: Top locations and how to plan for it

Many UK residents choose to retire abroad, drawn by warmer weather, a slower pace of life, and better value. Longer life expectancies and improved retirement visas have made international moves more accessible than ever.

Currently, over 1 million British pensioners live overseas, with an estimated 200,000 to 250,000 in Europe.

Best countries to retire in

The 2025 Global Retirement Report from Global Citizen Solutions ranks Portugal, Mauritius and Spain as the leading retirement destinations, followed by Uruguay and Austria.

Based on an assessment of 44 countries, the report shows that top-ranked destinations, particularly in Europe, offer high living standards, strong environmental protections, clear and faster routes to citizenship, tax incentives for retirees, reasonable application costs and high levels of safety. Many also benefit from visa-free travel across the Schengen area.

Portugal leads the rankings due to its popular D7 visa, lower living costs than much of Western Europe, high-quality healthcare, effective tax planning options, a mild climate, excellent safety record and overall quality of life.

Mauritius ranks second globally and first in Africa, driven by its attractive tax framework and lifestyle appeal, while South Africa places 42nd overall.

Key financial considerations when retiring abroad

Before you trade grey skies for sunshine, it’s essential to get your cross-border taxes and finances in order. Without careful retirement financial planning, retirees risk unexpected tax bills, compliance issues, and costly long-term headaches.

Understanding your tax residence is key to determining where your income is taxed each year. In the UK, this is assessed under the Statutory Residence Test, which considers time spent in the country, ties such as property or family, and your recent residence history. Becoming non-resident can alter how your pensions and investments are taxed, and mistakes here can lead to double taxation.

Domicile is separate from residence. The UK has, in 2025, moved from a domicile-based system for Inheritance Tax, to a residence-based system. The new concept of ‘’domicile’’ has been reduced to a Long-term Residence test, which applies to all persons who have been resident in the UK for 10 out the past 20 years, and an IHT ‘’tail’’ which can expose you to UK IHT up to 10 years after you have left.

For many retirees, Inheritance Tax represents the biggest hidden financial risk when living overseas. Understanding these implications, options, treaty provisions and structuring your finances appropriately is key to protecting your wealth and ensuring a smooth, secure retirement abroad.

Understanding Temporary Non-Residence (TNR) for UK expats

TNR is measured in tax years, which run from 6 April to 5 April. While this seems straightforward, split-year treatment can complicate the calculation, as the overseas portion of a split year counts toward your non-residence period.

To successfully avoid these anti-avoidance rules, your absence generally needs to exceed five full tax years. In practice, this often means spending more than five calendar years abroad and frequently requires a total of six full tax years, or five full years combined with split-year treatment during your departure or return, to ensure you safely exceed the five-year threshold.

If you return to the UK within this five-year window, certain types of income and gains realised while you were abroad may become subject to UK tax:

• Capital Gains Tax (CGT): Gains on assets you held at departure, such as shares or investment funds.
• Pension payments: Flexible drawdown withdrawals and some authorised lump sums.
• Close Company Distributions: Dividends or distributions from close companies in which you have a material interest.
• Other income: This includes chargeable event gains on life insurance policies, offshore income gains, and foreign income remitted to the UK if you previously used the remittance basis.

Notably, ordinary employment income and most rental income earned while non-resident generally remain outside the scope of these rules.

Avoid pension pitfalls retiring abroad

Your pension is often your largest asset, and its tax treatment can change dramatically once you become tax resident in another country.

Portugal, Mauritius, and South Africa each apply different rules, shaped by their double taxation agreements with the UK. Some pensions are taxed only in the country of residence, others remain taxable in the UK, and some require returns in both jurisdictions with relief claimed.

One of the most common and costly mistakes involves the 25% UK tax-free pension lump sum. If this is taken after becoming tax resident overseas, the receiving country may tax it in full as income, depending on the provisions of the relevant tax treaty, and the local tax regulations. In many cases, taking lump sums before leaving the UK can make a substantial difference.

Timing is critical, and careful planning ensures you protect your retirement income and avoid unexpected tax bills.

Country-specific planning considerations

Portugal

Portugal remains a popular retirement destination for its lifestyle, healthcare, and residency options. However, the tax landscape has changed, making careful planning essential.

Residents are taxed on worldwide income. The Non-Habitual Resident regime closed to new applicants in 2024, and the replacement Incentive for Scientific Research and Innovation tax regime does not cover passive income like pensions. UK retirees now face taxation on foreign pensions at standard progressive rates, which can reach 48%. There may be options to mitigate this. How and when pensions are drawn, and how assets are structured before becoming Portuguese tax resident, can significantly affect outcomes. Specialist planning is crucial to avoid unnecessary tax exposure.

Key highlights

• D7 visa allows non-EU citizens with passive income to live in Portugal without working
• Minimum income requirement approximately €920/month (2026 estimate)
• Eligibility for permanent residence or citizenship after five years (there are proposals to extend this to 10 years)
• No inheritance or gift taxes for close family members on Portuguese assets

Mauritius

Mauritius offers a highly attractive environment for retirees seeking wealth preservation and lifestyle appeal. Its territorial tax system means that foreign-sourced income is generally untaxed unless remitted to Mauritius. This, combined with no Capital Gains, inheritance, or wealth taxes, makes it ideal for retirement planning.

Key highlights

• Retirement Permit available for those over 50 years old, valid for 10 years and renewable
• Pathway to a 20-year Permanent Residence Permit after meeting financial criteria
• No minimum stay requirement, offering flexibility for travel and time abroad
• Low-cost, high-quality healthcare and a relaxed lifestyle with warm weather year-round

South Africa

South Africa remains a popular option for retirees who want a familiar legal system and cultural connections, combined with lower living costs and appealing climates. However, the tax framework is complex and careful financial planning is crucial.

Key highlights

• Residents are taxed on worldwide income, and exchange controls govern money transfers
• Retirees currently benefit from a tax exemption on qualifying foreign pensions, though this is under review
• Retirement visas are available with proof of income or investments
• The UK/South Africa Double Tax Treaty helps prevent double taxation
• Currency and estate planning require careful attention

See also: What happens to my UK private pension if I move abroad?

A practical pre-departure checklist

Before retiring abroad, UK residents should consider the following steps:

• Confirm your UK tax residence exit position
• Review pension withdrawal timing and structure
• Understand the relevant double taxation agreements
• Update UK and overseas wills and estate plans
• Notify HMRC and confirm reporting obligations
• Review healthcare access and insurance cover

Addressing these points early creates clarity and reduces risk.

Join us in London

We are hosting an exclusive wealth and tax planning seminar in London from 24 to 27 February 2026, designed for UK residents planning to retire overseas.

What you will gain

• A clear understanding of how tax, pensions and estate planning work when living abroad
• Practical guidance to avoid common and costly mistakes
• Insight into property options and lifestyle considerations in popular retirement destinations

You will meet experienced cross-border advisers and property specialists based in the UK, Portugal, South Africa and Mauritius, including a specialist who lived and worked in Mauritius for 25 years before retiring there himself. Small-group roundtables will provide focused discussion on financial planning, property and everyday life in each destination.

These sessions are designed to help you understand the financial, tax, and practical considerations of leaving the UK and building a secure retirement overseas.

(Additional contribution by Cláudia Mendes)

If you would like to discuss which session or consultation is best suited to your plans, speak to our advisers before booking. Email [email protected] or give us a call on +44 (0) 20 7759 7519.