Right UK Tax Code for Your Pension — Whether You’re in the UK or Living Abroad
Non-UK resident and receiving a pension from the UK? Your pension provider must be using the correct tax code so that your pension income is paid out correctly. The HMRC tax code informs your pension provider how much tax to deduct using the UK’s PAYE (Pay As You Earn) system. With no Tax Code your face emergency tax deductions at source.
If your provider has the wrong code or no code at all, your pension income may be subject to over-taxation — often on an emergency tax code. If you’re living abroad, though, you may be eligible for a No Tax (NT) code, which will result in your pension payments being paid gross. Avoid being overtaxed and learn how you can apply for a standard code or NT code in 2025.
What Is a UK Pension Tax Code for expats?
A tax code is a combination of numbers and letters (such as 1257L, BR or NT) which indicates to pension providers (and employers) the amount of tax-free income you are entitled to, and how they should calculate your tax deduction. Here are some of the most common codes you may see applied:
| Code | Meaning |
|---|---|
| 1257L | Standard tax-free personal allowance for most people in 2025 (£12,570 per year) |
| BR | Basic rate tax (20%) – no allowance applied, often used on second pensions or as an emergency/temporary setup |
| D0 / D1 | Higher or additional rate tax on all income |
| NT | “No Tax” – HMRC is telling your provider to pay your pension income gross (used if you live abroad or certain reliefs apply) |
| Emergency code | Temporary code used when HMRC hasn’t confirmed the correct code – results in over-taxation until it’s changed |
Having the right code ensures you’re paying the right amount of tax – and aren’t left to wait a long time for tax refunds later on.
When Might You Get an Emergency Tax Code?
If your pension provider does not have the correct tax details from HMRC, they will apply an emergency tax code automatically. This means you will be overtaxed and may receive a tax refund later (more on that below). You may be subject to an emergency code in the following situations:
- You’ve just started receiving your pension income
- You’ve moved pension providers (e.g. from a pension company transfer or to drawdown)
- You’ve returned to the UK after living abroad previously
- You’ve started taking income from your pension without a prior PAYE record
Under an emergency code, your pension provider assumes you are entitled to the standard personal tax-free allowance (£12,570 for 2025) but it is spread across one month. So, your first pension payment can be over-taxed and you end up paying too much income tax.
How to Get the Correct UK Tax Code (If You’re Still UK-Resident)
If you are still resident in the UK, follow this process to ensure you have the correct tax code and avoid an emergency code:
Step 1: Check Your Current Tax Code Online
Go to [gov.uk/check-income-tax-current-year](https: //www.gov.uk/check-income-tax-current-year) and sign into your Government Gateway account.
You can see which tax codes are being applied to you and to which pension or provider they apply.
Step 2: Notify HMRC of Changes
If your pension income has changed in any way – or if you now have more than one pension – you will need to notify HMRC online or over the phone:
- Call HMRC on 0300 200 3300 (if you’re in the UK)
- Or login to your online account and “update income from pensions”
Step 3: Confirm Details to Pension Provider
Make sure your pension provider has your National Insurance number, date of birth and your current address (or previous address if you recently moved). If they are missing any of this information, they will default to an emergency code.
Step 4: Wait for the Code to Update
HMRC will process the change (usually within 2–4 weeks) and send the new code electronically to your pension provider. They will then start using this updated code on your future payments and refund any overpaid tax automatically via PAYE or Self Assessment.
Applying for a Tax Code or No-Tax (NT) Code When Living Abroad
If you’re no longer resident in the UK but are still receiving pension income from the UK, you may be able to apply for a No Tax (NT) code or get a tax code issued to avoid emergency tax. An NT code tells your pension provider to pay your pension income to you without any UK tax deductions.
Step 1: Check Eligibility for an NT Code
You will normally qualify for an NT code if two conditions are met:
- You are non-UK tax resident (according to the Statutory Residence Test)
- You live in a country that has a Double Taxation Agreement (DTA) with the UK, where your new country of residence is granted full taxing rights under the treaty.
If your new country of residence does not have a DTA with the UK (or if the treaty splits taxing rights with the UK), you may still be liable to pay UK tax.
Step 2: Ensure You Have an Active PAYE Record
HMRC can only issue an NT code if your pension provider has an active PAYE (Pay As You Earn) record for you. If your pension has never made a taxable payment before, you should ask your provider to make a small “test” withdrawal first. This will activate a PAYE record for you, which HMRC can then assign a tax code to.
Example: UK expat setting up a SIPP transfer
Oliver has just transferred his UK pension to a SIPP provider and moved abroad to Spain. He hasn’t ever taken a taxable withdrawal before so has no PAYE record.
Oliver asks his provider to make a £10 “test” withdrawal. The pension provider then creates an HMRC PAYE record for Oliver.
Step 3: Complete a Double Taxation Relief Form for Your Country
You will need to complete a Double Taxation Relief form (often referred to as a “DT-Individual” form) for your country.
- You can download a copy of the form from gov.uk.https://www.gov.uk/tax-uk-income-live-abroad/taxed-twice
- Each country should have its own specific version (e.g. France, Spain, etc. ).
The form will ask for your:
- UK National Insurance number
- Details of your pension provider
- UK and overseas addresses
- Confirmation that you are a resident in your new country of residence
Step 4: Get Evidence of Foreign Tax Residence
The vast majority of DT forms require you to get some sort of evidence from your local tax office that you’re tax-resident there.
This could be:
- A certificate of tax residence (issued by the tax office), or
- Your foreign tax office stamping the DT form as valid
Without this evidence, HMRC will not be willing to issue an NT code.
Step 5: Send Form to HMRC
Once signed and certified, send your form to the address on the form (usually HMRC, Pay As You Earn and Self Assessment, BX9 1AS, UK).
It can take around 12–16 weeks for HMRC to review and issue the NT code. More complex cases can take up to six months.
Step 6: Verify with Your Pension Provider
HMRC will send the NT code directly to your pension provider electronically. It’s always a good idea to verify with your pension provider that they have received and applied the NT code before you make your next withdrawal.
If they haven’t, your payments will still be taxed under the old code – so it’s worth checking to be sure.
What To Do If You’ve Already Been Taxed
If you’ve received UK pension payments and tax has been deducted before you received your NT code or correct code, you can reclaim the overpaid tax.
- Complete form P85 if you have now left the UK and have no UK tax liabilities
- Or submit a Self Assessment tax return showing the correct treaty relief claimed
HMRC will usually refund overpaid tax within 8–12 weeks once processed.
Tax Code Comparison Table for Pension Income
| Situation | Likely Tax Code | Description |
|---|---|---|
| Living in the UK, single pension | 1257L | Standard tax-free allowance |
| Second pension, no allowance | BR | Basic rate on all income |
| Living abroad under tax treaty | NT | No UK tax deducted |
| Starting pension without HMRC record | Emergency | Temporary until HMRC updates |
| Multiple pensions and allowances split | 1257L / BR mix | One pension gets allowance; others taxed |
Common Mistakes to Avoid (and How to Fix)
| Mistake | Result | Fix |
|---|---|---|
| Taking first pension payment before code issued | Over-taxed payment | Wait until HMRC confirms code |
| Not telling HMRC you’ve moved abroad | Emergency code or UK tax withheld | Complete DT form or P85 |
| Multiple pensions not updated | One pension untaxed, others over-taxed | Confirm all providers have correct code |
| Moving countries without updating HMRC | Code stays outdated | Notify HMRC and local tax office promptly |
| Missing National Insurance number | Code can’t be matched | Provide NI number to pension provider |
Key Takeaways
- Regularly check your tax code using your HMRC account online.
- Update your details to HMRC and pension provider when you move, start a pension or switch companies.
- If you live abroad, apply for a No Tax (NT) code using a DT-Individual form.
- If you’re still UK-resident, make sure HMRC issues the correct standard code (not emergency).
- Always keep records — especially of correspondence with HMRC and your pension provider.
Getting the right UK tax code for your pension — whether it’s a standard code or a No Tax (NT) code — is essential to ensure your pension income is being paid correctly and in a tax-efficient way.
Emergency tax codes can cost you hundreds, even thousands in unnecessary tax, while missing out on NT relief can leave you chasing HMRC for months.
By confirming your residency status, providing the right tax forms and clearly communicating with HMRC and your pension provider, you can make sure your pension is taxed correctly from the very first payment.