By Dominic Scoffield, retirement consultant and Chartered Financial Planner at Unity Financial Partners specialised in providing comprehensive retirement planning advice for British residents of Italy.

Imagine increasing your pension’s purchasing power by 30-40%.

Not only are the prices for retirement-type items such as food, wine and transport costs substantially lower in Italy, the Sterling exchange rate (even at the current mid-Brexit depressed level) gives an extra 10% discount.

An additional boost remains possible, through careful planning and financial dexterity, to increase the after-tax, net pension for UK nationals settling in La Bella Italia for their retirement.

The UK pension scene continues to evolve following the new options made available by the Pension Freedoms introduced in the 2015 Budget. The new, increased flexibility has encouraged many to re-visit their existing arrangements to make sure that they can take full advantage of these concessions.

A popular choice for those at or nearing retirement has been to combine their various schemes into a low-cost, fully flexible Pension with access to a comprehensive range of investment links, where investors can monitor as well as control their funds online.

Self-Invested Personal Pensions (SIPPs) are one example of the pension vehicles that can satisfy these requirements but may also have added attractions for Expats or those considering moving abroad.

Having online access is essential, as is the ability to mitigate the currency risks associated with purely Sterling-based investments.

The extra advantage is available to those with a permanent Italian address.

This advantage relates to how pensions can be taxed in payment. Expats who choose to draw their pension from an existing UK scheme will ordinarily have tax deducted at source, by way of a tax code, emergency or otherwise.

The other, preferred route would be to arrange for the UK pension to be paid gross and taxed in Italy. This would require the ND form, stamped at the Agenzia Entrate, being sent to the UK pension provider.

Once the pension is paid without the deduction of tax at source it is sensible to look at the most tax-efficient environments available to the Italian resident.

If the pension vehicle itself is moved from the UK to the European Economic Area (EEA) , then one might be in the position to benefit from the different and sometimes potentially less onerous tax rates that apply to pension withdrawals in different European states. The effect on net (after tax) pension income can be considerable.

In March 2017 HMRC introduced a 25% Overseas Transfer Charge (OTC), which is a penalty on UK pension schemes that transfer abroad. Crucially, this OTC penalty is waived for expats permanently residing within the EEA. The window of opportunity for those currently living in Italy (EEA) and for those contemplating the move is clear ahead of anticipated Post- Brexit developments.

Another short-cut that Italian residents with UK pensions can consider, is exercising their right to lump sum payments.

Many ex-pats with Italian residency have found that their existing UK schemes are reluctant to release the 25% tax-free cash (now called the pension commencement lump sum – PCLS) without proof of a current UK address.

By choosing the right type of pension scheme, it is possible to avoid these restrictions and to trigger immediate access for the over 55’s.

Dominic Scoffield[email protected]

Chartered Financial Planner

Unity Financial Partners


If you are interested in finding out more about how Dominic and our team at can help you with your retirement planning needs as a resident of Italy please contact us on the following link: or send an email to  [email protected]