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

The summer season is usually a time when we get the opportunity to relax, lie back and re-charge our batteries. Although the virus has altered many of our travel plans this year, it is still an opportune time to contemplate our future plans.

Inevitably our minds turn to the costs in making any changes to our routines.

For the over 55’s, our pension funds, thanks to flexible drawdown freedoms, allow us to take additional payments at any time.

Many of us are reasonably familiar with the 25% pension commencement lump sum (tax-free cash in old money) concession for UK tax residents, but less so with how this and further withdrawals are taxed in Italy.

If your pension is based in the UK, then HMRC will tax pension withdrawals on a month 1 basis, which generally mirrors how the PAYE emergency code system operates for salaries.

If a single pension withdrawal of £30,000 is selected, payable in any given month, then HMRC will leap at the chance to deem the payment to be a monthly installment, implying that £360,000 will be the total amount drawn over the next 12 months.

Accordingly, they will deduct a higher rate tax, which will come as a great shock to the uninitiated.

The overpaid tax then sits in the HMRC coffers until an appropriate reclaim is made in the following tax year.

Happily, for those with Italian residency, there is a way to avoid this aggressive deduction.

First, a form needs to be submitted to HMRC which (because there is a Double- Taxation Agreement between the UK and Italy) switches the tax liability from one country to another.

Once the correctly completed form has been submitted, HMRC will issue a new, NT (nil tax) code enabling the pension provider to make payments without any tax deductions.

At Unity, we are able to smoothly navigate the completion of the correct forms as the papers first need to be authorised by the Italian Agenzia delle Entrate.

We can then assist with the completion of the Italian tax return and ease the many complications that arise due to the two different tax accounting periods, April 5th in the UK and 31st December in Italy.

Our aim is to help you avoid nasty surprises and to enjoy your summer break just that little bit more.

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]