Paphos Life

As of 2025, some British retirees living in Cyprus and getting a UK state pension are set to see the amount they receive fall as it will no longer be taxed on the island, but in the UK.

The tax rates on pensions imposed in Cyprus are more generous than those in the UK, and could impact people’s choice of where to live. Those set to change are pensions paid to UK government workers.

READ MORE

This change isn't necessarily a bad thing, so have a serious think about your own circumstances.

A friend of mine receives a UK police pension from her deceased husband, together with a UK state pension. Prior to the change she is taxed on both in Cyprus, and actually paid tax. The change means the police pension is taxed in the UK and the state pension remains taxed in Cyprus. Both are below the tax free threshold in their respective countries. The result being that she no longer pays tax in either country and is a happy bunny.

It has been a good day for me because a few pence will be knocked off by 25% UK pension, but a popular vote on Sunday has increased my 75% Swiss pension from 12 to 13 months per year!

On the subject of UK Service pensions being taxed at source in UK ( not OAP which may continue to be taxed in Cyprus) does anyone know how to fill in the Cyprus tax return where world wide income should be shown?

To show any UK Government pensions, including UK military pensions, that are exempt from Cyprus tax (Double Taxation agreement) I suggest the following:

Under B1 Pensions, enter the type of Pension (I put in 'UK Government Pension') and enter '3' under the code column and the annual amount.

The total below will show all the pension amounts. BUT at the end of the form under Self Assessment Deductions it will show the UK Government pension amount as separate from any income/other pensions liable for Cyprus tax. You will only be taxed on other income if over the tax threshold.

I have done it this way for a couple of years and the returns have been accepted as Assessment Applied.

Chris

The following from John Redwood, now Baron Redwood, Former Member of Parliament (MP) for Wokingham in Berkshire regarding the financial state of the OAP fund via National Insurance contributions. Quote.

The last accounts for the [OAP] Fund to March 2025 show that the fund received £130.9 bn in NI contributions that year with other income of £7.3bn, primarily interest on investments. It paid out £143 bn leaving an annual deficit of £7bn. That left it with a balance for future payments of £79bn. It needs to keep a cash reserve to make payments on a continuous basis. The main contributory benefit paid out was the pension, at £136.9bn. There was a £5bn payment for contributory ESA and £200m for contributory JSA. The Fund also covered the modest costs of the Pensioner Christmas bonus. The next report may show the extra NI paid has created a surplus. Unquote.

A little comfort in these gloomy days. Now dont spend it all in one go!

Clive.. Sadly your message comes on the posting headed " Expat Brits fear pensions loss"
This unfortunately leads us to believe that we may have a loss in our 4 weekly UK pensions..
But it seems that is not the case