Taxation of United Nations Pensioners in the UK

An update to clarify new rules that may apply to those recently retired or retiring, who have spent significant recent time overseas.

Before I discuss these new rules, it is useful to recap on the current taxation rules for UK resident individuals receiving a pension from the United Nations Joint Staff Pension Fund (UNJSPF). These rules will apply to those who have been in the UK for a reasonable length of time and to others who were outside the UK but never spent long enough outside of the UK.

The UK, subject to some rules surrounding non-domiciled individuals which expired on 5 April 2025, has always taxed its residents on their worldwide income and gains.

In terms of UNJSPF pensions, at least some of the pension will be taxed; possibly all of it after a defined period has elapsed (which is often between 10 to 33 years following retirement). The precise duration is fact dependent based on each individual’s circumstances.

The reason the pension is, initially at least, only partially taxed is because of a double taxation agreement that the UK has with the USA. This agreement, where applicable, allows normal UK domestic rules to be overridden. This is what allows a UK resident pensioner with a US pension to be partially taxed on their US based pension. An element of the pension is considered to be a return of contributions made to the pension, and such an element is not taxed.

For the purposes of reading the treaty, the UNJSPF is treated as being based in America due to the New York office making the majority of pension decisions for the fund.

So what are these new rules?

The Foreign Income and Gain Regime

The foreign income and gains regime (FIG regime) came into force with effect from 6 April 2025. The Labour government introduced this as a part replacement for scrapping the previous domicile based remittance system.

For any individual, whether a British citizen or not, if they have been non-UK resident (for tax purposes) for at least 10 tax years, then upon a return to the UK they can benefit from not paying tax on their overseas income and gains during the first four tax years of residence. After this period has elapsed, their worldwide income and gains revert to being taxed (although, the partial exemption from tax applicable against UNJSPF pensions is still available).

To elect for this FIG regime to apply, a tax return must be filed and the exempt overseas income and gains declared. Such overseas income and gains can be freely moved into the UK and spent here (or retained overseas, if that is your preference).

A couple of simple examples follow to demonstrate these new rules.

Example 1: Bob worked in Angola for a UN agency for the last 11 years and retired and moved back to the UK in August 2025. He can elect not to pay tax on his UNJSPF pension for the first four tax years.

If Bob had only been overseas for four tax years, the FIG regime cannot apply, and he is reliant on claiming a partial exemption from tax on his UNJSPF pension.

Example 2: Elizabeth has the same facts as Bob, but she retired and returned to the UK in August 2023.

For 2023/24 and 2024/25 Elizabeth must pay tax on her worldwide income and gains (although the partial exemption from tax applicable to her UNJSPF pension applies). For 2025/26 and 2026/27, being her third and fourth year of UK residence following the introduction of the FIG regime, she can claim the benefit of the FIG regime.

For those who have spent many years living abroad but who have recently moved or are considering a move back to the UK, this FIG regime could provide valuable benefits.

The aim of the FIG regime is to incentivise people who are internationally mobile to come to the UK; however, there is no reason the regime cannot be used by pensioners retiring to the UK following lengthy service abroad.