UK Pension Transfers to NZ: Rule Changes from April 2026
From 1 April 2026, New Zealand is changing how tax is handled when UK expats transfer their pensions here. The key change is straightforward.
If tax is payable on a transfer, it can now be deducted directly from your pension pot. You no longer need to fund the tax personally.
At the same time, you can choose to have the taxable portion capped at 28 percent instead of being taxed at your marginal income tax rate (which could be 30%, 33%, or 39%).
If you've been in New Zealand longer than four years, this is worth understanding.
Why This Matters
When you first move to New Zealand, there's a four-year window where overseas pension transfers aren't taxed. After that exemption expires, part of any UK pension transfer becomes taxable.
Inland Revenue works out the taxable percentage based on your age and how long the pension has been running. Only that portion gets added to your income for the year and taxed at your normal rate.
Here's an example:
UK pension transfer: NZD 250,000
Taxable percentage: 10%
Taxable amount: NZD 25,000
If you're on a 33% tax rate, the tax bill is NZD 8,250.
Under the current system, you generally need to pay that from your own pocket.
What Changes from April 2026
Two practical improvements.
First, the tax can be deducted from the pension itself and paid straight to Inland Revenue by your pension provider. No need to find the money separately.
Second, you can elect to have the taxable portion taxed at a flat 28% instead of your marginal rate.
Using the same example:
NZD 25,000 taxable amount
At 33% marginal rate: tax is NZD 8,250
At 28% flat rate: tax is NZD 7,000
Saving: NZD 1,250
It may not always be dramatic, but it's meaningful. And if you're on the 39% rate or have a higher taxable percentage, the difference grows.
Before You Decide
This change doesn't automatically mean you should transfer a UK pension. That depends on your personal circumstances, the quality of your UK scheme, fees, investment options, and other factors.
What it does do is remove two practical barriers: the tax friction and the need for cash on hand to pay the bill.
For some people, that won't change the overall decision. For others, it might make a transfer workable where it wasn't before.
Next Steps
If you're past your four-year exemption and considering a transfer, it's worth reviewing your position under these new rules with a qualified adviser before deciding.