Avoid tax in your retirement. Legitimately.

Apparently most of us are in denial. Getting old isn’t going to happen to us, we won’t need a pension. But crumbliness (like death and taxes) comes to us all, and there can be little more galling than putting away money for the future, especially at a time when it can be ill-afforded, and then paying tax on it.

That’s right. Whether you draw an occupational pension from a former employer, or you buy an annuity with a personal pension fund, after the initial tax-free lump sum, the rest is taxable as income, and subject to tax at up to 50%* on current rates.

So why not choose to pay no tax? If you have worked and saved all your life some would argue that you are due a tax hiatus. Unfortunately, such a tax break is not available on our looted and trashed fair shores, but if you look a little further afield, you could get good weather and keep all your money. Sounds nice.

belizeFirst stop, Belize, an English speaking country on the Caribbean coast of Central America. Under the Belize Retired Person’s Incentive Program (BRIP), if you are aged over 45 and have prove a regular minimum income, Belize wants YOU. You can even take your spouse and dependent children up to the age of 18 (or 23 if at University). Provided you have a pension of $2,000 a month (approx £1,236) paid into a Belize bank account, the whole of your pension, and any other income from anywhere else in the world, will be completely tax free. dditionally, when you become a resident in Belize under the terms of the programme, you can import all household effects, a car and even a light aircraft or a boat duty and tax-free (some other countries will levy a tax on imported assets). Result. See this handy Toucan-approved information leaflet for more details.

AndorraMapOr if the Caribbean isn’t for you, how about Europe? The passive residency rules in the tiny country of Andorra, sandwiched between France and Spain, allow any qualifying individual to live 100% income tax free.

However, the one downside is that you have to invest a fairly hefty sum (€30,000 for the first and €7,000 per subsequent applicant) in a non-interest bearing bond for the duration of your residency. You do get the money back if you choose to leave, but if you plan on staying forever, you might want to consider it a one-off tax to enable you to live tax free ever after. You also have to prove that you have sufficient funds to support yourself (like having just over €30,000 in the bank, as above) and that you are not a criminal.

Families can all go, including children of any age, and it’s not so far if you wanted to pop back for a wider family event.map-monaco

Or finally, have you thought about Monaco? The small French Principality on the French Riviera is famous for its casinos, Grand Prixes and millionaires. And there is no income tax. At all.

Only problem is being able to afford to live there, of course. Perhaps if you won the lottery...

*although if you are receiving a pension of over £150 grand a year, you probably don’t need our help. But our rates are very reasonable if you do.


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