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MPF Pension

UK-Hong Kong MPF Pension Taxation Guide 2026

Practical 2026 guide to UK tax treatment of Hong Kong Mandatory Provident Fund payments: Article 17 treaty treatment, MPF permanent-departure withdrawal rules, UK foreign-pension legislation, FIG eligibility, BN(O) evidence issues and Self Assessment reporting.

MPF and the UK-Hong Kong Treaty: Article 17, Not Article 14

Hong Kong's Mandatory Provident Fund (MPF) is a compulsory retirement savings system. For UK tax purposes, an MPF payment must first be classified by its legal nature and then tested against the UK-Hong Kong Double Taxation Agreement. The treaty's pension provision is Article 17. Article 17 expressly covers pensions and similar remuneration, including a lump-sum payment, arising in one jurisdiction and paid to a resident of the other in consideration of past employment or self-employment, as well as social-security pensions.

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The pension article is Article 17, not Article 14.
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Article 17 expressly mentions lump-sum pension payments.
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A qualifying Hong Kong MPF payment can therefore require treaty analysis before ordinary UK foreign-pension rules are applied.
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The source and legal nature of the payment matter.
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The treaty can allocate exclusive taxing rights to the source jurisdiction.
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The MLI-modified treaty should be used for the current 2026 position.

Treaty-First Analysis of an MPF Lump Sum

For a UK tax resident receiving a Hong Kong MPF payment, the correct order is to establish UK residence, identify the exact MPF payment and its Hong Kong source, and then apply Article 17. If the payment falls within Article 17 and Hong Kong has the exclusive taxing right under the treaty, the UK result is not simply a domestic 25% exemption or a normal FTCR calculation. The treaty allocation must be established first.

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Do not begin with the domestic 25% pension-lump-sum rule.
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Do not begin with FIG either.
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Treaty residence and domestic residence are separate questions.
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The actual MPF benefit type should be documented from the trustee/provider.
QuestionWhy It Matters
What type of MPF payment is it?A retirement lump sum, periodic pension, early-withdrawal payment and other retirement benefits can require different statutory analysis.
Where does the payment arise?Article 17 allocates taxing rights by reference to the jurisdiction in which the pension/similar remuneration arises.
Was the recipient UK resident when paid?This affects UK domestic pension taxation and treaty residence.
Does Article 17 apply?If so, treaty taxing rights may override the ordinary domestic UK result.
Does UK domestic pension legislation also apply?Foreign pension lump-sum rules such as section 574A can be relevant where treaty exemption does not remove the UK charge.

UK Domestic Taxation of Foreign Pension Lump Sums

If an MPF payment is within UK domestic foreign-pension taxation and is not exempted by the treaty or another statutory rule, HMRC's current guidance identifies section 574A ITEPA 2003 as the regime for certain relevant lump sums from foreign pension schemes. HMRC states that the starting point is that 100% of the relevant lump sum is taxable, subject to the statutory reductions in section 574A.

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Section 574A is the important provision for certain relevant foreign pension lump sums.
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It can apply where the scheme is not a UK registered pension scheme, relevant non-UK scheme or qualifying EFRBS and the other statutory conditions are met.
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The payment generally needs to be made to a UK-resident member for the section 574A charge to arise.
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HMRC's starting point is 100% taxable, subject to statutory reductions.
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The old blanket statement '25% tax-free on foreign pensions' should not be used.
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The 25% pension tax-free rule applies to particular authorised UK pension lump sums and is not automatically transferable to every foreign pension payment.

Why the 25% Rule Cannot Simply Be Applied to MPF

The familiar UK rule that a pension member can usually take up to 25% of a pension tax-free applies to specific UK pension lump sums and the lump sum allowance framework. HMRC's foreign pension guidance is different. A relevant foreign pension lump sum can fall under section 574A, where the full amount is initially within the charge before the statutory deductions are considered. Therefore an MPF withdrawal cannot simply be split into 25% tax-free and 75% taxable without first determining the applicable UK statutory and treaty provisions.

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The standard lump sum allowance is generally £268,275 for 2026-27, subject to protected allowances.
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That allowance is part of the UK registered-pension regime.
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An MPF scheme is not automatically a UK registered pension scheme.
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Section 574A is specifically relevant to certain foreign pension lump sums.
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Treaty exemption can override the UK domestic charge where the treaty allocates exclusive taxing rights away from the UK.
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The actual MPF scheme documentation should be retained.

Article 17: Hong Kong Pension and MPF Payments

The UK-Hong Kong treaty's Article 17 states that pensions and other similar remuneration, including a lump sum payment, arising in a Contracting Party and paid to a resident of the other Contracting Party in consideration of past employment or self-employment, and social-security pensions, are taxable only in the first-mentioned Party. For a qualifying Hong Kong MPF payment arising in Hong Kong, this can give Hong Kong exclusive treaty taxing rights even where the recipient has become UK resident.

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Article 17 is the key pension treaty provision.
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The wording expressly includes lump sums.
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The treaty can give Hong Kong exclusive taxing rights.
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The treaty result depends on the payment qualifying as pension/similar remuneration arising in Hong Kong.
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The exact source and nature of the MPF benefit therefore need to be established.
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Where the treaty removes the UK charge, FIG does not need to be used to create the exemption.

FIG Regime and MPF: Do Not Treat FIG as the Primary Exemption

The Foreign Income and Gains (FIG) regime applies from 6 April 2025 to qualifying new UK residents who satisfy the 10-consecutive-tax-year non-residence condition. A qualifying claimant can obtain relief for qualifying foreign income and gains for up to four consecutive tax years. However, an MPF payment should first be tested against the UK-Hong Kong treaty. If Article 17 gives Hong Kong exclusive taxing rights, there is no UK tax charge to be relieved by FIG. FIG becomes relevant only to the extent the payment is within the qualifying foreign-income/gains rules and remains subject to UK taxation.

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BN(O) visa status does not itself create FIG eligibility.
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The person generally needs at least 10 consecutive tax years of prior non-UK residence.
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FIG relief must be claimed for the relevant year.
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A FIG claim causes loss of the UK Personal Allowance and CGT annual exempt amount.
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FIG should not be presented as a universal exemption for every MPF withdrawal.
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Treaty relief and FIG are legally distinct mechanisms.

MPF Withdrawn Before UK Residence

A payment received before UK residence begins is normally outside the UK income-tax charge simply because the recipient is not yet UK resident, but it should not be labelled automatically 'clean capital' without considering the nature and timing of the payment. An MPF lump sum remains a pension/retirement payment and should be documented. The UK residence date and the actual payment date are important.

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The UK residence status on the payment date matters.
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The payment's pension character does not disappear merely because it was received before UK arrival.
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Foreign tax imposed by Hong Kong before UK residence does not automatically create a later UK FTCR claim.
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Bank transfers made after UK arrival do not necessarily change the original tax character of an earlier payment.
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Keep the MPF trustee statement, payment date and Hong Kong tax documentation.

MPF Withdrawn During a Qualifying FIG Year

A qualifying new UK resident may have a FIG claim available during the first four years of UK residence, but the actual MPF payment still needs classification. If the Hong Kong treaty gives Hong Kong exclusive taxing rights under Article 17, the UK liability is determined by the treaty rather than by using FIG as the primary exemption. If an amount is otherwise qualifying foreign income/gain within FIG and is subject to UK taxation, the FIG rules may be relevant.

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Do not automatically classify all MPF withdrawals as FIG-eligible foreign income.
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Identify the pension article and treaty taxing rights first.
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A FIG claim is annual and can be made for selected qualifying foreign income and gains.
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Unused FIG years cannot simply be rolled into later years.
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The allowance consequences of claiming FIG must be considered.

BN(O) Permanent-Departure Rule for Early MPF Withdrawal

Under Hong Kong MPF law, early withdrawal on the ground of permanent departure requires the member to satisfy the statutory permanent-departure requirements and provide evidence to the MPF trustee. The MPFA has stated that the BN(O) passport and associated BN(O) visa cannot be relied on as proof of permanent departure from Hong Kong, because Hong Kong does not recognise the BN(O) passport as a valid travel document or proof of identity for this purpose. Trustees must assess the total evidence provided by the applicant.

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A BN(O) passport alone is not accepted as documentary proof of permanent departure.
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A BN(O) visa alone is also not sufficient evidence.
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The trustee has a gate-keeping role.
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The applicant must provide evidence satisfying the statutory permanent-departure requirements.
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Applications are assessed on the totality of evidence and the individual circumstances.
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Rejected applications do not mean the MPF disappears; funds generally remain in the scheme account.
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False declarations for permanent-departure withdrawals can result in enforcement action.

BN(O) Does Not Mean Automatic Access Only at Age 65

The original page's statement that many BN(O) holders 'must wait until age 65 or hold alternative permanent residency' is too categorical. Age 65 is one normal retirement-related route, but MPF legislation has multiple permitted withdrawal grounds. Permanent departure is one early-withdrawal ground, and the BN(O) documentation problem affects that particular ground. Other statutory grounds may still be available depending on the member's circumstances.

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Retirement is a separate withdrawal ground from permanent departure.
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Other statutory grounds include total incapacity and terminal illness subject to their requirements.
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Small-balance and other prescribed grounds can also have separate conditions.
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The BN(O) issue specifically concerns the evidence for permanent departure.
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A member should ask the trustee which statutory withdrawal ground applies to their facts.

Hong Kong Tax Treatment of MPF Withdrawals

The Hong Kong tax result depends on the type of MPF payment and the underlying statutory scheme. Hong Kong does not use a UK-style pension-tax framework, and MPF retirement benefits should not be assumed to be equivalent to a UK registered-pension lump sum. The UK-Hong Kong treaty analysis should therefore begin with the payment's Hong Kong source and legal character rather than the percentage treated as tax-free under UK pension rules.

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Do not assume every MPF lump sum has 0% Hong Kong tax merely because it is a retirement payment.
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Different MPF withdrawal grounds can have different legal documentation and tax characteristics.
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The trustee's payment statement should identify the nature and ground of withdrawal.
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Hong Kong domestic treatment and UK treaty treatment are separate questions.
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The UK should not impose tax contrary to an applicable treaty allocation.

UK Reporting: SA106, SA109 and Pension Documentation

A UK resident who receives an MPF payment may need to report foreign pension income through Self Assessment depending on the nature of the payment and the applicable treaty treatment. SA109 is used for residence, split-year and FIG information where Self Assessment is required; SA106 is the foreign-income supplementary page. But the taxpayer should not automatically enter an MPF amount as UK-taxable foreign pension income without first determining whether Article 17 gives Hong Kong exclusive taxing rights.

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SA109 should be used where residence/split-year/FIG reporting is required.
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SA106 can be relevant to foreign income reporting.
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A treaty-exempt payment may still need appropriate disclosure depending on the return and reporting circumstances.
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Do not claim FTCR for the same item simply because Hong Kong tax was paid if the treaty gives Hong Kong exclusive taxing rights.
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Keep trustee statements, MPF withdrawal certificates, Hong Kong tax evidence and residence records.

MPF Transfers Are Different From MPF Withdrawals

Transferring UK pension savings to an overseas pension scheme is a different transaction from receiving an MPF withdrawal. UK pension transfers can involve QROPS rules, overseas-transfer allowance rules and potentially a 25% overseas transfer charge. An MPF payment received as a benefit should therefore not be described as a 'pension transfer' without analysing the actual transaction.

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Withdrawal of MPF benefits and transfer of pension rights are different legal events.
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A transfer from a UK pension to an overseas scheme can trigger the separate overseas-transfer rules.
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The MPF tax treatment depends on the source of the money and the nature of the transfer/payment.
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Do not combine QROPS transfer advice with ordinary MPF withdrawal advice.

Practical 2026 MPF-to-UK Tax Workflow

A reliable MPF analysis should be treaty-first and payment-specific. Establish the UK residence position, identify the exact MPF benefit and withdrawal ground, establish Hong Kong source and domestic treatment, apply Article 17, then test UK domestic pension rules only to the extent the treaty leaves a UK taxing right. FIG and foreign-tax credits should be considered only after this primary classification.

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Step 1: establish the UK tax residence status for the payment year.
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Step 2: obtain the MPF trustee's statement identifying the payment and withdrawal ground.
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Step 3: determine whether the payment is a pension/lump sum within Article 17.
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Step 4: determine where the pension payment arises under the treaty.
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Step 5: determine which jurisdiction has the treaty taxing right.
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Step 6: if UK taxing rights remain, analyse section 573/574A and any relevant statutory exemption.
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Step 7: do not apply the ordinary 25% UK pension rule automatically to an MPF payment.
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Step 8: test FIG eligibility separately if the taxpayer is a qualifying new UK resident.
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Step 9: assess BN(O) permanent-departure evidence if the MPF is being withdrawn early.
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Step 10: complete SA106/SA109 reporting as actually required.
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Step 11: retain MPF, Hong Kong tax, residence and payment-date evidence.
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Step 12: obtain specific advice for unusual MPF benefits, mixed payments or treaty uncertainty.

Frequently Asked Questions (6)

There is no single answer without classifying the payment. Article 17 of the UK-Hong Kong treaty covers pensions and similar remuneration, including lump sums, and can give Hong Kong exclusive taxing rights where the payment arises in Hong Kong and falls within the article. If the treaty does not remove the UK charge, UK foreign-pension rules can become relevant, including section 574A for certain foreign pension lump sums. The payment date, UK residence status, MPF benefit type and treaty source must therefore be checked.

A BN(O) passport or its associated visa cannot by itself be relied on as proof of permanent departure from Hong Kong for the MPF permanent-departure withdrawal ground. MPFA states that trustees must assess the totality of the evidence and satisfy themselves that the statutory permanent-departure requirements are met. A different document or other evidence may therefore be needed, and other statutory withdrawal grounds can have separate rules.

No. The familiar 25% tax-free lump-sum rule applies to specified UK pension arrangements and authorised lump sums. HMRC's foreign-pension guidance says certain relevant foreign pension lump sums are instead dealt with under section 574A ITEPA 2003, where 100% is initially within the charge subject to statutory reductions. An MPF payment must therefore be classified under the treaty and UK foreign-pension rules before applying any percentage.

Not automatically. FIG is available only to a qualifying UK resident within the first four qualifying UK-residence tax years following at least 10 consecutive tax years of prior non-UK residence. Even where FIG eligibility exists, the MPF payment must first be classified and tested against Article 17 of the UK-Hong Kong treaty. If Hong Kong has exclusive taxing rights under the treaty, FIG is not the mechanism that creates the exemption. If a UK charge remains and the payment qualifies as foreign income/gain for FIG, the FIG rules may then need to be considered.

Article 17 is the relevant pension provision. It covers pensions and other similar remuneration, including lump-sum payments, arising in one jurisdiction and paid to a resident of the other in consideration of past employment or self-employment, as well as social-security pensions. Article 14 is the employment-income article; it is not the pension article.

The reporting route depends on the payment and treaty result. A UK resident may need foreign-income reporting through SA106 and residence/FIG information through SA109 where Self Assessment requires those pages. However, do not automatically report the entire MPF payment as UK-taxable pension income: first establish whether Article 17 gives Hong Kong exclusive taxing rights and whether any UK domestic foreign-pension provision applies. Keep the MPF trustee statement, payment date, withdrawal ground and Hong Kong tax documents.
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2026 TAX SNAPSHOT

Standard Personal Allowance
£12,570
Standard allowance; specialist and Scottish rules can differ.
England / Wales / Northern Ireland Basic-Rate Band
£37,700
£50,270 including the standard £12,570 Personal Allowance.
4-Year FIG Regime
Maximum 4 tax years
Available to qualifying new UK residents after at least 10 years of non-UK residence.
IHT Long-Term UK Residence
10 of previous 20 years
Overseas-asset exposure can continue for 3–10 years after leaving, depending on residence history.

Summary Takeaways & Checklist

  • The UK-Hong Kong treaty's pension provision is Article 17, not Article 14.
  • Article 17 expressly covers pensions and similar remuneration, including lump sums, and can allocate exclusive taxing rights to Hong Kong for qualifying Hong Kong-source pension payments.
  • The UK 25% pension-lump-sum rule is not a universal exemption for foreign MPF payments; section 574A can apply to relevant foreign pension lump sums where the treaty does not remove the UK charge.
  • FIG eligibility does not arise merely because someone holds a BN(O) visa and should not be presented as the automatic exemption for an MPF withdrawal.
  • A BN(O) passport or BN(O) visa cannot by itself be relied on as evidence of permanent departure for early MPF withdrawal.
  • MPF trustees assess permanent-departure applications using the totality of evidence and the statutory requirements.
  • Receiving MPF before UK residence is generally a different analysis from receiving it after UK residence begins; payment date and residence status must be documented.
  • SA106/SA109 reporting depends on the actual payment and treaty position; an MPF payment should not automatically be treated as UK-taxable foreign pension income.
  • MPF withdrawal and UK-pension-to-overseas-scheme transfer are separate transactions with separate tax rules.

Official References & Manuals

GOV.UK 2010 UK-Hong Kong Double Taxation AgreementGOV.UK Synthesised UK-Hong Kong DTA and MLIHMRC Hong Kong Treaty ManualHMRC Hong Kong Treaty SummaryHMRC Foreign Pension IncomeHMRC Foreign Pension Lump SumsHMRC Pension Payments Exempt from UK TaxGOV.UK Foreign Income and Gains (FIG) RegimeHMRC FIG Helpsheet 2026MPFA BN(O) Permanent Departure StatementHong Kong Government / LegCo MPF Permanent Departure EvidenceGOV.UK UK Government Response on BN(O) MPF AccessGOV.UK Pension Tax-Free Lump Sum Rules

Related HMRC Guides

UK-Hong Kong DTAA Double Tax Relief GuideUK-Hong Kong Property Selling CGT GuideHMRC Foreign Tax Credit Relief Calculator