CPF for British (and other) Expats

This is an updated CPF blogpost from 2023, you can find it here

If you have Permanent Resident status in Singapore, you will be paying into the Singapore CPF scheme whether you wish to or not. Additionally, contributions will be made for you by your employer (assuming you are employed).

Though there is much to discuss in relation to contribution amounts and what you ought to do with the cash within your CPF whist you are here in Singapore, this article will not seek to give detailed advice thereon. That said, Given the guaranteed interest rates available (see CPF Interest Rates), and given that they typically offer higher rates of return that other risk-free options, my general advice is to simply take the interest rates (as opposed to investing via CPF) and to view it as part of
the low-risk portion of you overall portfolio.

Instead, this article will highlight one key difference between how Singapore and the UK view your CPF account, and how that difference can lead to a large unexpected tax liability.


Whilst resident in Singapore, your payments into CPF are tax-decuctible. Additionally, there is no tax to pay on any investment growth within CPF, and withdrawals are also completely tax free.

Though you will often hear Singaporeans complaining about CPF, and having their money locked away from them until later in life, they perhaps do not realise how good they have it in comparison to the rest of the world. Having a scheme that is tax-free at all three stage (contribution, growth and payout) is something that most global governments do not allow.

If you leave Singapore and give up your PR, you will be required to take out the value that you have accumulated in your CPF without penalty (see Closing CPF Account). Currently the CPF Board estimate that the closure of an account will take up to 18 weeks.

So far, CPF looks like an incredible deal for any expat…..

United Kingdom:

Whilst resident in the United Kingdom, payments into a recognised ocupational or personal pension are tax-decuctible. However, payouts from those pensions are fully taxable (aside from a 25%

Pension Commencement Lump Sum allowance on UK-recognised schemes).

If you move to the UK during a tax year, HMRC will split that year into two parts. The relevant date on which the split takes place will generally be when you start work in the UK or move into your home, whichever comes first (this is a simplification of the Statutory Residence Test for brevity). If you receive your CPF payout in the ‘UK Part’ of that year, you are treated as a UK tax resident when you receive that payment.

Given the above, the question then becomes ‘how would the UK treat my Singapore CPF withdrawal(s) if completed whilst I am UK tax resident’?

The UK taxes pension payments in full, and that also applies to overseas pensions. From that fact alone, you would logically expect any payment from your CPF account to be taxed at your marginal income tax rate in the year of receipt, possibly resulting in it being taxed as high as 45%!

Alternatively, if the UK opted to view your CPF account as something other than a pension, akin to any other savings or investment account with a bank or brokerage, you would be taxed ‘only’ on the gains made on your CPF investments (i.e. the difference between payout and contributions). The

UK approach to pensions places us in the strange situation in which HMRC would effectively punish you for having an overseas pension rather than an overseas savings account!

The approach makes sense when dealing with UK pensions, as when paying into those a tax relief was given that would not be afforded to those paying into a savings account. From a UK perspective, a pension is not taxed at point of contribution or growth, but is taxed at time of withdrawal. In contrast, a simlpe savings account or brokerage investment account is taxed at time of contribution (in that payments made are from post-tax income) and growth (you pay tax on dividends, interest or on capital gains) but not on withdrawal (unless at that time realising any growth).

Having never being able to find an answer on the matter, it seems that HMRC has recently clarified, and it does not make such pleasant reading for British Singapore PRs


According to the answer provided by an HMRC admin person on the above forum, the approach is not what we could have guessed. Your Singapore employer contributions plus any growth in your CPF account will be taxable when taken out as a UK tax resident, whilst your own contributions will not be taxed. I can find no logic in this approach, but for now this comment from HMRC admin is as close to a conclusive answer as we can get.

‘When the CPF is paid out as a lump sum to a UK resident, Income Tax is charged on both the employer’s contributions and any growth in value of the scheme investments (from 6th April 2017).

Despite going fully through the legislation mentioned in the above HMRC forum posts, I can actually find no logical reason for the employee contributions also not being taxable, and am left wondering if the admin at HMRC has missed the fact that those are tax-deductible contributions in Singapore (instead viewing them as after-tax contributions into a pension). Regardless, at best around half of the CPF account would be taxable and at worst all of it.

This being the case, we can summarise that you will pay tax at your marginal rate on roughly half of your CPF balance. If you have $200k SGD in your CPF, and return to the UK on a £125k annual salary, this would see you loose $45k of your CPF to HMRC.

What is the solution?

1. Accept the situation, report the payout on your UK tax return and pay the tax

2. Elect not to report the payment on a UK tax return

I suspect that this is what most people inadvertently do, believing that CPF payouts are simply non-taxable regardless of where they live.

Ignorance of the law is no defense however, and clearly I cannot endorse this approach.

3. Take an extended break after leaving Singapore and delay your return to the UK

Given the 18 week estimate currently, that could be a very long holiday. This would be the ideal time to take yourself on that long trip around the world, with HMRC effectively paying for it in lost tax revenue!

Of course you may be returning to the UK with an employer who would not be so happy with this extended holiday.

4. Renounce PR and stay in Singapore until you receive the payment. This could be done either by renouncing PR and having an EP granted to your company. We are unsure if the Singapore Govt will allow this, as they tend to take a dim view of those who renouce PR or Citizenship willingly, and may seek to make a point by refusing or delaying the EP application and any associated Dependent passes.

Other Countries:

In case any Australian’s are wondering, the ATO does not put you in this position when returning to Australia. Australia would simply tax any investment growth or interest on your CPF balance attributable to the time after you move back to Australia (a much fairer solution).

For Americans, as the US will have been taxing you on your income fully (including all CPF contributions) each year, the IRS would only wish to tax growth within your CPF account whenever that growth is liberated (wherever you are resident). One other note for Americans is that they would be well advised to avoid investing their CPF, and should simply take the interest rates given by the CPF Board (so as to avoid investing into any non-reporting mutual fund or PFIC).

Chartwell Associates

Chartwell Associates is Singapore’s Leading Fee Based Financial Planning Company Building Wealth, Securing Futures. Expert Financial Planning For Expats And Locals.

Feel free to contact us for a free consultation, here

More Insights