Cypriot taxes for Brits: the 2026 reform, the UK treaty and your State Pension

Once you're tax resident in Paphos, Cyprus taxes your income from everywhere. The good news: since January 2026 the first EUR 22,000 is tax-free, and the UK–Cyprus treaty decides most of the rest.

The short version

• Cyprus taxes residents on worldwide income. From the 2026 tax year the first EUR 22,000 (about £18,330) is taxed at 0%, with bands of 20%, 25%, 30% and 35% above it [6][7].
• You're resident if you spend more than 183 days a year in Cyprus, or if you meet the stricter 60-day rule [9].
• The UK taxes by residence, not citizenship: tell HMRC you've gone with form P85, or the SA109 pages if you file Self Assessment [1].
• Under the 2018 UK–Cyprus convention, your State Pension and private pensions are taxed only in Cyprus; civil service, NHS, teachers' and armed forces pensions stay with the UK [2][3].
• Your UK State Pension still rises every April in Cyprus [4].

When Cyprus treats you as resident

Cyprus taxes by calendar year, so your first Cypriot tax year will never line up with the UK's 6 April to 5 April. The Tax Department's guide to the individual return sets out two ways to be resident [9]:

1. The 183-day rule. You spend more than 183 days in the Republic in the calendar year, in one go or in bits.
2. The 60-day rule. You spend at least 60 days (but not more than 183) in Cyprus, have a permanent home here that you own or rent, aren't resident in another country for more than 183 days, aren't tax resident anywhere else, and have a business, a job or an office (such as a directorship) in Cyprus at 31 December.

Most retirees in Peyia or Tala qualify the simple way, by living here. The 60-day route suits people who split their year and have a Cypriot company or job; our guide to Cyprus non-dom status and the 60-day rule goes through it.

If both countries claim you, Article 4 of the treaty breaks the tie by looking at your permanent home, then your centre of vital interests, then where you habitually live, then nationality [2].

Income tax after the 2026 reform

Cyprus overhauled its personal tax from 1 January 2026. The tax-free band went up from EUR 19,500 to EUR 22,000, and the bands above it were widened [6]. As back home, each slice pays its own rate.

Source: Cyprus Tax Department, Tax Reform 2026 FAQs (11 May 2026) and form T.D.59A for 2026 [6][7]. Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = EUR 1.2002).

The reform also brought in new family deductions, each claimed per parent or per person [7]:

• Children: EUR 1,000 for the first dependent child, EUR 1,250 for the second and EUR 1,500 for each one after that, doubled for single parents.
• Your main home: up to EUR 2,000 a year for rent or for interest on a mortgage on your main home in Cyprus.
• Going green: up to EUR 1,000 for energy upgrades, solar panels and batteries at your main home, or an electric car registered in Cyprus.

These only apply if total family income stays under EUR 100,000 (no children, one or two children), EUR 150,000 (three or four) or EUR 200,000 (five or more), and both partners file on time and consent to sharing their tax details [6].

Returns, deadlines and the 25-year rule

From 2026, every Cyprus tax resident aged 25 to 70 must file a return, whatever their income, as must anyone with taxable income [6]. The 2026 return is due by 31 July 2027 [6]. Returns go in online through the Tax Portal, and you'll need a Tax Identification Number (TIN) first. The Paphos branch of the Tax Department can help, though plenty of Brits pay a local accountant for the first year, which is money well spent.

Defence tax and GESY

Two smaller charges catch Brits out. Special Defence Contribution (SDC) is charged on dividends and interest for people who are domiciled in Cyprus, but most Brits aren't, so they're exempt; from 2026 SDC on rent has been abolished altogether [6][8]. Contributions to GESY, the national health system, run at 2.65% on employment income and are also collected on pensions, rent, interest and dividends [7][9].

Cyprus has no inheritance tax and no annual property tax on your home.

Leaving the UK tax system properly

The UK doesn't stop taxing you because you've moved to Universal and bought a sunhat.

1. Check the Statutory Residence Test for the year you go. See the Statutory Residence Test explained.
2. Tell HMRC. Use form P85 if you don't usually file a return, with parts 2 and 3 of your P45. If you're in Self Assessment, use the SA109 residence pages, which go by post; you can't tell HMRC you're leaving online [1].
3. Claim split-year treatment if you qualify. See split-year treatment: the year you leave.
4. Keep proof of the move: your Paphos lease or title, your residence permit, flights and Cypriot bank statements.

As a non-resident you pay no UK tax on income from outside the UK, but you can still owe it on UK income such as rent [1]. British citizens can usually still claim the UK personal allowance against that UK income.

The UK–Cyprus treaty: who taxes what

The current convention was signed in Nicosia in 2018 and applies in the UK from 6 April 2019 for income tax and in Cyprus from 1 January 2019 [2].

Cyprus removes double taxation with a credit: it lets you deduct UK tax on income the UK is allowed to tax, up to the Cypriot tax on that income [2].

Government pensions. This is the big one for Paphos, home to plenty of former teachers, nurses and service personnel. Before 2019 these pensions were taxed in Cyprus. Under the 2018 treaty they're taxed only in the UK unless you're both resident in and a national of Cyprus [2][3]. A transitional election let people already living here keep the old treatment, but it ran out on 31 December 2024 [3]. The 5% Cypriot rate doesn't help with these pensions.

Private pensions with UK tax taken off. If a provider is still deducting UK tax, ask HMRC to pay it gross under the treaty using the DT-Individual form. Our guide to double taxation agreements and reliefs explains how.

UK rent still goes through the Non-Resident Landlord Scheme on the UK side. See UK income while you live abroad.

Your UK State Pension in Cyprus

Cyprus is in the EEA list, so your State Pension rises every April just as it would back home in Blighty [4]. The full new State Pension is £241.30 a week in 2026/27 [5], about £12,550 a year or roughly EUR 15,060.

It's taxed only in Cyprus [3], and it's paid gross. On its own, it sits comfortably inside the EUR 22,000 tax-free band, so a couple living on two State Pensions may pay no Cypriot income tax at all. Add a workplace pension and things change.

That's where Cyprus's famous option comes in. Each year, you can choose to have foreign pension income taxed at a flat 5% on everything above EUR 5,000 (about £4,170), instead of at the normal rates [8]. The threshold went up from EUR 3,420 in 2026. With the new tax-free band, the normal rates now often work out cheaper on smaller pensions, so do the sums both ways each year. Our guide to UK pensions in Cyprus and the 5% option works through examples.

Never move a pension just because you've moved. A UK pension can be paid to you in Paphos as it is. Transfers to overseas schemes need regulated financial advice, can trigger the overseas transfer charge, and attract scammers; read the FCA and MoneyHelper warnings first. See UK workplace and private pensions abroad.

A few loose ends

An ISA is only tax-free in the UK; in Cyprus its interest and dividends count like any other investment income. Remote workers for a UK firm should read working abroad for a UK employer.

The FCDO's advice is short and sensible: get professional advice on paying tax in Cyprus, and the Tax Department answers questions on double taxation relief [10]. A tax adviser who knows both countries can check your situation, especially in your first year. For a reality check from people who've survived their first Cypriot return, try our community group for Brits in Cyprus.

Sources

1. GOV.UK: Tax if you leave the UK to live abroad
2. GOV.UK (HMRC): 2018 UK–Cyprus Double Taxation Convention as amended by the 2018 Protocol, in force
3. GOV.UK (HMRC): Government service pensions under the UK–Cyprus Double Taxation Convention (last updated 1 July 2022)
4. GOV.UK (DWP): Countries where we pay an annual increase in the State Pension (updated 27 October 2026)
5. GOV.UK: The new State Pension, what you'll get
6. Cyprus Tax Department: Tax Reform 2026, FAQs for individuals (in Greek, new edition 11 May 2026)
7. Cyprus Tax Department: Form T.D.59A 2026, declaration for claiming tax deductions
8. Cyprus Ministry of Finance: Tax incentives (15 January 2026)
9. Cyprus Tax Department: Guide for the completion of the income tax return for individuals 2025
10. GOV.UK (FCDO): Living in Cyprus (last updated 5 February 2026)

Keep reading

• UK pensions in Cyprus: the 5% option
• Cyprus non-dom status and the 60-day rule
• Double taxation agreements and reliefs
• Leaving the UK: telling HMRC (P85) and your last tax year