Originally posted on: 2 March 2025
Updated on: 13 January 2026
Introduction
When Helen and I left New Zealand to commence our OE, we cleaned out every dollar from our Kiwi bank accounts and took it all with us on our big overseas adventure. It seemed like the simplest thing to do at the time, and we needed every penny anyway.
But things have really changed since then. These days, more and more Kiwi expats moving to the UK often leave investments behind—particularly KiwiSaver accounts and PIE (Portfolio Investment Entity) funds. Maybe you figured, like many others, these investments were hassle-free and a good little nest egg to keep ticking over while you’re overseas.
But here’s the thing: once you’ve moved to the UK and become a tax resident there, those quiet little NZ nest eggs aren’t as hassle-free as you thought. They’re being taxed every year by New Zealand at a chunky flat rate of 28%. Meanwhile, back in the UK, there’s a whole range of smart, tax-efficient investment options (like ISAs), which offer completely tax-free returns. By not switching things up, you’re potentially paying unnecessary tax to New Zealand—and missing out on keeping more of your earnings tax-free.
In this simple, practical blog, we’ll unpack exactly how holding these NZ-based investments could be impacting your tax situation. We’ll also explore whether it might be smarter—and kinder to your wallet—to shift your investments into the more tax-efficient alternatives available here in the UK.
Because let’s face it, no one wants to be giving away hard-earned cash to tax unnecessarily.
Quick Overview – Taxing of KiwiSaver & PIE Funds for UK-based Kiwis
If you’re a Kiwi now living in the UK, it’s a decent bet you still have a KiwiSaver account tucked away back home. Or maybe you’ve got some funds stashed in another popular New Zealand investment vehicle known as PIE (Portfolio Investment Entity) funds. Both of these have become incredibly common—easy ways for Kiwis to invest without breaking a sweat.
But here’s something you might not know: when you officially become non-resident (and living in the UK typically puts you in that category), these investments automatically get taxed by New Zealand at the maximum Prescribed Investor Rate (PIR) of 28%. And the kicker is, as a non-resident, you can’t dial down that rate, even if your income would usually qualify you for a lower one.
So, what does that mean for you practically? Essentially, every year you keep your investments parked back in NZ, you’re paying a hefty chunk of your investment returns straight into the IRD’s pockets—money that maybe you didn’t even realise you were losing.
Contrast that with what’s available here in the UK. You have tax-efficient investment options—most notably Individual Savings Accounts (ISAs)—that allow your money to grow completely tax-free. By not taking advantage of these, you might just be quietly leaking valuable income year after year.
“…the service has been fabulous.”
Ah Mike, we think you’re pretty fabulous too!
How KiwiSaver is Taxed for Non-Residents
Let’s zero-in on KiwiSaver for a minute, because if you’re a Kiwi living abroad in the UK, there’s a decent chance you’ve still got money tied up there. After all, it’s been one of the simplest and most popular investment options in New Zealand for years.
The not-so-good news is that once you’re no longer an NZ tax resident, your KiwiSaver returns are taxed at a flat rate of 28%—the maximum Prescribed Investor Rate (PIR). And there are basically no exceptions to this rule. Unlike residents back home who might qualify for lower tax rates depending on their income, as a non-resident you don’t get that luxury. You’re stuck at the top rate, full-stop.
Plus, remember those handy KiwiSaver government contributions, the extra $521 per year from the NZ government? Unfortunately, once you’re no longer living in NZ, these completely stop too. So, you’re missing out on an additional benefit that made KiwiSaver especially attractive back when you were based in New Zealand.
There is a little bit of good news, but it probably does not apply to most people. After you’ve lived outside New Zealand for at least one full year (so long as you’re not moving to Australia), AND if you plan to permanently emigrate from New Zealand, then you qualify to withdraw nearly all your entire KiwiSaver balance. You can take out your own contributions, your employer’s contributions, any kick-start bonus you’ve received, and all accumulated returns. The only bit you can’t touch are the past government contributions (including the $521/year, if you’ve received it) as these will stay behind – not very generous by the NZ government but there you go.
The not so good news is pension income in the UK is taxable, so if you draw down your entire KiwiSaver as a UK tax resident, the full amount (even the contributions you made) become taxable in the UK, so yes, your contributions end up being double taxed. Once in NZ (KiwiSaver contributions are made from after-tax earnings), and again in the UK if you liquidate your KiwiSaver pension fund as a UK tax resident.
Bottom line? If you’re now a tax resident in the UK, KiwiSaver isn’t quite the ‘set-and-forget’ investment it might have seemed. If you’ve got substantial funds stuck back in KiwiSaver, it’s definitely worth assessing your options—but if you don’t plan to permanently leave NZ, then all you can really do is acknowledge you are paying the top tax rate in NZ on this income.
Taxation of NZ PIE Funds for UK Kiwi Expats
OK, we’ve talked about KiwiSaver, but what if you’ve got other kinds of investments back home in New Zealand? Specifically, maybe you’ve invested through one of the popular Portfolio Investment Entity (PIE) funds—managed funds or similar types of investment structures that loads of Kiwis use to grow their money hassle-free.
Unfortunately, if you’ve become a tax resident in the UK, it’s a similar story to KiwiSaver. As a non-resident investor, your NZ PIE income is automatically taxed at the maximum prescribed investor rate (PIR) of 28%. Just like with KiwiSaver, there generally aren’t many exceptions or any flexibility here—you’re pretty much stuck paying the full 28%, even if your actual income would normally qualify you for a lower rate.
Now, to be fully accurate, there is a special type of PIE fund—called a Foreign Investment PIE—that can offer much lower rates (even 0%) for so-called “Notified Foreign Investors” (NFIs). These specialised investment vehicles are structured specifically for overseas investors, and if you’re able to qualify as an NFI, your tax burden can reduce dramatically.
However very few of the mainstream retail-focused Kiwi PIE funds offer these specialist Foreign Investment PIE categories. Almost all the common PIE products most Kiwis invest in aren’t structured to accommodate NFIs, meaning you’re stuck with that stubbornly high 28% PIR. For most Kiwi expats living in the UK, this is likely your reality.
With that in mind, it makes good sense to pause and take stock—could you put your money in a smarter (and lower-tax) place instead? After all, unlike KiwiSaver, you can easily cash up a PIE fund.
UK ISAs – a More Tax-Efficient Alternative for UK Residents
So, we’ve established that keeping your KiwiSaver and PIE investments back in New Zealand after moving to the UK can quietly cost you quite a bit of tax. You’re leaving money behind that could be put to better use—so let’s talk about one of the smartest alternative options here in the UK: Individual Savings Accounts, more commonly known as ISAs.
In simple terms, an ISA is basically a tax shelter available to anyone who’s a UK tax resident. All the income you earn inside an ISA—whether it’s interest, dividends or capital gains—is entirely tax-free. No strings. No catch.
Here’s why ISAs are so popular:
– Completely Tax-Free Growth: Interest earned, dividends paid from investments, and any increase in value (capital gains) are all totally free of UK income tax and capital gains tax.
– £20,000 Annual Contribution Limit: You can contribute up to £20,000 every single UK tax year. The £20k annual limit is quite generous and the benefits can add up fast.
– Investing Flexibility: The beauty of ISAs is the wide range of choices they offer. You can choose between Stocks & Shares ISAs (perfect for long-term growth), Cash ISAs (straight savings accounts with interest earned tax-free), or even split your allowance between the two. Within Stocks & Shares ISAs, you can easily invest in shares, bonds, managed funds or exchange-traded funds (ETFs), including international funds if that’s something you’re interested in.
– Easy Access and Low Hassle: ISA’s gives you flexible access to your money whenever you need it—no complicated applications or waiting periods involved.
To visualise this clearly, let’s quickly compare the two options:
– KiwiSaver/PIE Funds (NZ): taxed every single year at 28% flat PIR
– ISAs (UK): taxed at 0%, every single year, no exceptions
When you look at it this way, it’s really obvious why using an ISA as a Kiwi expat in the UK is a much smarter move financially.
If your goal is holding onto as much of your investment returns as possible then it makes perfect sense to shift your investments from those heavily taxed NZ vehicles across to an ISA. You get to keep more of your own money, watch your investments grow faster, and potentially achieve your financial goals sooner.
NZ KiwiSaver and PIE Funds and UK Reporting Fund Status
At this point, you’re probably clear on the fact that keeping standard KiwiSaver or PIE investments back home typically means handing over that hefty 28% annual tax to the IRD. But there’s another tricky UK tax wrinkle you’ll need to know about too—and this one’s often a nasty surprise for Kiwi expats selling their NZ investments after they’ve moved to the UK.
Let’s unpack it quickly and simply.
In short, KiwiSaver funds and standard NZ-based PIE funds generally don’t qualify as HMRC “reporting funds” here in the UK—in fact, I’ve never yet come across one that does. What does this mean exactly? Well, it means HMRC treats these Kiwisaver and PIE funds as “non-reporting offshore funds” by default.
Here’s why that matters from your perspective:
No Annual UK Tax (if there’s no distribution)
The good news is you’re not paying UK tax year-to-year on income that remains inside your KiwiSaver or PIE fund—as long as there’s no actual distribution out to you. While that sounds good at face value, keep in mind you’re already paying 28% each year back home in NZ anyway. But at least it keeps the admin low.
The Catch (and it’s a BIG one!)
The moment you sell your Kiwi investment PIE fund (I’ll ignore Kiwisaver here on the basis you cannot usually cash it out), all of the gains you’ve made through growth suddenly become fully taxable in the UK—but crucially, they’re taxed at ordinary income tax rates, NOT the usually much lower capital gains rates. For most people, UK income tax rates on these types of gains (20%, 40%, or even 45%) are significantly higher than capital gains tax rates would be (typically 18% or 24%).
That last point deserves attention, because it can lead to double taxation—an issue that’s especially painful for Kiwi expats:
You’re taxed every single year by NZ at 28% on the investment returns in your PIE investment—then on exit, the UK taxes the whole accumulated gain all over again, and often at a high UK income tax rate rather than capital gains rates. Although the UK allows partial credit for the tax already paid in New Zealand, you typically won’t get full relief—meaning you’re effectively paying tax twice on at least some portion of your investment returns.
Its not great. In practical terms, this can add up to a significant tax sting when pulling your money out of your Kiwi-based investments after becoming a UK resident. In short, holding a standard KiwiSaver or PIE fund long-term from within the UK becomes even less appealing once you know that HMRC treats them as non-reporting funds.
That’s why it’s such a smart idea for Kiwis to carefully examine their investment options before leaving New Zealand. By potentially cashing up KiwiSaver or PIE investments before becoming a UK taxpayer, you can avoid nasty tax surprises down the track. Once you’re tax resident in the UK, it’s often too late—and that can make cashing out feel pretty painful.
Case Study: Kiwi PIE fund vs UK ISA – 5 Year Comparison
Let’s consider the case of Ella, a Kiwi who moves from New Zealand to the UK and stays for exactly five years before heading back home. She has done well with her savings, and currently has NZD $40,000 invested in a standard NZ PIE fund.
We’ll consider two alternative approaches over the five-year period:
– Scenario A: She leaves the $40,000 investment back in New Zealand.
– Investment return: 8% per year (compounded annually)
– Annual NZ tax: 28% flat PIR
– Scenario B: She withdraws the funds and transfers them to the UK immediately upon leaving, converting approx NZD $40,000 into roughly GBP £18,000 (using an indicative exchange rate of around 1 GBP = 2.22 NZD).
– She invests the £18,000 into a UK ISA.
– Investment return: same 8% per year (compounded annually)
– Annual UK tax: 0% tax due to ISA tax-free status
After 5 years, if she left her investment in her PIE fund, it will be worth NZD $52,924 (I have decided not to show you the detailed calculations).
If she took the funds with her to the UK and invested in an ISA, she would have a balance of GBP26,448. Converted back to NZD this is NZD $58,715.
Net result? Ella is better off by NZD$5,791 simply transferring her PIE investment to the UK and investing in an ISA. Her investment is 11% larger due to some good decision making early on.
Summary
Let’s quickly recap—if you’re a Kiwi who’s moved (or about to move) to the UK and still hold investments back home like KiwiSaver and PIE funds, you could be losing out on unnecessary tax.
Here’s the deal laid out simply:
– Once you’re no longer living in NZ, your KiwiSaver and PIE investments switch to a flat 28% tax rate. That’s high rate of tax to be paying on your investments, just saying.
– Standard KiwiSaver and PIE funds don’t quite gel neatly with the UK tax system—they’re treated as ‘non-reporting offshore funds’, making any gains fully taxable as income at UK income tax rates, rather than the lower capital gains rates you’d probably prefer.
– Even though the NZ-UK tax treaty helps you avoid some double tax issues, it probably won’t save you entirely. You may still feel the pinch of being taxed twice on your gains.
– If you are thinking about (and are able to) liquidate your KiwiSaver pension fund, and remit those funds to the UK, get some tax advice first. You could end of paying income tax in the UK on the entire KiwiSaver fund amount.
But you’ve got smarter, tax-friendly options in the UK—especially ISAs—where returns from interest, dividends, and capital growth are completely tax-free. You can invest up to £20,000 a year in an ISA, enjoying tax-free growth for years to come.
What should you do next?
– Ideally, check your investment options before leaving NZ, or at least before becoming a UK tax resident.
– Carefully consider withdrawing KiwiSaver if permanent emigration rules apply (get tax advice on this first – it can come with fishhooks) and look at switching any NZ PIE funds into either zero-rate PIE schemes (if available) or UK tax-efficient alternatives such as ISAs.
– Time your moves strategically to maximise your ISA allowance and minimise the UK and NZ tax burden. Professional advice can definitely help smooth the journey here.
Yes, the tax details might feel annoying, complicated or even painful—but solving this properly could save you stress, hassles, and potentially a whole lot of money.
And remember, you’re not in this alone—if you’d like tailored, friendly advice sorting all this out, that’s exactly what we’re here for at No Worries Accounting.
Frequently Asked Questions
What happens to my KiwiSaver when I move to the UK?
Once you’re a UK tax resident, your KiwiSaver investment returns are taxed at a flat 28% in New Zealand, and you’ll no longer get the annual NZ government contribution. If you’ve permanently left NZ and lived overseas (excluding Australia) for at least one year, you can usually withdraw almost your whole KiwiSaver balance tax-free in NZ—although be aware the UK treats this withdrawal as taxable foreign pension income.
Do I have to pay tax on my KiwiSaver and PIE funds if I live in the UK?
Yes—once you leave New Zealand and become a UK tax resident, your KiwiSaver and PIE fund returns are automatically taxed at a flat rate of 28% in NZ. While these NZ funds typically don’t trigger any annual UK tax if they make no distributions, when you eventually cash them out, the UK treats your gain as income and taxes it at UK income tax rates.
What is the PIR (Prescribed Investor Rate) and how does it apply to Kiwis living in the UK?
PIR is the NZ tax rate applied to returns you earn within KiwiSaver and PIE investments. Normally, it’s based on your income (with rates of 10.5%, 17.5%, or 28%). But if you’re a Kiwi living in the UK—a non-resident from NZ’s perspective—you’ll automatically default to the maximum PIR of 28%, regardless of your actual income. This high rate can make your investments less tax-efficient, which is why reviewing your options carefully is important.
How do ISAs compare to PIE funds for kiwis moving to the UK?
If you’re moving to the UK, ISAs are generally far more tax-efficient than keeping your money in NZ PIE funds. NZ PIE funds tax your earnings each year at 28% once you’re a non-resident, whereas UK ISAs offer entirely tax-free returns—including interest, dividends and capital gains. For most Kiwis now living in the UK, moving investments into an ISA can mean significantly lower taxes and higher investment growth over the years.
When is the best time to withdraw my KiwiSaver and PIE funds before moving to the UK?
Ideally, the best time to withdraw your KiwiSaver and PIE funds is before you become a UK tax resident. Cashing out before moving means you pay no UK tax on withdrawal, avoiding the risk of hefty UK income tax charges. Once you’re UK resident, any KiwiSaver lump-sum withdrawal is fully taxable in the UK (as foreign pension income), so planning ahead can definitely minimise your overall tax cost.
I’m only in the UK for a few years. Should I still move my investments?
If you’re only planning a short stay (say, a couple of years), it might not make sense to cash out your KiwiSaver or PIE funds—especially if permanent withdrawal isn’t straightforward. But remember, while you’re in the UK, those NZ investments will be taxed at the high 28% non-resident rate, potentially impacting your returns significantly. It’s worth briefly reviewing your numbers and plans with a professional advisor to check if leaving money in NZ still stacks up over your time overseas.
I plan to move back to New Zealand eventually. What should I do with my KiwiSaver?
If you’re planning on returning to New Zealand long-term, leaving your KiwiSaver invested in NZ will make sense. However, just be aware that while you’re away, returns will be taxed at 28% as a non-resident, and you’ll no longer get the annual government contribution.