Do YOU want to retire in the sun? The top spots that will slash your tax bill by

When you finally put your feet up in retirement, you want to make the very most of your hard-earned pension pot.

Yet with UK inflation remaining stubbornly high and fiscal drag biting into your pension thanks to frozen income tax rates, it might be time to reflect on where to spend the rest of your days.

Moving abroad is high on the agenda for many retirees. So if you want to embrace a better climate, lifestyle – and more house for your money – a country with preferential tax rates might be the icing on the cake.

With the help of expert Federica Grazi of Mitos Relocation, we take a look at the UK’s favourite retirement locations and what to expect if you want to move there.

We have crunched the numbers using a figure of £45,000 – roughly the income that a single person needs for a ‘comfortable’ retirement in the UK, according to the Pensions and Lifetime Savings Association (PLSA).

It’s worth noting that some countries like Greece, Italy and Cyprus offer flat-tax incentives usually applied on all taxable foreign sourced income and gains. These are just estimates so it is essential you speak to a tax adviser to consider your own personal circumstances.

Also be aware that pensions paid by the UK Government are always taxed in the UK, while local inheritance tax rules must be considered. All the countries we’ve looked at have Double Taxation Agreements (DTAs) with the UK. These are treaties the UK has with countries to prevent your income being taxed twice.

In the UK on a £45,000 per annum pension you would pay £6,500 tax, so this is the baseline figure used in our calculations.

So where is it possible to save the most – or even make a loss?

Moving abroad is high on the agenda for many retirees in the UK due to better climates, lifestyle and, typically, more house for your money

CYPRUS: SAVE £4,500

With only £2,000 payable on a £45,000 pension income, it’s not surprising that this island has great allure for retirees.

In Cyprus you can take advantage of a flat-rate tax of 5 per cent – above a tax-exempt allowance of €3,420. However, retirees can choose between the flat rate and standard progressive rates with a tax exemption until €19,500 – and there is no time limit.

If your pension income is over €25,000 it’s better to go for the flat rate, says Nick Cairns, a cross-border wealth adviser at Blevins Franks.

Normal tax rates (after €19,500 personal allowance) are 20 per cent up to an income of €28,000, stepping up to 35 per cent for income over €60,000. There are no inheritance, wealth, gift or annual property taxes.

In Cyprus retirees can live comfortably off around €2,000 (£1,705) a month, according to Peter Savvas from Paphos Relocation Services. To buy a property such as a three-bedroom €300,000 villa with a private pool will incur around €5,000 in buying/legal costs, says Sarah Hordle of Island Homes Cyprus. Those over UK state pension age – 67 years old – can save by accessing the Cypriot General Health System (GESY), via an S1 certificate from the NHS.

An S1 form, also known as a Certificate of Entitlement, allows access to state-provided healthcare in another European Economic Area (EEA) while their healthcare costs are covered by their own country.

With only £2,000 payable on a £45,000 pension income, it’s not surprising that Cyprus has great allure for retirees. Pictured, the old port of Kyrenia

How to move:

A visitor visa – or ‘pink slip’ which is renewable annually for five years – is the most popular option.

You do not need to purchase a property, although the value of one may be considered as part of your financial resources.

You will need to show €24,000 per year income from abroad, plus 20 per cent extra for a spouse, and the cover of living expenses.

A golden visa is more costly – you will need to invest at least €300,000 for a new-build villa and show proof of more than €50,000 annual income. But in return it grants you permanent residency.

GREECE: SAVE £3,300

Greece offers a flat-rate tax of 7 per cent, which means that you will pay £3,200 tax on £45,000. The preferential Greek tax regime lasts for a duration of 15 years.

‘There is a consistent influx of retirees choosing Greece, combining the Financially Independent Person (FIP) residence permit with the flat tax,’ says Maria Kaili of Cremer & Partners in Athens.

Grazi says the Greek flat rate starts being more convenient for incomes above £20,000. The scheme is not widely known or well publicised, says Steve Gantzos of Greek Property Finders. He says to budget around 10 per cent buying costs on a second-hand villa – and you can find plenty of traditional houses for less than €150,000.

In Greece, the cost of living is 21.5 per cent lower than in the UK according to numbeo.com. There’s also a…