Retiring in Japan
Japan: the tax picture for FIRE
Japan taxes inheritances on the recipient rather than the estate. Under the sozoku-zei system, the total estate less a basic exemption — ¥30,000,000 plus ¥6,000,000 per statutory heir — is notionally split between heirs by their statutory shares, a 10–55% rate schedule is applied to each share, and the resulting tax is then reallocated according to what each heir actually acquires. Ember models a single heir, so it encodes the whole basic exemption — ¥36,000,000, being ¥30,000,000 plus ¥6,000,000 for one statutory heir; a real multi-heir estate gets a larger exemption and a flatter effective rate, so the modelled figure errs high there. Japan's 20% surtax on heirs who are neither the spouse nor a child or parent (相法18) IS included in Ember's modelled rates for the sibling class, whose schedule therefore runs 12–66%: ¥100,000,000 to a sibling models at ¥14,640,000 against ¥12,200,000 for a child. It is deliberately not applied to Ember's catch-all "other" class, because parents land in that class in a four-way relationship model and the statute exempts them from the surcharge — so a nephew or an unrelated legatee is understated by one sixth. A spouse who is the sole heir is modelled as bearing no Japanese inheritance tax at any estate size, which is what the statutory credit (the greater of ¥160,000,000 or their statutory share — the whole estate, for a sole heir) produces.
On income, Ember models Japan's national progressive scale (5–45%) with the 2.1% reconstruction surtax and the near-universal ~10% local inhabitants tax combined into one schedule, using the permanent ¥620,000 basic deduction from the FY2026 reform. Gains and dividends on listed securities are modelled at Japan's flat 20.315%. Japan's state pension (kokumin/kōsei nenkin) is modelled with its 60–75 claim window, and under the 2006 UK–Japan treaty, UK private, occupational and State Pensions are taxed only where you live — Japan, not the UK. On day-to-day costs, Ember carries an illustrative cost-of-living factor of 0.70 for Japan at medium confidence. One honest gap to know about: Japan's public-pension deduction — which shelters at least ¥1.1 million of pension income for over-65s — is not yet modelled, so Ember's Japanese tax on pension income errs on the high side.
Income tax (2026)high confidence
Tax-free allowance: JP¥620,000 (then bands apply to income above it).
| Band (above allowance) | Rate |
|---|---|
| JP¥0 – JP¥1,950,000 | 15.1% |
| JP¥1,950,000 – JP¥3,300,000 | 20.2% |
| JP¥3,300,000 – JP¥6,950,000 | 30.4% |
| JP¥6,950,000 – JP¥9,000,000 | 33.5% |
| JP¥9,000,000 – JP¥18,000,000 | 43.7% |
| JP¥18,000,000 – JP¥40,000,000 | 50.8% |
| above JP¥40,000,000 | 55.9% |
What this model doesn’t capture (12)
- inhabitants tax (住民税) folded into the band rates at a flat 10% — its own smaller basic deduction (¥430,000 vs the ¥620,000 modelled), the ~¥5,000 per-capita levy (incl. forest environment tax) and its prior-year assessment timing are not modelled (net effect ≈ ±¥25k/yr)
- basic deduction modelled at the permanent ¥620,000 base (所得税法第86条 as amended for 令和8年分以後) — the 租税特別措置法第41条の16の2 additions are not applied: +¥420,000 below ¥4.89M total income and +¥50,000 from ¥4.89M to ¥6.55M for 2026–2027 (over-states tax by up to ≈¥128k/yr at the top of the ¥4.89M tier), and from 令和10年分 (2028) the PERMANENT +¥370,000 for total income ≤¥1,320,000, which makes the deduction ¥990,000 there — so the over-statement below ¥1.32M (≈¥56k/yr) does not end with the temporary tiers; the high-income taper (¥480k→¥320k→¥160k→0 above ¥23.5M total income) is also not applied (under-states only above ¥23.5M)
- 公的年金等控除 modelled for state/government-service pensions (rental/pension honesty slice, 2026-07-20) with the standard 'other income ≤ ¥10M' table — the higher-other-income variants (minimum drops to ¥1.0M/¥0.9M) are not modelled; qualified CORPORATE plan annuities (also 公的年金等) are indistinguishable from private annuities in this model and stay undeducted (over-taxed — conservative); survivor pensions (遺族年金) are tax-exempt in Japan but are taxed like ordinary pension income here (conservative)
- from 令和9年分 (2027) a combined cap applies where a person has both 給与等 and 公的年金等 revenue: any excess of (給与所得控除額 + 公的年金等控除額) over ¥2,800,000 is deducted from the 公的年金等控除額 (令和8年度税制改正) — not modelled; this pack applies no 給与所得控除, so the two deductions never co-exist here and the cap can never bind, but any future 給与所得控除 must carry it or the pension deduction will be over-stated
- employment-income deduction (給与所得控除) not modelled at all — retiree-focused pack, so salaried users are over-taxed by the whole deduction; its minimum is ¥740,000 for 2026–2027 (permanent ¥690,000 floor plus the 令和8・9年 +¥50,000 特例) and ¥690,000 from 令和10年分 (2028), CPI-indexed thereafter
- social-insurance premiums (national health, long-term care, nenkin) are separate levies, not modelled; their income-deductibility (社会保険料控除) is also not modelled (small conservative bias)
- spouse/dependant deductions, the dividend aggregate-taxation option with 配当控除, and furusato nozei not modelled
- the high-income minimum-tax measure (極めて高い水準の所得に対する負担の適正化措置, 措法41条の19) is not modelled — from 令和9年分 (2027) it applies to individuals whose 基準所得金額 exceeds ¥165,000,000 (previously ¥330,000,000) at a 30% rate (previously 22.5%), so the flat 20.315% modelled on listed-securities dividends and gains is not the all-in rate for a taxpayer above that threshold (under-states tax there)
- corporation tax not modelled (JP national 23.2% + local enterprise taxes)
- selfEmployment: no regime module — self-employed national health/pension quotas and the blue-return deduction are not modelled
- exit tax (国外転出時課税 — deemed-disposal on ≥¥100M financial assets when leaving after 5+ resident years) not modelled
- from 2027 the 2.1% reconstruction surtax re-splits into 1.1% reconstruction + 1.0% defence surtax — the combined burden is unchanged, so ×1.021 stays correct
Capital gainshigh confidence
Capital gains are taxed at a flat 20.3%.
20.315% flat on listed securities (15% national + 0.315% reconstruction surtax + 5% inhabitants), separate self-assessment (申告分離課税); unlisted shares same rate in a ring-fenced pool (no cross-offset). Real estate differs: 39.63% held ≤5yrs / 20.315% >5yrs measured to 1 Jan of sale year — not modelled. NISA tax-free wrappers not modelled. AT DEATH there is NO basis step-up: 所法60①一 carries the decedent's acquisition cost AND acquisition date to the heir, so a later sale is taxed on the whole latent gain and the ≤5yr/>5yr real-estate test runs from the DECEASED's purchase; 措法39 adds part of the inheritance tax charged on the asset to its cost where it is sold within about 3 years 10 months of death, capped at the gain. Neither is modelled — Japan charges inheritance tax at death (see the JP estate pack) and the latent gain again on sale. entryStepUp:false above is the separate question of rebasing on BECOMING resident.
Inheritance & estate taxmedium confidence
Tax is charged on each recipient, scaled by their relationship to the deceased.
Recipient-side sozoku-zei. Mechanics: total estate less the basic exemption (¥30,000,000 + ¥6,000,000 per statutory heir), notionally split by statutory shares, the 10–55% schedule applied per share, then reallocated by actual acquisition. allowanceMinor encodes the WHOLE 遺産に係る基礎控除額 for the engine's declared single-heir model: ¥30,000,000 + ¥6,000,000 × 1 statutory heir = ¥36,000,000 (相法15①). 法定相続人の数 is counted as if no heir had disclaimed, and adopted children entering the count are capped at one where the decedent has natural children and two where he does not (相法15②-③). 相法16 makes this exact for one heir — where the decedent has a single heir the whole post-exemption residue is that heir's 法定相続分に応ずる取得金額 ('当該相続人が、一人である場合又はない場合には、当該控除した残額'). A real estate with n statutory heirs has a LARGER exemption and a flatter effective rate, so this encoding is conservative (over-states tax) for multi-heir estates. Spouse: 相法19の2 relieves the greater of ¥160,000,000 or the spouse's 民法900 statutory share of the aggregate, capped at what the spouse actually acquired; where the spouse is the sole heir the statutory-share leg is the WHOLE aggregate (相法19の2①二イ), so a surviving spouse bears no Japanese inheritance tax at any estate size here. The sibling class carries the 相法18 二割加算 (rates ×1.2); the parent class does NOT — 相法18 exempts 一親等の血族, which is children AND parents (NTA No.4157 lists 父母 among the acquirers never surcharged) — and because 相法15① and 相法16 carry no relationship term, a sole surviving parent (民法889①一: 直系尊属 inherit only where the decedent left no 直系卑属) is charged exactly as a sole child: ¥36,000,000 exemption, standard 10–55% schedule. 'other' also stays on the un-surcharged schedule, but it no longer holds parents: after the parent class it is almost entirely acquirers 相法18 DOES surcharge (grandparents and remoter 直系尊属, nephews/nieces, unrelated legatees, a non-代襲 grandchild adopted by the decedent — 相法18②), the one exception being a 代襲 lineal descendant. See gaps.
When should you claim your Japan state pension?high confidence
Japan National + Employees' Pension (kokumin/kōsei nenkin)
Normal pension age 65. Deferring adds 0.7% per month (≈8.4%/yr) to age 75. Claiming early from 60 cuts it by 0.4% per month.
Two-part system: flat basic pension (kokumin nenkin — FY2026 full ¥847,300/yr, pro-rated by contribution months/480) plus earnings-related kōsei nenkin (enter your nenkin-net forecast as the amount). Indexed annually (macroeconomic slide). Payable abroad without freezing. Old-age pension income is taxable (雑所得 after the public-pension deduction — the JP tax pack over-taxes it, see its caveats); survivor pensions are tax-exempt.
The best age to claim isn’t just about these factors — it depends on your life expectancy, your other income, and which country you’re tax-resident in when the money lands. Deferring into a lower-tax country can flip the answer entirely. Optimise your claim age →
Cost of living
70%
of a UK baseline (100%) — a rough, illustrative comparison, not a forecast.
UK private pension
Under the UK treaty, a UK-sourced private pension paid to a resident here is generally taxed only where you live (not by the UK).
Common questions
Is there inheritance tax in Japan?
Yes. Japan levies sozoku-zei on the recipient rather than the estate: after a basic exemption of ¥30,000,000 plus ¥6,000,000 per statutory heir, the estate is notionally split by statutory shares, taxed on a 10–55% schedule, and the tax is reallocated by what each heir actually receives. Ember models a single heir, so it encodes the whole ¥36,000,000 exemption, and a spouse who is the sole heir is modelled as bearing no tax — the statutory credit covers the greater of ¥160,000,000 or their statutory share, which for a sole heir is the whole estate. The 20% surtax (相法18) on heirs who are neither the spouse nor a child or parent IS applied to Ember's sibling class, at rates of 12–66%, but not to the catch-all "other" class, where parents — whom the statute exempts from the surcharge — also land; a nephew or unrelated legatee is understated by one sixth as a result. Ember models this at medium confidence.
How does Ember treat the cost of living in Japan?
Ember applies an illustrative cost-of-living factor of 0.70 to Japan, where 1.0 represents the baseline, so modelled living costs come out well below that baseline. The figure carries medium confidence — treat it as a planning input rather than a precise measure of Japanese prices.
Will my UK pension be taxed in Japan?
Under the 2006 UK–Japan double tax convention (Article 17), UK private, occupational and State Pensions paid to a Japan resident are taxable only in Japan — the UK gives full relief. Ember models this, applying Japanese income tax to the pension income. One honesty note: Japan's public-pension deduction is not yet modelled, so the Japanese tax Ember shows on pension income errs on the high side. Government-service pensions are the exception — they generally stay taxed in the UK.
What does Japan do to your FIRE date?
The free calculator compares your number across every covered country; the full planner models your actual accounts, pensions, residency moves and these exact tax rules — with the maths behind every figure shown.