What about overseas transfers?

What about overseas transfers?

A member moving abroad may want to transfer pension benefits to a scheme in their new country.

A Qualifying Recognised Overseas Pension Scheme (QROPS) is one that has told HMRC that they meet the relevant conditions to be a Recognised Overseas Pension Scheme (ROPS) as defined in the Finance Act 2004.

Common questions

How does the member know if their scheme is a ROPS?

  • There is a list on the HMRC website which the public can view.
  • Not all schemes are on it so if the member cannot find their scheme listed, they would have to check the status with their new scheme directly.

What if the overseas scheme is not a ROPS?

  • If the transfer is paid to a scheme that is not a ROPS, both the member and the UK scheme will have to pay a tax charge as it will be considered an unauthorised payment.
  • If the UK scheme is not satisfied that the overseas scheme meets the requirements it will refuse to make the transfer payment.

Will a transfer into the ROPS be automatically allowed?

  • This is the same as transfers between UK schemes.
  • If the new scheme does not allow transfers to be received, a transfer cannot take place.

Will a ROPS transfer be taxed?

  • The schemes on the ROPS list have told HMRC they meet the relevant conditions to be a ROPS as defined in the Finance Act 2004. However, HMRC can’t guarantee they are ROPS or that any transfers to them will be free of UK tax.
  • Further due diligence needs to be carried out and it is the member’s responsibility to find out whether they have to pay tax on any transfer of pension savings.

After the ROPS transfer

When a transfer takes place, the UK scheme will notify HMRC within 60 days.

If the member is under age 75, the UK scheme will perform the LTA test and advise the member of the percentage. If the transfer value is more than the member’s available LTA, the excess is taxed at 25%.

If the ROPS subsequently makes any unauthorised payment it must be reported to HMRC by the member.

If the ROPS invests in taxable property, the member will be charged. 

However, this tax charge doesn’t apply if the member is a non-UK resident and hasn’t been a UK resident at any time during that tax year, or the previous 5 tax years, in relation to when the investment was made.