If you're moving abroad or have a job overseas you may want to transfer your UK pension savings to an overseas pension scheme. If the transfer doesn't meet certain conditions you'll pay a tax charge on the amount you transfer.
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The overseas scheme receiving the transfer must be a qualifying recognised overseas pension scheme (QROPS) or the transfer will be an unauthorised payment. Both you and the UK scheme administrator will have to pay tax on any unauthorised payment.
The conditions that apply if your transfer is between two UK pension schemes apply to transfers to a QROPS. There are also additional requirements for transferring your pension pot overseas.
To qualify as a QROPS the scheme must meet the requirements set by UK tax law. The pension scheme must notify HM Revenue & Customs (HMRC) and confirm that it meets the legal requirements. A QROPS must broadly mirror the way a UK pension scheme works - meaning you should still get a lump sum and pension when you retire. However, this is subject to any local law or taxes in the country where the QROPS is operating or the country where you're living.
It's best to check that the scheme you want to transfer to is a QROPS. If it's not, your UK pension scheme will probably refuse to make the transfer.
You can find a list of schemes that have told HMRC they're a QROPS using the link below. Not all schemes choose to be on this public listing, so you'll need to check with the pension scheme directly if it's not on the list.
You must give all of the following information to the scheme administrator of your UK scheme before they can transfer your pension savings:
You must also give a signed statement that you're aware that if the transfer doesn't meet the transfer conditions or the scheme isn't a QROPS, the transfer will be an unauthorised payment and you'll have to pay tax on the transfer.
You can use form APSS 263 Member Information, to give the relevant information and statements to your UK scheme administrator.
You must give all this information to your UK scheme administrator within 60 days of the date you first asked your UK scheme to make the transfer.
Your UK scheme administrator must check that the scheme receiving the transfer is a QROPS. They should check the QROPS list no more than one day before actually transferring your pension savings to the overseas scheme.
If you're under 75 the transfer of your pension savings to a QROPS will trigger a test of your pension savings against the lifetime allowance. Your scheme administrator will:
They may ask you for more information to allow them to do this.
Your UK pension scheme administrator must tell you what percentage of the lifetime allowance has been used up by the transfer. If the amount transferred is more than your lifetime allowance, the excess will be taxed at 25 per cent.
Within 60 days of the transfer the UK scheme administrator must tell HMRC about the transfer using form APSS 262 Transferring UK tax-relieved pension assets.
Some UK tax charges can still apply to payments made from the overseas scheme if you:
UK tax charges will apply to:
If an unauthorised payment occurs because the QROPS invests in'taxable property' you'll be charged tax even if you haven't been a UK resident for more than six years before the investment was made.
The scheme manager of the QROPS should tell HMRC when they make a payment that would be taxable.
You must tell HMRC that you have tax to pay by completing a Self Assessment tax return. If you normally use a paper Self Assessment return you'll need to complete the relevant boxes on the additional information pages (SA101) of the return.
If you haven't completed a tax return before, or it's been a while since you did, you'll need to register.