Overseas transfers explained

A transfer from a UK-registered pension scheme to an overseas pension scheme qualifies as a recognised transfer if the receiving scheme has QROPS status.

A QROPS is a foreign pension scheme that meets conditions set out in UK legislation, operates similarly to UK schemes, is registered with HMRC, and agrees to report certain information regularly.

As part of our Bitesize Technical series, Senior Technical Consultant, Joshua Croft explains the rules around overseas transfers.

Key insights on overseas pension transfers

QROPS stands for ‘qualifying recognised overseas pension scheme’. It’s a status granted by HMRC to overseas pension schemes that meet UK legislative conditions and report regularly to HMRC.

Transfers to a QROPS are tested against the member’s overseas transfer allowance (OTA), which is usually £1,073,100 (potentially higher with protection).

If the transfer exceeds the OTA, a 25% overseas transfer charge (OTC) applies to the excess.

The OTC applies to the full transfer amount if certain conditions aren’t met, including where the member isn’t tax-resident in the same country as the QROPS, or the scheme isn’t linked to their employer or an international / public service organisation.

If the OTC applies to the full amount, it won’t be charged again for exceeding the OTA.

More Bitesize Technical

Want to snack on another technical insight? Start from the beginning of our latest series on pension contributions, here.

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