Overseas pensions: pension transfers
How qualifying recognised overseas pension scheme (QROPS) managers report pension transfers and when tax needs to be paid.
You must tell HM Revenue and Customs (HMRC) about pension transfers to or from your QROPS that have received UK tax relief. You also need to provide information to the scheme manager or administrator who is receiving the pension.
You still need to report this information if you manage a former QROPS.
Your pension scheme can lose its QROPS status if you don’t provide this information within the time limit. Former QROPS may get an initial penalty of £300 and a daily penalty of up to £60 until they provide this information.
Tax on transfers
Transfers of pension savings to another QROPS will have an overseas transfer charge of 25% unless the:
- pension savings were in the QROPS before 9 March 2017
- pension savings were in another QROPS before 9 March 2017 and from 9 March onwards
- the transfer to the QROPS was requested before 9 March 2017
- original transfer from a registered pension scheme was more than 5 tax years ago
- overseas transfer charge was paid on a previous transfer (and hasn’t been refunded by HMRC)
- scheme member is a resident of the country that the QROPS receiving the transfer is based in
- scheme member is a resident of a country in the European Economic Area (EEA) and the QROPS is based in another EEA country
- QROPS is an occupational pension scheme and the member is an employee of a sponsoring employer under the scheme at the time of the transfer
- QROPS is an overseas public service scheme and the member is employed by an employer that participates in that scheme at the time of the transfer
- QROPS is a pension scheme of an international organisation and the member is employed by that international organisation at the time of the transfer
The overseas transfer charge only applies to the transfer of pension savings from a registered pension scheme to a QROPS, the transfer of pension savings to an overseas pension scheme that has received UK tax relief on contributions or another QROPS.
You’ll need to check if the overseas transfer charge applies when a scheme member requests a transfer to another QROPS.
You need to tell your scheme member, within 30 days of them requesting the transfer, to give you information about the transfer. This will help you decide whether or not the transfer will be liable to overseas transfer charge.
You can use form APSS255 to request this information from your member.
Your scheme member has 60 days from their transfer request to give you this information. If they don’t, you must deduct the overseas transfer charge if you make the transfer.
You’re jointly responsible with the scheme member for making sure that this tax is paid on pension savings that have received UK tax relief.
Transfers to an overseas pension scheme that isn’t a QROPS
Transfers of pension savings to an overseas pension scheme which isn’t a QROPS will be treated as an unauthorised payment and charged at least 40% tax.
What to report to HMRC
You’ll need to tell HMRC about any pension transfers from your scheme within 90 days if:
- it’s less than 10 years since the funds were transferred from a registered pension scheme
- the member is UK resident, or has been, in the 10 years before the payment
The extended time limit will apply to:
- transfers made from a registered pension scheme on or after 6 April 2017
- pension inputs into an overseas scheme on or after 6 April 2017 that have benefited from UK tax relief
You need to tell HMRC whether or not the overseas transfer charge applies. You can use form APSS253 to do this. If the overseas transfer charge needs to be paid, once you report it, HMRC will tell you how to pay the tax.
If the transfer was made on or after the 6 April 2017, you’ll need to tell HMRC if the member:
- is UK resident
- has been UK resident at any time in the 5 tax years before the transfer
- has been UK resident for 10 tax years, if there’s an extended time limit
You’ll also need to tell HMRC if the scheme member’s circumstances change within 5 tax years of the transfer and the overseas transfer charge subsequently needs to be paid. You can use form APSS244 to do this.
What to report to the new scheme manager or administrator
You need to give information to the new scheme manager or administrator if the member is a UK resident or has been in any of the last 5 tax years, or 10 tax years if the extended time limit applies.
You also must tell them within 91 days of the transfer from your scheme if you’ve:
- paid the member a lump sum payment from their pension savings, the equivalent of ‘uncrystallised funds pension lump sum’
- started paying from pension savings that have been invested to give an adjustable income (the equivalent of ‘flexi-access drawdown pension’)
Transfers to another QROPS
You must also tell the new QROPS manager within 91 days of the transfer:
- whether the pension was transferred to your scheme from a UK registered pension scheme or another QROPS, and if so the date
- the value of pension savings that remain from the original transfer into your scheme (this will be the value of the original transfer if you haven’t made any payments from the pension savings)
- the amount of any pension savings that have received UK tax relief since you started managing it
- whether an overseas transfer charge of 25% applies, and:
- if it does - tell the new QROPS manager the amount of tax paid and the date of payment
- if it doesn’t - tell the new QROPS manager why the transfer was tax-free (if it’s tax-free because a charge was paid on a previous transfer, give details of the previous charge)
What to report to the scheme member
If an overseas transfer charge applies, you must tell the scheme member within 90 days of the transfer:
- the date of the transfer
- that an overseas transfer charge applies to the transfer
- the amount of the transfer that’s subject to the overseas transfer charge
- the amount of tax that needs to be paid
- if you’ve paid the tax charge (or intend to do so)
- the date the tax was paid
- if you’ve reported the tax to HMRC
If an overseas transfer charge doesn’t apply you must tell the scheme member within 90 days of the transfer:
- the date of the transfer
- that the overseas transfer charge doesn’t apply to the transfer
- the reason why the overseas transfer charge doesn’t apply
If the charge doesn’t apply because the individual is resident in the same country as the QROPS or they’re both in a country within the EEA, you must tell the scheme member within 90 days:
- when the period in which the overseas transfer charge may apply ends
- how the tax charge may apply within that period
Transfers into your scheme
You don’t need to report transfers into your scheme, but HMRC might ask you for information about the pension savings you’ve received.
The scheme manager and scheme administrator transferring the pension savings to your QROPS will tell you if the overseas transfer charge applied and how much tax was paid. They’ll also tell you if the transfer wasn’t taxable and the reason why.
Keep this information for 5 tax years after the date of the transfer in case the scheme member’s circumstances change and overseas transfer charge needs to be paid or repaid.
Claim a refund of the overseas transfer charge
If you paid the overseas transfer charge, you can claim a refund of tax paid where the scheme member’s circumstances have changed so that the pension transfer now isn’t subject to the overseas transfer charge.
This will happen if the scheme member hasn’t claimed a refund in respect of that pension transfer and within 5 tax years of the transfer to which the overseas transfer charge applied.
It will also happen if the member gives you information that shows that tax shouldn’t have been paid on the transfer, or becomes a resident of either:
- the country in which the QROPS that received the onward transfers of pension savings is based in
- a country in the EEA and the pension savings were transferred to a QROPS in another EEA country
Use form APSS243 to claim a refund from HMRC.
Published: 5 December 2016
Updated: 6 April 2017
- Amendments made following changes to the pension tax rules for overseas pension schemes, that take effect from 6 April 2017.
- Updated guidance to include information regarding the overseas transfer charge.
- First published.