Overseas pensions: pension transfers
Information for qualifying recognised overseas pension scheme (QROPS) managers about how to 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
- scheme manager received the transfer request before 9 March 2017
- original transfer from a registered pension scheme was more than 5 years ago
- overseas pension 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
- QROPS is an overseas public service scheme and the member is employed by an employer that participates in that scheme
- QROPS is a pension scheme of an international organisation and the member is employed by that international organisation
The overseas transfer charge only applies to the pension savings transferred from a registered pension scheme, not to any contributions to the QROPS after the original transfer.
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 must pay 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 need to tell HMRC about any pension transfers from your scheme within 90 days if the scheme member either:
- is a UK resident or has been a UK resident in the previous 5 tax years
- first transferred their pension savings into your scheme in the last 10 years
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.
You’ll also need to tell HMRC if the scheme member’s circumstances change within 5 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.
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 known as an ‘uncrystallised funds pension lump sum’
- started paying from pension savings that have been invested to give an adjustable income (known as a ‘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:
- 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 3 months 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
- whether you’ve paid the tax charge (or intend to do so)
- the date the tax was paid
- whether you’ve reported the tax to HMRC
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 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:
- 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
- gives you information that shows that tax shouldn’t have been paid on the transfer
Use form APSS243 to claim a refund from HMRC.