Guidance

Overseas pensions: set up your scheme for migrant member relief

How to become a qualifying overseas pension scheme (QOPS) so that members of your scheme can claim UK tax relief on pension contributions.

Overview

Your members and their employers can claim tax relief on their pension contributions if the member moves to the UK after joining your scheme. This is known as migrant member relief.

Your scheme needs to be a QOPS for your members to get tax relief. The scheme must:

  • be an overseas pension scheme
  • report certain information to HM Revenue and Customs (HMRC)

Overseas pension schemes

Your scheme must be based outside of the UK and can’t be a registered pension scheme. It must also meet the following rules.

The tax recognition test

Your scheme must be:

  • open to residents in the country your scheme was set up in
  • registered with the country’s tax authority as a pension scheme

Your scheme’s country must have a system to tax personal income and give tax relief on pensions. The country (except for Australia) must only give tax relief on either:

  • pension contributions
  • payments out of the scheme

Australian pension schemes must be complying superannuation plans.

The regulatory requirements test

Your scheme must be regulated by a pension scheme regulator in the country your scheme is run from.

If a regulator doesn’t exist in your country for your occupational or non-occupational pension scheme, your scheme must be either:

  • based in an EU member state (other than the UK), Norway, Iceland or Liechtenstein
  • an occupational pension scheme
  • provided by a person that is regulated to provide the pension scheme
  • a non-occupational scheme provided by a person that is regulated to provide the scheme

Where your scheme is a public service pension scheme set up or approved by the government of the country it’s based in, you won’t need to meet this test.

International organisations

There are different rules for pension schemes run by international organisations, like the EU or UN.

To be an overseas pensions scheme, your scheme must be set up to provide benefits in respect of service to that international organisation by its employees.

Information your scheme must report

You must tell HMRC about ‘benefit crystallisation events’ for migrant members of your scheme. Use form APSS252 to do this.

Benefit crystallisation events occur when the member:

  • starts taking a regular income from their pension savings before they’re 75
  • gets an increase in the equivalent of annual pension payments they’re receiving, which is more than the greater of:
    • the retail price index
    • 5% of the previous year’s pension payment
    • £250
  • buys a lifetime annuity before their 75th birthday
  • puts their pension savings into a fund before their 75th birthday that can be accessed at any time (known as a ‘drawdown’ pension)
  • reaches their 75th birthday with pension savings that haven’t been accessed
  • reaches their 75th birthday with money left in a drawdown pension
  • dies before their 75th birthday and within 2 years their uncrystallised pension savings are used to pay the equivalent of a lump sum death benefit or a pension to their beneficiaries
  • transfers their pension to a qualifying recognised overseas pension scheme
  • is paid the equivalent of:
    • pension commencement lump sum
    • uncrystallised funds pension lump sum
    • serious ill-health lump sum
    • lifetime allowance excess lump sum
    • stand-alone lump sum
  • is overpaid the equivalent of a lump sum because of an error calculating their pension entitlements
  • didn’t begin taking their pension before they died because you couldn’t confirm they were entitled to their pension (for example, you couldn’t contact them)
  • wants to test their pension savings against the lifetime allowance before they start taking a pension or their 75th birthday

When you report a benefit crystallisation event you also need to tell HMRC if the pension savings have been used to get:

  • a flexi-access drawdown pension
  • an uncrystallised pension lump sum
  • a flexible lifetime annuity

You should also tell HMRC if you agree to pay a member’s annual allowance tax charge - using form APSS210.

Tell HMRC you’re a QOPS

To be a QOPS, you must tell HMRC that your scheme:

  • is an overseas pension scheme
  • will report information on pensions that have received UK tax relief
  • will tell HMRC if your scheme stops being a QOPS

You can use form APSS250 to do this.

When you’ve given HMRC the required information they’ll send you a letter, which will include your QOPS reference number.

You must make sure your scheme meets the rules to be a QOPS at all times if your members want to receive tax relief on their contributions.

When you stop being a QOPS

You must tell HMRC if your scheme stops being a QOPS.

HMRC can also decide your scheme isn’t a QOPS if you don’t report the necessary information to HMRC.

Scheme managers of existing QOPS should check if their scheme will meet the new conditions introduced from 6 April 2017. If their scheme doesn’t meet the new conditions, they must tell HMRC.

The result of ceasing to meet the conditions to be a QOPS will be that members and employers will no longer be able to claim tax relief on contributions to the scheme under the migrant member relief provisions.

Published 5 December 2016
Last updated 11 December 2017 + show all updates
  1. There is no legal time limit by which scheme managers of qualifying overseas pension scheme (QOPS) have to tell HM Revenue and Customs that the scheme ceases to be a QOPS.
  2. The regulatory requirements test and the requirements for international organisations have been updated as the rules have changed. QOPS must tell HMRC if they don't meet the new requirements.
  3. First published.