Overseas pensions: tell HMRC you’re a QROPS
What you must do to be a qualifying recognised overseas pension scheme (QROPS) and what you must report.
An overseas pension scheme can only receive a UK tax-free transfer from a registered pension scheme if it’s a QROPS - but some transfers to a QROPS have a tax charge.
If you’re the manager of a scheme and want it to be a QROPS, the scheme must:
- be a recognised overseas pension scheme (ROPS)
- report certain information to and pay tax to HM Revenue and Customs (HMRC)
Recognised overseas pension schemes
To be a ROPS, 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:
- be 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
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.
The pension age and benefits tax relief tests
Your scheme must only make payments to members under 55 years of age if they’ve retired because of ill-health.
If tax relief is available on pension payments, it can’t only be given to non-residents of the country your scheme is run from.
As with the regulatory requirements test, you won’t need to meet these requirements where your scheme is a public service pension scheme set up or approved by the government of the country it’s based in.
Your scheme must be based in either:
- an EU member state (other than the UK), Norway, Iceland, Liechtenstein, or a country (except New Zealand) with a double taxation agreement with the UK that includes arrangements for non-discrimination and the exchange of information
- a country or territory with which the UK has a double taxation agreement that provides for the exchange of information
- a country or territory with which the UK has a tax information exchange agreement (TIEA)
If your scheme is based in Guernsey it can’t be open to non-residents of Guernsey and be an exempt pension contract or trust under section 157E of the Income Tax (Guernsey) Law 1975.
There are different rules if your pension scheme’s run by an international organisation, like the EU or UN.
To be a ROPS in this case, your pension scheme must be:
- set up to provide benefits in respect of service to that international organisation by its employees
- established in one of the following:
- an EU member state other than the UK
- Norway, Liechtenstein or Iceland
- a country or territory with which the UK has a TIEA or a double taxation agreement that makes provision for exchange of information
Information your scheme must report
You’ll need to tell HMRC within 30 days if:
- you stop being a QROPS
- information you previously provided has changed, was incomplete or inaccurate, using form APSS251A
You’ll need to tell HMRC within 90 days if:
- you make payments to members
- your scheme transfers pension savings, whether this is taxable or not
- a scheme member moves to a different country, and give HMRC their new address
- a scheme member’s circumstances change and an overseas transfer charge needs to be paid as a result
You’ll also need to:
- give HMRC information about pensions that have transferred into your scheme from a registered pension scheme or another overseas pension scheme if they ask for these details
- provide information to the new pension scheme manager within 91 days of transferring a pension
- give your members a statement when they flexibly access their pension
- pay the overseas transfer charge within 90 days of HMRC telling you how to pay it
If you don’t report this information your scheme will lose its QROPS status.
Tell HMRC you’re a QROPS
To be a QROPS you must tell HMRC that your scheme:
- meets the rules to be a ROPS
- will report information on pension savings that have received UK tax relief and pay tax when due
You can use form APSS251 to do this.
You can also ask HMRC to add your scheme to the ROPS notifications list. This shows that you’ve told HMRC that your scheme is a ROPS and have agreed to report on your pensions. However it doesn’t show that your scheme meets the ROPS conditions, so you may have to explain how your scheme meets the requirements to:
- individuals who want to transfer to your scheme
- other pension scheme administrators and scheme managers
Once you’ve told HMRC you’re a QROPS they’ll send you a letter with your QROPS reference number.
You can only receive pension transfers free from UK tax if you continue to meet the rules for being a QROPS. Telling HMRC and receiving a QROPS number isn’t a guarantee of your QROPS status.
You need to tell HMRC if you stop being a QROPS.
You need to tell HMRC every 5 years that you’re still a ROPS. Use form APSS251 to do this.
HMRC will remove the scheme’s QROPS status if you don’t re-notify them.
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 re-notifying HMRC about your QROPS status.
- First published.
From: HM Revenue & Customs
Related guides: Overseas pensions: set up your scheme for migrant member relief