Budget 2017: New QROPS Tax Charge For Expats


Chancellor Phillip Hammond is cracking down on transfers to offshore pensions by slapping a 25% tax charge on expats switching their retirement pots out of the UK.

In his Budget 2017, Hammond announced that the transfer charge on savers moving their pensions from Britain to a Qualifying Recognised Overseas Pension Scheme after March 9, 2017.

The charge is aimed to stop tax avoidance and is not a blanket expense for every QROPS transfer.

Savers escape the penalty if:

  • they live in the same country as their QROPS is based
  • the expat and the QROPS are both based in the European Economic Area
  • the QROPS is provided by an employer

“If this is not the case, there will be a 25% tax charge on the transfer and the charge will be deducted before the transfer by the pension scheme sending the money offshore,” said guidance from HM Revenue and Customs (HMRC).

Transfer tax can be grabbed for five years

The government also made clear that QROPS pension transfers are subject to the charge and UK tax for five years after the transfer date regardless of where the retirement saver lives.

Hammond explained the measure supported the government’s aim of promoting a fairer tax system.

“It continues to allow overseas transfers from pension schemes that have had UK tax relief that are made when people leave the UK and take their pension savings with them to their new country of residence,” said the government.

HMRC reckons only a handful of QROPS pension transfer will be liable to the transfer charge out of the average 12,000 to 15,000 transfers each year.

More new QROPS rules from April 2017

Nevertheless, HMRC expects to raise £65 million from the tax charge this year and £315 million over the next five years.

The transfer charge rules will also apply to savings switches between QROPS pensions.

HMRC is also tightening the rules for providers offering QROPS offshore pensions to expats from April 6.

Providers must certify that their QROPS pass the pension age test so that they can offer freedom to access cash on the same terms as UK pensions.

The new test outlaws QROPS that offer benefits to retirement savers aged below 55 years old.

QROPS Information and Guidance

For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.

Download the Free Pension Transfer Guide

Expat Pension Transfers Guide

iExpats.com expert writers have created a simple guide to Expat Pension Transfers just for you.

Find out how you could save tax, increase growth and investment opportunities with this simple, no-nonsense guide that will introduce QROPS, SIPPs and QNUPS options and talk through the pros and cons. Download the free guide by following the link below


  1. Does this mean that all US residents are now faced with this tax since there are no real QROPS schemes in the US that the IRS considers would create a qualifying rollover? Where did the chancellor get the idea this would only affect a handful of people?

  2. It is obviously a lie that it will affect only a handful of people if he expects it to raise £65 million this year and £315 million over the next five years.

    I recommend any UK citizen being offered an overseas posting with their company to consider the following.

    I am one of the very many affected. My pension pot is significantly less than £1 million, but it represents my biggest asset. I was seconded then permanently transferred to Hong Kong 19 years ago and paid into my employer’s UK pension scheme while in Hong Kong. Eventually, I clocked up 17 years of service with the company, 15 years of which I was based in Hong Kong, therefore NOT subject to UK income tax. But I DID pay Hong Kong tax on all my pension contributions to my UK pension.

    Now I will be hit for a fortune in tax on a pension fund that was 80-90% funded from overseas earnings … if I try to transfer to a more flexible pension based back overseas, where the money was earned.

    As with the US case mentioned above, there are no real QROPS schemes in Hong Kong that would enable anyone in my situation to transfer their employer pension into. Most are closed for specific companies that I am highly unlikely to join.

    Moreover, my freedom of movement is curtailed as I would have to stay in one tax jurisdiction for a minimum of five years after transfer to avoid being hit by this tax. (Hong Kong is great while you’re earning, but not a great place to retire to!)

    UK basically treats its expatriate citizens as cash machines to fund its morally and financially bankrupt system.

    The sooner I can get another citizenship, the better for me and my family, which would not even be allowed to join me without spending a fortune on immigration fees, even if I were daft enough to want to return to UK.

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