QROPS and the overseas transfer charge

A transfer from a UK registered pension scheme to a qualifying recognised overseas pension scheme (QROPS) requested on or after 9 March 2017 is taxed at 25% under the overseas transfer charge unless an exclusion applies, the most common being that the member lives in the same country as the receiving scheme. Since 6 April 2024 even an excluded transfer is taxed at 25% on any part that exceeds the member’s overseas transfer allowance, which is usually £1,073,100. The exclusion for transfers within the EEA and Gibraltar ended for transfers requested on or after 30 October 2024.

What is a QROPS and why does the status count?

A QROPS is an overseas pension scheme that meets HMRC’s conditions and has told HMRC that it is a qualifying recognised overseas pension scheme. HMRC publishes a recognised overseas pension schemes notification list, but GOV.UK makes clear that it is the member’s responsibility to check that the receiving scheme is a QROPS, either with the overseas scheme or with the UK provider or an adviser.

The status is the whole basis of the tax treatment. A transfer to a QROPS can be a recognised transfer, which is an authorised payment. If the overseas scheme is not a QROPS, the UK scheme may refuse to make the transfer, and if it goes ahead it is an unauthorised payment taxed at 40% or more (GOV.UK, Transferring your pension; PTM102300).

When does the overseas transfer charge apply?

The charge is an income tax charge set out in sections 244AA to 244N of the Finance Act 2004. HMRC’s Pensions Tax Manual at PTM102200 says it can apply to:

• recognised transfers from a registered pension scheme to a QROPS requested on or after 9 March 2017
• transfers of UK tax relieved funds from a relieved relevant non UK scheme to a QROPS, other than block transfers (from 6 April 2024)
• onward transfers from one QROPS to another made during the relevant period of the original transfer

Transfers requested before 9 March 2017 are outside the charge and cannot later become chargeable (PTM102300). A request for this purpose is a substantive instruction to transfer a stated amount or percentage to a named overseas scheme; a casual enquiry does not count.

There are now two charging provisions. Section 244AC charges 25% of the whole transferred value where none of the exclusion conditions is met. Section 244IA charges 25% of the excess over the member’s available overseas transfer allowance where the transfer is excluded from the section 244AC charge (PTM102200).

Which exclusions apply to people living in the scheme country?

A transfer escapes the section 244AC charge if at least one of these conditions is met when it is made (PTM102300):

• Same country (section 244B). The member is resident in the same country as that in which the QROPS is established. Residence means residence for tax purposes under the law of that country. If someone is resident in more than one state in a tax year, HMRC uses the tie breaker in Article 4 of the OECD model tax convention.
• Occupational scheme (section 244D). The QROPS is an occupational pension scheme and the member is an employee of a sponsoring employer when the transfer is made.
• International organisation (section 244E). The QROPS was set up by an international organisation and the member is its employee. HMRC stresses that this does not simply mean a multinational employer.
• Overseas public service scheme (section 244F). The member is employed by an employer participating in the scheme.

The former EEA exclusion in section 244C covered a QROPS established in the EEA or Gibraltar where the member lived in the UK, the EEA or Gibraltar. Section 32 of the Finance Act 2025 removed it, and it now applies only to transfers requested before 30 October 2024 and completed before 30 April 2025 (PTM102300).

Every exclusion depends on the member giving the scheme administrator the required information before the transfer. GOV.UK says form APSS 263 lists what is needed, and that the transfer will be taxed at 25% if the information is not provided within 60 days of requesting the transfer.

How does the overseas transfer allowance work?

From 6 April 2024 the overseas transfer allowance caps the amount that can leave the UK system without the charge, even where an exclusion applies. Under sections 244IB and 244IC, the allowance equals the member’s lump sum and death benefit allowance (PTM102200). GOV.UK states that it is usually £1,073,100 and may be higher for someone who holds a protected allowance, which is covered in our guide to lifetime allowance protections after abolition.

The available allowance is reduced by earlier transfers to a QROPS. On the first transfer on or after 6 April 2024, it is also reduced by 100% of any lifetime allowance the member used before that date (PTM102200). HMRC’s example is a member who had used 60% of the standard lifetime allowance, so £643,860, leaving an available overseas transfer allowance of £429,240.

The calculation of the charge therefore depends on which route applies:

Position at transfer	Charge
No exclusion applies	25% of the whole transferred value (section 244AC)
Exclusion applies, transfer within available allowance	No charge
Exclusion applies, transfer exceeds available allowance	25% of the excess over the allowance (section 244IA)

What happens if the member moves country within five years?

The exclusions are not tested once and forgotten. If a transfer was excluded because the member lived in the scheme’s country and the member stops living there during the relevant period, the section 244AC charge arises at that point (PTM102400). The relevant period starts on the date of the transfer and runs to the next 5 April plus a further five tax years. HMRC’s example is a transfer on 13 June 2017, where the relevant period ran until 5 April 2023.

The rule works in reverse too. If a transfer was charged because the member lived elsewhere and the member then becomes resident in the scheme’s country within the relevant period, the section 244AC charge becomes repayable under section 244M (PTM102600). A section 244IA charge on the excess over the allowance cannot become repayable on a change of circumstances, and a repayment of the section 244AC charge can trigger a section 244IA charge where the transfer exceeded the allowance.

Members must tell both the transferring scheme and the QROPS scheme manager when they change residence; GOV.UK points to form APSS 241. Where the charge arises after the transfer, the member and the scheme manager are jointly and severally liable, and the scheme manager must report to HMRC within 90 days of being told of the change (PTM102400).

Who pays the charge and how is it reported?

On a transfer from a registered pension scheme, the member and the scheme administrator are jointly and severally liable under section 244J. The administrator should deduct the tax from the member’s fund before transferring and report and pay it through the Accounting for Tax return. If it does not deduct the tax, the amount of the charge increases (PTM102200).

The member must also report the charge on a Self Assessment return, even when the administrator has already paid it all, and normal filing and payment rules apply. Liability arises whether or not anyone involved is UK resident or domiciled. See our guide to Self Assessment deadlines and penalties for the return timetable.

A worked example

Illustration only. Priya has lived in Australia for several years and has £1,200,000 in a UK personal pension. She used none of her lifetime allowance before April 2024 and has no protection, so her available overseas transfer allowance is £1,073,100.

• She transfers the whole fund to an Australian QROPS and gives the administrator the APSS 263 information in time. The same country exclusion applies, so there is no section 244AC charge.
• The transfer exceeds her allowance by £126,900, so a section 244IA charge of 25% applies to that excess: £31,725.
• If she had instead transferred to a QROPS in a country where she did not live, with no other exclusion, the charge would have been 25% of £1,200,000: £300,000.

What mistakes come up most often?

• Assuming a transfer from the UK to an EEA scheme is still exempt. That exclusion only protects transfers requested before 30 October 2024 and completed before 30 April 2025.
• Treating citizenship or a home abroad as residence. The test is tax residence in the scheme’s country.
• Missing the information deadline, so an otherwise excluded transfer is taxed at 25%.
• Forgetting that a move during the relevant period can create a charge years later, and that the member stays liable alongside the scheme manager.
• Overlooking the overseas transfer allowance on large funds, particularly where lifetime allowance was used before April 2024.
• Assuming the UK has no further interest. GOV.UK notes that payments from an overseas scheme can still be taxed in the UK depending on when the member was UK resident, and the temporary non residence rules can bring income back into charge on return.

A transfer also moves the funds out of the UK rules on access ages. Any protected pension age follows an individual transfer to a QROPS, but without one a payment before 57 after 5 April 2028 is unauthorised unless the ill health condition is met (PTM062250). The inheritance tax position is covered separately in our guide to pensions and inheritance tax.

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Related Accountapedia entries

• Migrant member relief for overseas pension contributions
• The lump sum and death benefit allowance
• The lump sum allowance after the lifetime allowance
• Protected tax free cash above 25%
• Unauthorised payments charges

Sources

• GOV.UK: Manual page PTM102200
• GOV.UK: Manual page PTM102300
• GOV.UK: Manual page PTM102400
• GOV.UK: Manual page PTM102600
• GOV.UK: Transferring your pension
• GOV.UK: Check the recognised overseas pension schemes notification list
• GOV.UK: Manual page PTM062250

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.