Overview
An overseas pension scheme can only receive a UK tax-free transfer from a registered pension scheme if it’s a qualifying recognised overseas pension scheme (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 HMRC
Recognised overseas pension schemes
To be a ROPS, your scheme must be based outside of the UK and cannot 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 does not exist in your country for your occupational or non-occupational pension scheme, your scheme must be either:
- based in an EU member state, 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 will not 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 cannot only be given to non-residents of the country your scheme is run from.
As with the regulatory requirements test, you will not 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.
Further requirements
Your scheme must be based in either:
- an EU member state, 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 cannot 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.
International organisations
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
- 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’ll need to tell HMRC within 90 days if:
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 do not 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 does not 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 is not a guarantee of your QROPS status.
You need to tell HMRC if you stop being a QROPS.
How to keep your ROPS or QROPS status
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 do not re-notify them.
To keep QROPS status your pension scheme must continue to meet the conditions to be a ROPS at all times.
You must make sure the scheme continues to meet the ‘Pension Age Test’ within regulation 3(6A) of The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 (SI 2006/206). You may need to amend your pension scheme rules to do this.
To maintain ROPS and QROPS status from 6 April 2028, your scheme rules should reflect that payments may not be made to members under the age of 57 except where retirement is due to ill-health or where certain lump sums are paid out (read PTM112300 in the HMRC Pensions Tax Manual).
