Overseas Transfer Charge Explained: The 25% QROPS Tax for UK Expats

If you are thinking of moving a UK pension to a QROPS, the overseas transfer charge is the first thing to understand. It is a 25% tax on the amount you transfer, and unless you qualify for an exclusion, it can wipe out years of growth in one go. This guide explains what the overseas transfer charge is, when it applies, which transfers are excluded, how the overseas transfer allowance works, and what to ask before you sign anything.

This guide is general information, not personal advice. The rules are detailed and have changed recently, so take regulated advice before transferring a pension.

What is the overseas transfer charge?

The overseas transfer charge is a tax charged by HMRC when you transfer UK pension savings to a qualifying recognised overseas pension scheme. The rate is 25% of the amount transferred.

It exists to discourage people from moving tax-relieved UK pension money abroad purely for tax reasons. The UK gave tax relief on those savings when they were paid in, so HMRC wants to be sure the money is moved for a genuine reason, usually because you live in, or work for an employer in, the country where the new scheme sits.

The charge applies to transfers to a QROPS. A transfer from one UK pension to another UK pension, including a UK SIPP, is not an overseas transfer and does not attract it.

When does the 25% charge apply?

The charge applies to the whole transfer unless an exclusion applies. If an exclusion applies, it can still apply to any amount above your overseas transfer allowance (more on that below).

Put simply, you pay 25% unless you can show one of the following.

The exclusions

The exclusions are narrow. For most expats, only the first one is likely to matter.

1. You live in the same country as the QROPS. For example, you live in Australia and move the pension to an Australian QROPS.
2. The QROPS is an occupational pension scheme and you are an employee of a sponsoring employer.
3. The QROPS is an overseas public service pension scheme and you work for a participating employer.
4. The QROPS is a scheme set up by an international organisation, and you work for that organisation.

For each exclusion you must also provide the required information to your UK scheme before the transfer goes ahead. If you miss the paperwork, the 25% can be charged even though you would otherwise have qualified.

What changed in October 2024

Until 30 October 2024, living in the European Economic Area and transferring to an EEA scheme was also an exclusion. That exclusion was removed. Living in an EEA country and moving to a QROPS in another EEA country no longer qualifies on its own, unless one of the other exclusions applies, such as living in the same country as the scheme.

If you read an older article that says a transfer within the EEA is exempt, treat it with caution.

The overseas transfer allowance

Since 6 April 2024 there has also been an overseas transfer allowance. For the 2026 to 2027 tax year the standard allowance is £1,073,100.

It works like this:

• If you qualify for an exclusion and the transfer is within your allowance, there is no charge.
• If you qualify for an exclusion but the transfer is above your allowance, the 25% charge applies to the amount above it.
• If no exclusion applies, the 25% charge applies to the whole transfer, whatever the size.

Your available allowance can be lower than the standard figure if you have made earlier transfers to a QROPS since the allowance was introduced, or if you hold certain types of protection. Your UK pension provider should be able to tell you what you have left.

Worked examples

Example 1: £150,000, no exclusion. You live in Spain and transfer to a QROPS based in Malta. Neither the same-country test nor any other exclusion applies. The charge is 25% of £150,000, which is £37,500, leaving about £112,500 to be invested in the new scheme.

Example 2: £150,000, same-country exclusion. You live in Australia and transfer to an Australian QROPS. The exclusion applies and £150,000 is well within the £1,073,100 allowance, so there is no charge, provided the paperwork is done on time.

Example 3: £1,500,000 with an exclusion. The same-country exclusion applies, but the transfer is above the allowance. The charge applies only to the excess: £1,500,000 minus £1,073,100 is £426,900, and 25% of that is £106,725.

Example 4: £1,500,000 with no exclusion. The charge applies to the whole amount: 25% of £1,500,000 is £375,000.

The numbers are illustrative and ignore any other tax. They show how much depends on whether an exclusion applies.

The paperwork

Two forms matter in practice.

• Form APSS 263. You give this to your UK scheme administrator within 60 days of requesting the transfer. It provides the information needed to decide whether the 25% charge applies. If you do not give it, the charge is applied.
• Form APSS 241. You use this if your circumstances change after the transfer, as explained next.

If you move country after transferring

The charge is not necessarily final on the day you transfer. For five full tax years after the tax year of the transfer, a change in your circumstances can change the answer.

• If you moved to the QROPS’s country, you may be able to claim a refund of the charge.
• If you move away from the country where the QROPS is based, you may owe the 25% charge that you had avoided.

You must tell HMRC using form APSS 241 if you move country within this period. Anyone who expects to move again soon should be especially careful about relying on the same-country exclusion.

Moving money on from a QROPS

The charge is not limited to the first transfer out of the UK. HMRC also looks at onward transfers from a QROPS made within five full tax years of the original transfer into it. If you move the money from one overseas scheme to another in that period, and the new scheme does not meet the same conditions, a charge can arise. This is one reason to choose the first scheme carefully rather than planning to switch later.

Transferring back to the UK has its own rules, and the position depends on how long the money has been overseas and what has happened to it. Ask the QROPS provider what its exit terms and any charges would be before you transfer in.

Common mistakes

• Assuming the old EEA exclusion still applies. It was removed from 30 October 2024, so any guide that treats an EEA transfer as automatically exempt is out of date.
• Missing the 60-day deadline for the paperwork. The information must reach your UK scheme within 60 days of requesting the transfer, or the 25% is applied.
• Relying on the adviser’s description of the scheme. Check for yourself that the scheme is a qualifying one, and that you meet the exclusion you are relying on.
• Forgetting about a future move. An exclusion based on where you live can be lost if you move country within five full tax years, so a planned move changes the answer.
• Ignoring the allowance. A large pension may exceed the overseas transfer allowance even if an exclusion applies.
• Treating the charge as the only cost. Even where there is no charge, the QROPS may cost more each year than a UK SIPP.

Is the charge ever worth paying?

Rarely. A 25% reduction is a large head start for any benefit to overcome. A QROPS would need to deliver savings in tax, currency risk and charges that outweigh the lost 25%, and do so for decades. In most cases where no exclusion applies, a UK SIPP or leaving the pension where it is will be more sensible. See our guide to SIPP vs QROPS for how the two compare.

Alternatives that avoid the charge

• Leave the pension where it is. It stays invested and you can usually manage it online from abroad.
• Move to a UK SIPP. There is no overseas transfer charge. A SIPP for expats can be run from overseas and offers a wide choice of investments.
• Qualify for an exclusion. If you are settled in a country that has a QROPS, the same-country exclusion can make a transfer there charge-free.

Questions to ask before you transfer

1. Which exclusion do I qualify for, and what evidence do I need to give?
2. How much of my overseas transfer allowance is available?
3. Who is responsible for submitting the paperwork, and by when?
4. What happens if I move country in the next five years?
5. What are the total costs of the new scheme every year?
6. Is the receiving scheme on HMRC’s list of qualifying schemes?

If an adviser cannot answer these clearly, look elsewhere. Our guide to transferring a UK pension abroad covers the wider process, and the expat pensions hub has more on your options.

Frequently asked questions

What is the overseas transfer charge?

It is a 25% tax on the amount you transfer from a UK pension to a QROPS, unless an exclusion applies.

Does the overseas transfer charge apply to a UK SIPP?

No. A transfer to a UK SIPP is not an overseas transfer.

Can I avoid the overseas transfer charge?

Yes, if an exclusion applies, such as living in the same country as the QROPS or transferring to an employer-sponsored occupational QROPS. You must provide the right information to your UK scheme in time.

Is the EEA exclusion still available?

No. The exclusion for transfers within the European Economic Area was removed from 30 October 2024.

What is the overseas transfer allowance?

It is a limit on how much you can transfer without charge, even when an exclusion applies. For 2026 to 2027 the standard amount is £1,073,100. Anything above your available allowance is charged at 25%.

Can the charge be refunded?

Possibly. If you move to the QROPS’s country within five full tax years of the transfer, you may be able to claim a refund. If you move away from it, you may owe the charge.

This article is for information only and is not financial or tax advice. Pension and tax rules can change. Take regulated advice that considers your own circumstances before transferring a pension.