SIPP vs QROPS for UK Expats: Which Is Right for You?
If you leave the UK with a pension behind, you generally have three options: leave it where it is, move it into a UK SIPP for expats that you can run from abroad, or transfer it to a QROPS in another country. The right answer depends mainly on where you will live long term, how large the pension is and whether you might come back. This guide compares SIPP vs QROPS on tax, costs, currency and flexibility, so you know what to ask before you decide.
This guide is general information, not personal advice. Pension rules and tax treatment change, and the right choice depends on your own circumstances, so take regulated advice before moving any pension.
Your three options when you move abroad
1. Leave the pension where it is. A UK pension does not have to move because you do. It stays invested, you can usually still manage it online, and you can start taking benefits from the pension age. This is often the right answer for a defined benefit scheme and for small pots.
2. Move it to a SIPP. A self-invested personal pension is a UK-registered pension that gives you control over the investments. You can keep it when you live overseas, and a transfer from one UK pension to a SIPP is not an overseas transfer.
3. Transfer it to a QROPS. A qualifying recognised overseas pension scheme is a pension scheme outside the UK that meets HMRC’s conditions for receiving transfers from UK pensions. It is where QROPS sits in the picture: an option for people who are settling abroad for the long term.
How a SIPP works for an expat
A SIPP is held with a UK provider and regulated in the UK. You choose from a range of investments, which can include funds, shares, investment trusts and bonds, depending on the provider. Most expats who keep a SIPP like three things:
- Simplicity. Moving between UK pensions is routine, and there is no overseas transfer charge.
- Familiar protection. A UK SIPP sits within UK regulation, including the Financial Services Compensation Scheme for eligible claims.
- Flexibility if plans change. If you return to the UK, nothing about the pension needs to change.
The usual drawbacks are that the pension is held in sterling, so you carry currency risk if you spend in another currency, and that payments normally come out in pounds.
How a QROPS works
A QROPS is an overseas scheme, usually based in the country where you live or in a recognised pension jurisdiction. It can offer things a UK SIPP cannot: investing and paying benefits in a local currency, and in some countries, a different tax treatment on the money coming out.
The drawbacks are real. A QROPS is regulated by the country where it is based, not the UK. Fees are often higher. If you later move country or return to the UK, the position can become more complicated and costly. And since 2024 the rules for moving money into one have tightened (see the next section).
The overseas transfer charge
The biggest recent change is the overseas transfer charge. A transfer to a QROPS is charged at 25% of the amount transferred unless an exclusion applies. Even where an exclusion applies, any amount above your overseas transfer allowance (usually £1,073,100) is charged at 25%. Our full guide to the overseas transfer charge sets out the exclusions, the allowance and the paperwork in more detail.
The exclusions are narrow. The one most people use is where you live in the same country as the QROPS, for example you live in Australia and the scheme is an Australian one. Others cover an occupational scheme run by your employer, an overseas public service scheme, and a scheme set up by an international organisation you work for. Living in the EEA and transferring to an EEA scheme no longer qualifies on its own, because that exclusion was removed from 30 October 2024.
Two practical points. You must give your UK scheme administrator the required information (form APSS 263) within 60 days of requesting the transfer, or the 25% is charged. And if you move to a different country within five years of the transfer, you must tell HMRC (form APSS 241): you may get a refund if you have moved to the QROPS’s country, or owe 25% if you have moved away from it.
A transfer to a UK SIPP has no overseas transfer charge. For many expats this single point decides the question.
A transfer to a scheme that is not a QROPS can also be treated as an unauthorised payment, which carries a tax charge of at least 40% and can attract further charges. Always check that the scheme is on HMRC’s list of overseas pension schemes before you move anything.
If you are considering transferring a UK pension abroad, the charge needs to be part of the calculation from the start.
A worked example
Suppose you have a £200,000 pension and you live in Thailand.
- Transfer to a QROPS based in a different jurisdiction (not Thailand): the scheme is not in the country where you live, so no exclusion applies. The charge is 25% of £200,000, which is £50,000, and about £150,000 arrives in the new scheme.
- Transfer to a UK SIPP: there is no overseas transfer charge, and the full £200,000 stays invested.
- Transfer to a QROPS in Thailand, where you live: the same-country exclusion can apply. The £200,000 is within the overseas transfer allowance, so there is no charge, provided the paperwork is done on time.
The numbers are illustrative, but they show why the location of the scheme relative to where you live matters so much. A charge of £50,000 would take many years of lower fees or better tax treatment to recover.
Tax on contributions and withdrawals
Contributions. A UK SIPP can keep receiving UK tax relief on contributions after you leave the UK in some cases. You can qualify if you were UK resident at some point in the five tax years before the year you pay in and were UK resident when you joined the scheme. Otherwise you can still pay in up to the £3,600 basic amount each tax year, or up to your relevant UK earnings if higher. Foreign earnings do not count towards that limit. A QROPS does not receive UK tax relief. For the full rules, see our guide on whether you can pay into a UK pension while living abroad.
Tax-free cash. A SIPP normally allows 25% of the pension to be taken tax-free, up to a maximum of £268,275 (the lump sum allowance). Some countries allow a different proportion from a QROPS, but local rules apply.
Income. What you pay on withdrawals depends mostly on where you live and the double taxation agreement between that country and the UK, not just on which scheme holds the pension. In many cases the country of residence taxes the income either way.
Death benefits. From 6 April 2027, most unused pension funds and death benefits count towards the estate of a person who dies, for UK inheritance tax. If that applies to you, your adviser needs to look at how it interacts with the scheme you choose.
The honest summary: the tax outcome often depends more on your country of residence and its treaty with the UK than on whether you choose a SIPP or a QROPS.
Why your country of residence matters more than the scheme
Two expats with identical pensions can end up with very different results, because the tax on what you draw depends on the country you live in. Some countries tax pension income at ordinary rates. Some tax only part of it, and a few tax very little. Some treat foreign pensions differently from local ones, and the double taxation agreement with the UK decides which country gets to tax what.
This is why a headline claim that a QROPS “saves tax” should be treated with care. Before relying on it, ask for the figure in writing for your own country, based on your own income, and ask whether it assumes you will stay put. If you may move again, a tax advantage in the current country may not last.
Costs
Costs vary a great deal between providers, so ask for the full picture in writing before you move:
- Set-up charge for opening the new scheme
- Annual scheme or platform fee
- Adviser fees, initial and ongoing
- Investment charges on the funds you hold
- Transfer or exit charges on the old pension
- Currency conversion costs if you switch money between currencies
A QROPS commonly carries more layers of cost than a UK SIPP, particularly for smaller pots, where fixed fees take a larger share. Ask each provider for a single projected annual cost as a percentage and as a figure in pounds, and compare like for like.
Currency and investments
If your expenses are in one foreign currency for life, holding some or all of your pension in that currency can reduce exchange rate risk. A QROPS can do this more easily. Some SIPP providers now offer multi-currency options, so check what is on offer before assuming you need to move abroad to get it.
On investments, a SIPP generally offers a broad choice. QROPS investment choice depends on the scheme, and some are narrower.
If you return to the UK
A SIPP is unaffected if you come back. A QROPS may still be treated under UK rules as a pension scheme, and moving the money back to a UK scheme can mean extra cost and paperwork. If there is a real chance you will return, that points toward keeping a UK pension.
The hybrid approach
You do not have to choose one or the other for the whole pension. Some expats keep part of their pension in a UK SIPP and move part to a QROPS, for example where one pot qualifies for a transfer charge exclusion and another does not, or where they want some money in sterling and some in the currency they live in.
The trade-off is cost and complexity. Two schemes mean two sets of fees, two sets of paperwork and two sets of rules to keep track of. It tends to make sense only for larger pensions, and only after an adviser has set out the combined cost.
Defined benefit pensions
If you have a final salary or other defined benefit pension, be especially cautious. These schemes pay a guaranteed income for life, and giving that up for a transfer value is a major decision. Transfers of defined benefit pensions above a certain value generally need advice from a regulated adviser before the scheme will release the money, and the scheme will check this. Read about final salary transfer before taking any step.
Scams and unauthorised payments
Pension scams often target people living abroad, because the pension is out of sight and the rules are unfamiliar. Warning signs include cold calls or messages about “free pension reviews”, pressure to move quickly, promises of high or guaranteed returns, offers to release cash early, and investments you have never heard of. Check any adviser on the Financial Conduct Authority register, and check the scheme on HMRC’s list. If in doubt, do not transfer.
Questions to ask before you transfer
Whichever route you are leaning towards, put these questions to the adviser and the provider, and keep their answers in writing:
- Is the receiving scheme on HMRC’s list of qualifying recognised overseas pension schemes?
- Will the overseas transfer charge apply to my transfer? If not, which exclusion applies, and what do I need to prove?
- What are the total costs in the first year and each year after, as a percentage and in pounds?
- Who regulates the scheme, and what protection do I have if the provider fails?
- In which currency will the money be held, and what does it cost to switch?
- What happens if I move to a different country, or back to the UK?
- What are the exit charges if I want to transfer out later?
- How is the adviser paid, and does that payment depend on me going ahead?
- What tax will I pay on withdrawals in the country where I live, on current rules?
- What happens to the pension when I die, and who inherits it?
If an adviser cannot or will not answer these clearly, that is information in itself.
SIPP vs QROPS at a glance
| UK SIPP | QROPS | |
|---|---|---|
| Where it is based | UK | Overseas jurisdiction |
| Regulation | UK | Country where the scheme sits |
| Overseas transfer charge | None | 25% unless an exclusion applies |
| Currency | Mainly sterling, some multi-currency | Local or multi-currency |
| UK tax relief on new contributions | Possible in some cases | No |
| Typical costs | Often lower | Often higher |
| Return to the UK | Simple | Can be complicated |
| Best suited to | People who may move again or return | People settled long term in one country |
Which suits you? A checklist
You may lean toward keeping or moving to a UK SIPP if:
- you may move again or return to the UK
- your pension is under about £300,000, where fixed fees weigh more
- you want UK regulation and simplicity
- you are not in a position to qualify for a transfer charge exclusion
You may want to look at a QROPS if:
- you are settled long term in one country and plan to stay
- the transfer qualifies for an exclusion from the overseas transfer charge
- you want to hold and draw your pension in a local currency
- local tax rules clearly favour it and a specialist has confirmed this for your case
If you are unsure, getting a UK pension review before deciding can show what you have, what it costs and what your options are. You can also read our guide to expat pensions for the wider picture.
Frequently asked questions
Can I keep my SIPP if I move abroad?
Yes. You can usually keep a UK SIPP when you become non-resident, although some providers have rules about which countries they accept, so check yours.
Is a QROPS better than a SIPP for expats?
Neither is better in every case. A QROPS can suit people settled long term in one country, particularly where a transfer charge exclusion applies. A SIPP often suits people who want lower costs, UK regulation and the option to move or return.
Do I pay tax on a transfer to a QROPS?
A 25% overseas transfer charge applies unless an exclusion applies, such as where you live in the same country as the scheme. You also need to give your UK scheme the required information within 60 days of asking for the transfer.
Do I need advice before transferring?
For a defined benefit pension above a certain value, regulated advice is generally required. For other pensions it is not always a legal requirement, but the stakes are high enough that independent advice is strongly worth considering.
What if I move country after transferring to a QROPS?
If you move within five years of the transfer, you must tell HMRC. Depending on where you move to, you may get a refund of the overseas transfer charge or owe it.
Can I move my QROPS back to the UK?
Often yes, but it can involve extra cost and paperwork, and the rules depend on the scheme. Check the terms before you transfer in.
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.
