QROPS Advice: How New HMRC Rules Could Impact Your Overseas Pension Transfer
📚 QROPS Guidance Series (2025/2026)
This series brings together the most important guidance for British expats and returning UK residents with overseas pensions. From understanding the latest HMRC rule changes to deciding whether to keep your QROPS or move to a UK SIPP, these articles provide clear, practical insights to help you make confident financial decisions.
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- QROPS Guide for Expats – Understand Your Options (2025/2026 Edition)
- Are QROPS Still Suitable in 2026?
- QROPS Advice: How New HMRC Rules Could Impact Your Overseas Pension Transfer
- Evaluating Expat Pension Options – Should I Keep My QROPS or Move to a UK SIPP?
- QROPS Explained: How the 5-Year Rule Affects Your Overseas Pension
- I’m Unhappy With My QROPS – What Should I Do?
- How to Choose the Right QROPS Adviser
- QROPS Poland: Should British Expats Review or Transfer Their UK Pension?
📅 Last updated: October 2025 — Reflects the latest HMRC guidance on QROPS transfers and reporting.
Introduction
If you’ve ever considered transferring your UK pension overseas into a Qualifying Recognised Overseas Pension Scheme (QROPS), or already have, you’ll know that HMRC rules can feel complex and ever-changing.
While the framework hasn’t disappeared, the details have evolved, and misunderstanding them could cost thousands.
This article breaks down the principles behind the Overseas Transfer Charge, reporting obligations, and 10-year rule, with real-world examples and clear guidance to help you make informed decisions.
Key Takeaways
- The QROPS regime still exists but is far more tightly regulated than it once was.
- The Overseas Transfer Charge (OTC) applies to most transfers where the member and scheme are in different countries.
- HMRC reporting obligations last for 10 years after the transfer, even if you live abroad.
- EEA exemptions have been removed, and oversight is stricter than ever.
For many, UK-regulated International SIPPs are now a simpler, safer and cheaper option.
Understanding the Core HMRC QROPS Principles
These three principles are the key to HMRC compliance in 2025 and beyond.
1️⃣ The Overseas Transfer Charge (OTC)
The OTC is a 25% tax on pension transfers made from the UK to an overseas scheme.
It applies when:
- Your country of residence is different from the QROPS jurisdiction, or
- The transfer is outside the EEA, or
- You later move to a different country, different from the QROPS jurisdiction, within 5 years of transfer.
It does not apply when:
- You and your QROPS are both in the same country, or
- The transfer is within the EEA (with limited post-2024 exceptions).
Example:
If you live in the UAE but transfer your pension to a Maltese QROPS, HMRC will apply a 25% charge on the transfer value.
👉 Official list: Check the HMRC QROPS list here.
In short: The OTC is about alignment. If your residency and pension location don’t match, HMRC will tax the transfer.
2️⃣ Reporting Obligations
Even after the transfer completes, HMRC oversight continues.
QROPS trustees must report:
- All payments, withdrawals, or onward transfers
- Any change of your residency status
- Certain events, such as early access or unauthorised payments
Reporting lasts for:
- 10 years from the date of transfer, even if you live outside the UK.
If you become a UK resident again during that period, your QROPS becomes taxable under UK rules.
3️⃣ The 5-Year Rule
To obtain full QROPS benefits, you must leave the UK for more than 5 full tax years.
If you wish to access your QROPS in less than 5 years, then there can be significant tax issues.
In particular, there will be a problem if you access a large amount of your QROPS fund while outside of the UK and then return to live in the UK, all within a 5-year period,
👉 To fully understand the 5-year rule, read QROPS Explained: How the 5-Year Rule Affects Your Overseas Pension.
A Practical Guide for British Expats Reviewing Their Overseas Pension
Download my FREE QROPS Checklist
If you set up a QROPS several years ago, it may no longer be suitable for your circumstances. The rules have changed, costs may have risen, and your residency or tax position might be different. This checklist helps you quickly assess whether your QROPS still fits your goals or whether it’s time to seek professional advice.
Recent HMRC Rule Updates
While the principles haven’t changed, their application has tightened:
- EEA exemptions removed: Most transfers to Malta or Gibraltar now trigger the 25% OTC.
- Residency evidence: HMRC now requires proof of residence in the same country as the receiving scheme.
- Enhanced trustee reporting: Non-compliance can lead to scheme de-listing from HMRC’s recognised list.
These changes mean that a transfer that made sense five years ago may now carry significant tax or compliance risk.
Real-World Impact
John, 65, planned to relocate to Spain and considered transferring his £800,000 UK SIPP into a Malta QROPS.
- Pension: £800,000 in a UK SIPP
- Target: Malta QROPS
Before October 2024: Both Spain and Malta were within the EEA, so no OTC applied.
After October 2024: The exemption was withdrawn, meaning John now faces a 25% (£200,000) transfer charge.
Lesson: A change in rules, not circumstance, can erase expected advantages. Regular reviews are essential.
What You Should Do
To stay compliant and make sound decisions, follow these five practical steps:
- Confirm Residency – Ensure your country of residence matches your QROPS jurisdiction.
- Check HMRC Recognition – Verify your scheme is on the current HMRC QROPS list.
- Assess Transfer Tax Risk – Calculate whether the OTC applies to your situation.
- Review Reporting and Fees – Confirm your trustee is compliant and costs are still fair.
- Compare Alternatives – Review whether a UK International SIPP offers better cost, flexibility, and protection.
👉 For further detail, see my comprehensive QROPS guide for expats.
Summary
Summary: QROPS remain legitimate but niche. Strict HMRC rules on the 25% Overseas Transfer Charge, 10-year reporting, and residence alignment mean they now suit a smaller group of long-term expats. Reviewing your existing QROPS regularly is vital to avoid penalties, excessive fees, or loss of tax efficiency.
❓ Frequently Asked Questions (QROPS 2025 Update)
What is a QROPS?
A HMRC-recognised overseas pension that can receive transfers from UK pension schemes.
What is the Overseas Transfer Charge?
A 25% tax charge if your QROPS and country of residence don’t align.
Can I avoid the OTC?
Yes, if both your residence and scheme are in the same country.
How long must trustees report to HMRC?
For 10 years after the transfer, covering all payments and residency changes.
What happens if I return to the UK?
If within 5 years, you may fall foul of anti-avoidance rules.
Are QROPS safer than International SIPPs?
Not necessarily, SIPPs are UK-regulated and often cheaper.
How can I confirm if my scheme still qualifies?
Check the official HMRC QROPS list.
Are QROPS suitable for smaller pensions?
Typically not, fees can be high for funds below £250,000.
Can I transfer my QROPS back to the UK?
Yes, many expats now repatriate to UK International SIPPs for simplicity and FCA protection.
How often should I review my QROPS?
At least every 12–18 months, or whenever your residency or adviser changes.
🧠 Final Thoughts
QROPS transfers can still make sense, but only for the right person, in the right jurisdiction, under the right conditions.
If your life or tax residency has changed, it’s worth reviewing whether your current setup still fits.
Rules evolve, and so should your pension planning.
⚖️ The best pension isn’t the one that worked years ago — it’s the one that fits your life today.
Talk to an Expert
New HMRC rules on overseas pension transfers have raised the bar for QROPS suitability, paperwork, and ongoing compliance. If you’re weighing up a transfer — or already hold a QROPS set up years ago — it’s essential to understand how the latest guidance affects tax charges, eligibility, reporting, and whether a modern UK SIPP may now be the better route.
I’m Ross Naylor, a UK-qualified Chartered Financial Planner & Pension Transfer Specialist with nearly 30 years’ experience helping British expats compare QROPS with SIPPs, avoid unnecessary charges, and align pension strategy with your country of residence, currency needs, and long-term plans (including a future UK return).
If you’re unsure whether you still meet the rules for an overseas transfer, how the new HMRC framework impacts you, or whether your existing QROPS should be reviewed, I’ll provide a clear, impartial second opinion and a practical action plan.
Book a QROPS/HMRC rules review