Transfer QROPS Back To UK | QROPS To SIPP
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We’re passionate about providing high quality, up-to-date and relevant retirement advice to Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
The difference between a SIPP and a QROPS
How to transfer your QROPS back to a UK SIPP
All of the costs involved in the process
The benefits of transferring your QROPS to a SIPP
Many expats who left the UK have transferred their UK pension plans to a QROPS. Whether you have returned to the United Kingdom or now believe the product is not right for you, it's common to want to transfer back into a UK pension scheme.
Within this article we aim to clarify the different types of pensions, how you can transfer a QROPS to SIPP, and the areas to be mindful of.
What is a QROPS?
A QROPS, Qualifying Recognised Overseas Pension Scheme is an overseas pension scheme that meets certain criteria set out by HMRC. They can provide several benefits for British nationals living abroad but were also heavily missold in previous years.
What is a SIPP?
A SIPP, Self-Invested Personal Pension is a UK pension scheme that offers greater flexibility regarding how you invest and withdraw your pension than a standard workplace pension scheme.
Why Transfer a QROPS to a SIPP?
Many advantages can be gained in transferring a QROPS to SIPP, including;
Reduce costs: SIPPs cost up to 5 times less than QROPS.
Safety and Security: Gain the regulation and protection of the FCA, FSCS, and Pensions Regulator.
Tax Efficient Drawdown: If you're returning to the UK this can mean your taxes are paid to HMRC at source without any additional reporting on your tax return.
For non-UK residents, if the country of your residence has a tax treaty with the UK and not the country of your QROPS, you can withdraw the money gross of tax rather than having it held back at the source. You can achieve this by obtaining an NT code prior to taking pension income.
Can I Transfer My QROPS Back To The UK?
It's possible to transfer your QROPS back into a UK-registered pension scheme however there are many factors to consider. Firstly, the QROPS needs to be listed on HMRC's recognised overseas pension scheme notification list at the time of transfer.
Secondly, you cannot transfer directly to one of the mainstream pension providers in the UK which are for UK residents. Instead, you can transfer your pension pot to an International SIPP. An International SIPP is a UK SIPP for non-UK residents. Like a UK SIPP, it provides greater investment options while allowing flexible access from age 55 (57 from 2028).
For UK residents or if you reside in a country that doesn't have a tax treaty with the UK, tax charges are collected at source when income is taken, in line with the bandings for that tax year.
An Internationa SIPP offers the additional benefit of being multicurrency so that if your QROPS is held in any major currency other than GBP, the transfer can be done in this way. You can then transition to GBP at a more favourable rate in the future, all within the pension scheme and without creating any tax liability.
Tax Implications Of Transferring A QROPS
The transfer of a QROPS to SIPP itself is a non-taxable event. However, it's important to note you will be giving up any potential benefits the QROPS is providing.
Furthermore, whilst the lifetime allowance LTA was scrapped in April 2023, it can always be reintroduced. If your pension is near or over £1m or you don't intend to access it for some time, on-shoring your pension may not be prudent.
Most importantly you can lose out due to the reduction in the new Lump Sum and Death Benefit Allowance.
As part of transferring your pension out of the UK, a lifetime allowance test took place. Unfortunately, if you haven't taken any benefits in the UK before moving your pension offshore, you can face a 25% reduction in your new allowances.
This can be mitigated by requesting a Transitional Tax-Free Allowance Certificate (TTFAC) when transferring back to a SIPP.
The situation is complex and we strongly recommend taking advice before actioning any type of QROPS to UK pension transfer.
Expat Financial Advice
The Wealth Genesis helps expats globally with their retirement planning needs. This includes specialist expert advice on QROPS to SIPP transfers.
If you hold a QROPS, want to reduce the costs and improve the performance, or, are back residing in the UK and wish to move your pension to a more suitable arrangement, contact us using the button below, or the diary link.
One of our qualified cross-border advisers can discuss your position and requirements in greater detail.
FAQs
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The OTA was brought into effect in April 2024 and relates specifically to transferring your UK pension to a QROPS. As such, it does not affect transferring from an overseas pension scheme qrops to a SIPP.
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The 10-year reporting requirement relates to transferring your UK pension overseas and needing to adhere to certain rules such as not taking money from your pension before 55.
Transferring to a UK pension scheme means your pension will be subject to UK income tax and reporting. Therefore the 10-year rule is negated. If you reside in a country that has a tax treaty with the UK you can still receive your pension money gross of UK tax by obtaining an NT code.
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Any pension transfer is an important decision and you should always check if the transfer will be beneficial to your position. This depends on your individual circumstances.
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You can access your pension from age 55 (57 from 2028) in a UK pension scheme.
