I’ve heard the UK government has introduced an overseas transfer charge of 25% for pension transfers to QROPS schemes, but what is the overseas transfer charge?
From 9th March 2017, any pension transfers from the UK to a QROPS may be subject to an overseas transfer charge of 25% of the total value of the transfer amount.
The overseas transfer charge is a new tax aimed at stopping people from exploiting tax loopholes enabling them from transferring pension funds out of the UK to avoid UK tax.
The overseas transfer charge will only affect pension transfers which are requested on or after 9th March 2017.
In the simplest terms, the overseas transfer charge will not apply for any pension transfer that meets the following criteria:
- The person transferring the funds is tax resident in the same country that the QROPS is based
- The pension transferring the funds is a tax resident in the EEA and the QROPS is based in a country within the EEA, including Gibraltar.
There are other exceptions, and we have created a detailed guide covering the overseas transfer charge which explains things in more details and includes all of the exemptions, as well as the circumstances where the charge will have to be paid.
