What is QROPS for British Expats? Everything You Need to Know

In the 2023–2024 financial year, the number of UK pension transfers into Qualifying Recognised Overseas Pension Schemes (QROPS) surged to 7,100, more than double the previous year, according to HMRC. The total value of these transfers also rose sharply to £1.14 billion, the highest figure recorded since 2016–2017. 

Paperwork and rules can make pensions confusing, especially when you live overseas. QROPS, introduced in 2006, gave British expats a simpler way to transfer pensions abroad with tax benefits and local access. But since 2017, tighter rules and new charges have made them less straightforward. 

This Hoxton Wealth guide explains what QROPS are, who might still benefit, and how they compare with an International SIPP. 

At Hoxton Wealth, we can help British expats navigate complex pension transfers. With offices across the UK, Europe, Asia, and the Middle East, we understand the financial challenges that come with living abroad.

We’ve advised thousands of expats, managing over US $3.3 billion in assets worldwide. That makes us well-placed to explain whether QROPS are right for you, or if alternatives, such as International SIPP, may better suit your goals. 

A Qualifying Recognised Overseas Pension Scheme (QROPS) an overseas pension scheme that tells HMRC it meets the conditions to be a Recognised Overseas Pension Scheme (ROPS) and can appear on HMRC’s published ROPS list; this is not HMRC approval or endorsement. Transfers to a QROPS can be “recognised” for UK tax purposes but may still incur the 25% Overseas Transfer Charge unless an exclusion applies. 

QROPS were introduced in April 2006 as part of the UK’s “pension simplification” reforms. The idea was straightforward: give people who had left the UK a way to consolidate their pensions into a local scheme in their country of residence. 

After identifying who qualifies, it’s important to understand the rules governing QROPS transfers:

• 25% overseas transfer charge: Applies unless the pension holder is resident in the same country as the QROPS.
• Residency requirements: HMRC expects transfers to reflect genuine overseas residence.
• Approved jurisdictions: Only QROPS in approved countries can accept UK pension transfers without immediate tax penalties.

Following these rules ensures compliance and reduces the risk of unexpected charges or HMRC scrutiny.

QROPS transfers carry specific tax considerations that must be reviewed carefully:

• UK tax charges: Certain transfers may still trigger UK tax if residency conditions are not met.
• Local taxation: Your country of residence may tax pension income differently; some jurisdictions offer more favourable treatment.
• Double-tax treaties: These agreements between the UK and host countries can reduce or eliminate double taxation on pension transfers.

Understanding these implications helps expats make informed decisions and ensures the pension remains tax-efficient over the long term.

Suitability depends on your goals, risk tolerance, residency and tax status; outcomes can vary and tax rules can change.

1. Local currency access

QROPS allow pensions to be held in the currency of your country of residence. This reduces exposure to GBP fluctuations, protecting the real value of retirement income. For long-term expatriates, receiving funds in local currency helps cover everyday expenses, providing stability, financial predictability, and reducing the risk associated with currency conversions over time.

2. Tax efficiency

Transferring into a QROPS can provide tax advantages depending on your residency. Jurisdictions like Malta or Gibraltar have favourable double-tax treaties, potentially reducing UK tax liabilities. These benefits make QROPS appealing for expatriates seeking to optimise pension withdrawals while remaining compliant with both UK and local taxation laws.

3. Estate planning flexibility

QROPS can allow pension assets to be passed to heirs more efficiently. In some cases, funds may be inherited without incurring UK inheritance tax, subject to local laws and residency requirements. This feature offers expatriates a way to safeguard retirement savings for beneficiaries, providing greater control over intergenerational wealth transfer.

4. Consolidation of multiple pensions

For expats with several UK pension plans, QROPS provide a way to combine them into a single overseas scheme. Consolidation simplifies administration, gives a clearer overview of total retirement assets, and reduces paperwork. It is particularly useful for those who have accumulated pensions from multiple employers across different periods.

5. Investment flexibility

Many QROPS schemes offer a wide range of investment options beyond traditional UK pensions. This can include local funds, global equities, or alternative assets such as property or hedge funds. The diversity allows retirees to construct portfolios that match their risk tolerance, long-term financial goals, and exposure to international markets.

Transferring your UK pension into a QROPS can seem complex, but with careful planning and the right advice, it can be a smooth process. This section outlines the step-by-step procedure, considerations to keep in mind, and best practices to ensure compliance, optimise tax efficiency, and protect your retirement savings.

1. Assess your eligibility

Before starting any transfer, it is essential to determine whether you qualify for a QROPS transfer. You do not need to have permanently left the UK. What matters is that the receiving scheme is a QROPS/ROPS at the time of transfer, and whether the 25% Overseas Transfer Charge (OTC) applies based mainly on your tax residence versus the scheme’s location, as well as your available Overseas Transfer Allowance (introduced from 6 April 2024).

• Check the residency requirements for both HMRC and the QROPS jurisdiction (including the OTC “exclusion conditions” and any local rules).
• Review your existing UK pension arrangements to see if any restrictions or penalties apply for transfers.
• Consider your long-term retirement goals, including whether you plan to retire abroad permanently or may return to the UK, as this affects tax treatment.

A clear eligibility assessment prevents unexpected tax liabilities and ensures that the transfer aligns with your personal circumstances.

2. Compare QROPS schemes

Not all QROPS are created equal. Different jurisdictions and schemes offer varying levels of investment flexibility, tax treatment, fees, and regulatory oversight. A careful comparison is critical.

• Jurisdiction matters: Popular locations include Malta, Gibraltar, and some European countries with established QROPS frameworks. Each has different tax rules, regulatory protections, and investment options. Note: from 30 October 2024, the previous general OTC exemption for transfers to EEA/Gibraltar schemes was removed; an OTC can apply unless another exclusion is met (for example, being tax-resident in the same country as the QROPS).
• Scheme fees and structure: Some QROPS charge higher ongoing administration fees or exit penalties. Compare charges to understand the long-term impact on your pension.
• Investment options: Evaluate whether the QROPS scheme allows a diversified portfolio across global equities, bonds, property, or alternative assets. Many schemes operate on dedicated investment platforms, which simplify the buying, holding, and selling of assets. Some also allow lump sum investments or regular savings plans, giving you flexibility to grow your pension in a way that suits your retirement goals and risk tolerance.
• Regulatory safeguards: Confirm the receiving scheme is on HMRC’s Recognised Overseas Pension Schemes (ROPS) list at the time of transfer (schemes self-certify; HMRC does not “approve” or endorse them).

A comprehensive comparison can help you select a scheme that matches your financial objectives and risk tolerance.

3. Obtain professional advice

Because QROPS transfers involve cross-border pensions and tax implications, it is strongly recommended to work with qualified financial advisers familiar with both UK pensions and international retirement planning.

• Advisers can calculate tax exposure, including the 25% Overseas Transfer Charge if applicable.
• They can help structure the transfer to maximise investment growth and minimise costs.
• They can also help guide you through legal requirements, paperwork, and timing, reducing errors and delays.

That’s why many expats work with Hoxton Wealth. With knowledge  in UK pensions, QROPS, and International SIPP, we help British expats make informed decisions about their retirement. Our cross-border knowledge and personalised financial planning ensure every transfer is compliant and aligned with your long-term goals.

4. Request a pension transfer quote

Once you have identified your preferred QROPS scheme, you should request a detailed transfer quote from your current UK pension provider.

• This quote will outline any exit fees, transfer charges, and the value of your pension as of the transfer date.
• It helps you compare the costs of transferring versus leaving your pension in the UK.
• The quote also provides the basis for discussion with your financial adviser regarding timing and tax planning.

Having a clear financial picture at this stage is essential for making an informed decision.

5. Complete required paperwork

Transferring a pension to a QROPS involves significant documentation. Your adviser and the QROPS administrator will typically assist, but you need to provide:

• Proof of identity and residency
• Details of your current UK pension(s)
• Signed transfer forms from your existing provider
• Any additional forms required by HMRC or the overseas scheme

Accurate and timely completion of paperwork reduces the risk of delays or compliance issues.

6. Arrange the transfer

After approvals and paperwork are complete, your existing UK pension provider will transfer the funds directly to the QROPS.

• Funds are usually transferred via regulated channels, often in the currency of your new scheme.
• Ensure that the QROPS provider confirms receipt and proper crediting of funds.
• Monitor for any unexpected fees or delays, which are uncommon but possible.

Once the transfer is complete, your pension will start being managed under the QROPS rules and investment options.

7. Review investment strategy

After your funds have arrived in the QROPS, it’s critical to review and adjust your investment strategy according to your retirement goals.

• Consider risk tolerance, planned retirement age, and income needs.
• Take advantage of the QROPS’ investment flexibility, which may include access to multiple asset classes or global markets.
• Review periodically to ensure that your portfolio remains aligned with changing markets, personal circumstances, or tax rules.

This step helps optimise growth potential and ensures your pension remains aligned with your retirement plan.

8. Understand ongoing compliance

QROPS are subject to both local regulations and HMRC oversight. After the transfer:

• If you move countries within 5 years of the transfer, tell your UK scheme administrator and the overseas scheme manager using form APSS241—this can trigger a refund or a new OTC liability depending on where you move.
• QROPS scheme managers (not members) must report payments made from transferred funds for 10 years after the transfer using APSS253.
• Be aware of changes in tax treaties or UK legislation that may affect your pension in the future.

Staying informed avoids surprises and ensures the long-term security of your retirement assets.

9. Consider alternatives

Even after thorough planning, it’s wise to compare a QROPS transfer with alternatives such as an International SIPP.

• SIPP can offer similar investment flexibility with fewer administrative hurdles.
• Tax treatment may be simpler depending on your jurisdiction.
• Reviewing alternatives ensures that the decision to transfer to a QROPS is truly the most advantageous for your situation.

10. Plan for estate and succession

Finally, consider the long-term implications of your QROPS transfer:

• Understand how pension assets can be passed to beneficiaries.
• Factor in local inheritance rules, potential taxes, and HMRC guidelines.
• A clear estate plan ensures that your retirement savings provide security for your heirs as intended.

QROPS were once the default choice for British expats moving pensions abroad. Now, they are far more niche. For most expats, an International SIPP offers similar flexibility without the restrictions or the 25% Overseas Transfer Charge.

That said, QROPS can still be valuable if you’ve permanently left the UK, hold a large pension pot, and live in a jurisdiction with an approved scheme. The key is to carefully assess your situation before making any decisions.

At Hoxton Wealth, we can help expats decide between QROPS, SIPP, and other retirement solutions. Combining qualified advisers with a digital platform that gives a complete financial overview, we guide you through every step of the transfer process.

Every expat’s situation is unique, and pension decisions can have long-term implications. Working with knowledgeable advisers  ensures your choices are compliant, tax-efficient, and aligned with your retirement goals, giving peace of mind that your savings are working effectively for your future.

Get started today with Hoxton Wealth to explore your pension options and receive personalised advice tailored to your circumstances.