An overseas pension transfer is the process of moving your UK pension savings to a qualifying pension scheme based outside the UK, typically when you relocate abroad. This can offer potential benefits like currency flexibility, local access, and tax advantages - especially if the transfer is made to a recognised scheme such as a QROPS (Qualifying Recognised Overseas Pension Scheme).

This means it has to be regulated as a pension scheme in the country in which it is established, and recognised for tax purposes in that country. Theoretically a QROPS can comply with these requirements and be tax efficient. If the QROPS is in a country that taxes pensions at a minimal or even a zero rate, a pension transfer can potentially have tax benefits.

However, not all pensions or destinations are eligible, and tax implications should be carefully considered. Ensure you receive expat overseas pension transfer advice before you make any decisions regarding your pension plan.

TALK TO A RETIREMENT PLAN CONSULTANT IN DUBAI

A Qualifying Recognised Overseas Pension Scheme (QROPS) allows expats to transfer their UK pension abroad into a qualifying scheme.

A QROPS is very similar to a SIPP given they are a defined contribution scheme, but instead it's based outside the UK. QROPS are intended for people who are planning to, or have already left, the UK. They can be based in any country around the world and qualify as a QROPS as long as the scheme meets specific requirements set by HMRC.The main difference between a SIPPs and a QROPS is the additional tax benefit a QROPS may bring to those living outside the UK.

They are designed to meet the rules set out by HMRC regarding pension transfers. QROPS can offer tax-efficiency advantages, investment flexibility, and the ability to withdraw in different currencies. However, you might be subject to the Overseas Transfer Charge (OTC) on your transfer if you don't meet the required residency conditions. Potential advantages or disadvantage are all dependent on the type of pension scheme you currently have and any benefits you might be sacrificing by choosing to transfer

A qualified pension transfer specialist and expat QROPS adviser can help you with understanding QROPS pension transfer advice.

As well as understanding what SIPPs and QROPS are, it's vital that you understand the benefits of the type of scheme you currently have.

There are two types of UK pension scheme – defined contribution and defined benefit.

Defined benefit schemes are colloquially known as “gold-plated pensions”. They provide scheme members with a pension that is intended to be guaranteed. These schemes are becoming rare due to their cost - and if you have one, you should think very carefully before transferring from it.

It's also now required - by law - that anyone considering an international pension transfer from a defined benefit scheme worth more than £30,000, including into an overseas scheme such as a QROPS, must have taken financial advice from an adviser qualified to provide UK pension advice. Such an adviser has to be authorised by the Financial Conduct Authority.

Here are the international pension transfer rules to be aware of:

Eligibility: you must be moving abroad and transferring to a recognised overseas scheme, such as a QROPS, that meets HMRC requirements
Tax compliance: transfers may trigger an Overseas Transfer Charge (25%) unless specific conditions are met - such as residing in the same country as the pension scheme
Scheme restrictions: not all UK pensions can be transferred (e.g., most unfunded public sector schemes are non-transferable)
Reporting obligations: both the transferring and receiving schemes may need to report to HMRC for up to 10 years after the transfer

Your pension is one of your most important financial assets, and any decision to transfer it should not be taken lightly.

Transferring your UK pension to Dubai and the UAE can offer significant pension tax benefits, but it’s essential to follow the correct process to avoid unexpected, hidden costs and complications.

We'd always recommend you seek qualified UK expat pension advice which can help clarify advantages and disadvantages specific to you, and should you decide to proceed with a transfer, ensure it's smooth and compliant.

1. Check your pension's eligibility

Not all UK pensions can be transferred. While most defined contribution pensions are eligible, defined benefit pensions may have restrictions. Before proceeding, confirm with your pension provider whether your scheme allows transfers.

2: Choose the best scheme for you

To transfer a UK pension to the UAE, many expats use a QROPS, which offers tax advantages and flexibility. However, not all QROPS schemes are HMRC-compliant, so careful selection and consideration is required to find a suitable scheme.

3. Understand any tax implications

Dubai has zero income tax, but UK tax rules may still apply. The Overseas Transfer Charge (OTC) of 25% could apply if you don’t meet the residency requirements.

4. Get professional pension transfer advice

Getting expert UK expat pension advice from a qualified wealth management adviser ensures you comply with regulations. A professional pension transfer specialist can guide you through the process.

Read more

1. Do expats pay tax on UK pensions

2. Investment Advice from Financial Experts in the UAE

Because of the risks involved, you must always take the advice of a Financial Conduct Authority (FCA) regulated pension transfer specialist. Our retirement experts hold that accreditation.

Additionally, our retirement experts are Chartered Financial Planners, certified by the Chartered Insurance Institute (CII).

They are bound by the CII’s Code of Ethics, which requires them to:

obey all relevant laws and regulations
act with the highest ethical standards and integrity
act in the best interests of each client

Understanding your choices

Our approach to your retirement planning options is transparent and comprehensive. Together, we:

review your current financial position, assessing pension performance and projected benefits, as well as international investment returns to date;
consider where and when you want to retire, and your desired income in retirement; and
identify each option you have, explaining the pros and cons of each approach, to guide your informed decision making.

The impact of a pension transfer on your UK tax liability depends on several factors, including the type of pension you are transferring and where you are transferring it to. Here are some key points to consider:

1. Transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme)

Overseas transfer charge (OTC): If you transfer your UK pension to a QROPS outside the European Economic Area (EEA) and you are not a tax resident in the country of the receiving scheme, you may be subject to an Overseas Transfer Charge (OTC) of 25%. This is a one-off tax applied to the transfer amount.

No UK tax on transfer: in general, if the transfer is to a compliant QROPS, you won't incur any additional UK tax on the transfer itself, but be mindful of the potential OTC.

2. Tax on pension income post-transfer

Taxation in the UK: Once you move abroad, UK tax will not be applied to pension withdrawals unless you return to the UK and are considered a tax resident. However, the tax treatment depends on the country where you are a tax resident. Some countries may tax your pension income, and others like the UAE have a Double Taxation Agreement (DTA) with the UK to prevent double taxation.

Tax-free lump sum: You can still take a tax-free lump sum from your UK pension when you reach the age of 55, regardless of where you live. However, this is subject to UK tax laws at the time of withdrawal.

3. Impact on Lifetime Allowance (LTA)

The Lifetime Allowance (LTA) is the maximum amount you can accumulate in your pension pots without incurring additional tax charges. If you transfer your UK pension to another scheme (whether inside or outside the UK), it could impact your LTA.

4. Transfer of Defined Benefit Schemes

If you're transferring a defined benefit pension e.g. a final salary scheme, the transfer value is likely to be significant. Although the transfer itself isn't taxed, you may lose valuable retirement benefits, such as guaranteed income or inflation protection. It's important to assess the long-term impact, as the loss of these benefits could affect your overall tax planning.

5. Transfers to other UK pension schemes

If you transfer your pension to another UK pension scheme (like a SIPP or a defined contribution scheme), there are no immediate UK tax consequences. However, you'll still be subject to UK tax laws when you access the funds in the future.

In summary, the main impact on your UK tax liability when transferring a pension is the potential 25% Overseas Transfer Charge (OTC) if you transfer to a non-EEA QROPS. There is no tax on the transfer itself, but pension withdrawals may be taxed depending on your country of residence. If you’re approaching the Lifetime Allowance or transferring a defined benefit pension, it's important to consider the long-term tax implications.

Transferring a UK pension abroad can provide significant tax advantages, but it also comes with potential risks. Understanding the benefits and drawbacks is essential before making a decision.

Benefits

Potential tax benefits – some countries offer lower or even zero tax on pension withdrawals, allowing expats to maximise their retirement income. If your country of residence has a Double
Taxation Agreement (DTA) with the UK, you may only pay tax locally, avoiding UK deductions.
No UK inheritance tax – unlike UK pensions, which may be subject to Inheritance Tax (IHT) at 40%, a Qualifying Recognised Overseas Pension Scheme (QROPS) can help ensure your pension is passed to beneficiaries tax-efficiently.
Currency flexibility – UK pensions are paid in GBP, which can expose expats to exchange rate fluctuations. Transferring to a QROPS allows pensions to be held in local currency, providing greater financial stability.

Drawbacks

Overseas Transfer Charge (OTC) – a 25% tax charge applies if a pension is transferred to a QROPS outside the European Economic Area (EEA) and the pension holder does not reside in the same jurisdiction. This can significantly reduce the value of the transfer.
Local tax liabilities – while some countries like the UAE offer tax-free pension withdrawals, others impose income tax, capital gains tax, or wealth taxes on overseas pensions. Without careful planning, an expat may face unexpected tax liabilities in their new country of residence.
Loss of UK protections – UK pensions benefit from strong regulations, including Financial Services Compensation Scheme (FSCS) protection. Once transferred abroad, these protections no longer apply, increasing financial risk if the receiving scheme is mismanaged.

To ensure the best financial outcome, professional advice is essential before moving a pension overseas.

Transferring a pension overseas can be beneficial, but it comes with several costs. Financial advice is often required (1–3% of the transfer value), plus setup fees for a SIPP or QROPS (£250–£1,000+) and annual admin fees (£300–£1,500). Your current provider might charge transfer-out fees, and ongoing platform or fund fees typically range from 0.5% to 2% annually. Hidden costs can include currency conversion fees (2–5%), early withdrawal penalties, and commissions baked into offshore products. A 25% tax charge may apply if transferring to a non-compliant QROPS. Always get a full fee breakdown and use a regulated, fee-only adviser.

1. QROPS vs SIPP pension transfer guide

2. Should Dubai-based executives transfer UK pensions to QROPS or SIPP?

3. QROPS vs QNUPS vs SIPP – key pension differences

What is a QROPS?

QROPS is an acronym for qualifying recognised overseas pension scheme. This is a pension structure that allows individuals to move the trustee ownership of their pension benefits outside the UK.

This can achieve additional tax efficiency in some cases - but not in all cases by any means, given the recent tax treatment changes related to UK defined contribution arrangements for example.

Tread carefully if you’re considering making a transfer, and seek qualified regulated advice.

Usually, the biggest tax benefit achieved via a QROPS transfer is related to lifetime allowance (LTA) planning.

Can I transfer my pension abroad to an overseas scheme like a QROPS?

Yes, it may be possible, depending on the type of pension scheme you have.

However, there are lots of things to consider, mainly the benefits your current scheme offers versus the potential advantages of transferring.

This can be a complex decision to make, and one you must take advice on. The advice you take must be from an individual who is a qualified pension transfer specialist, and in turn, they must work for an organisation that’s regulated to offer pension transfer advice.

The advantages of a pension transfer are often heavily over-sold by unqualified advisers who may stand to profit substantially from a transfer via commissions and hidden fees.

Tread with caution; the value of your pension must be preserved so your future retirement plans are not scuppered.

What is a pension lifetime allowance, how does it work and affect me?

Lifetime allowance is the amount of pension money an individual can accrue before potentially incurring additional tax.

This allowance is currently £1m, although there are various transitional protections available to boost this.

Additionally, if any pension benefits were accrued whilst the pension member was a relevant overseas individual, there is an overseas enhancement factor available which can further increase the cap.

Lifetime allowance taxation arises when certain benefit crystallisation events (BCE’s) occur, and this is an area of pensions that requires complex financial advice.

What happens to my pension or QROPS when I die?

This will depend on whether you have defined benefit or defined contribution pension.

If you have a defined contribution pension, whether this is a UK scheme or a QROPS will also impact the tax consequences for your beneficiaries.

Defined benefit schemes will follow the scheme rules which can differ markedly from scheme to scheme.

Defined contribution schemes are more flexible in this regard, and will either pass to beneficiaries without any taxation being due, or any tax liable being based on the income tax rates applicable to the beneficiary, dependant on how old the pension member is when they pass away.

Can I transfer my pension if I move abroad?

Yes, in many cases you can transfer your pension abroad, especially if you're moving permanently. It's important to check eligibility and understand the implications before proceeding.

Can I transfer my UK pension to the UAE?

Yes, you can transfer a UK pension to the UAE through certain approved schemes, such as a QROPS, provided both you and the scheme meet HMRC criteria.

Is transferring pensions a good idea?

It can be, depending on your goals, tax situation, and where you're moving. Professional advice is essential to ensure it's the right move for you.

Is QROPS a good idea?

QROPS can be beneficial for expats looking for more flexibility, currency options, and potential tax advantages. However, it’s not suitable for everyone.

What happens to my pension if I change country?

Your pension stays in place, but access, taxation, and transfer options may change depending on your new country of residence.

Do I pay tax on my UK pension if I live in Dubai?

The UK may still tax certain pensions, but Dubai has no income tax. Your actual liability depends on the type of pension and applicable tax treaties.

What is the overseas transfer charge?

If you transfer your UK pension to a QROPS outside the European Economic Area (EEA) and you are not a tax resident in the country of the receiving scheme, you may be subject to an Overseas Transfer Charge (OTC) of 25%. This is a one-off tax applied to the transfer amount.

Who is eligible for a QROPS pension transfer?

UK pension holders who are moving overseas and meet HMRC requirements, and whose destination country has a recognised QROPS scheme, may be eligible.

Are there ways to avoid the overseas transfer charge?

Yes, if both you and the QROPS scheme are in the same country, or the transfer is within the European Economic Area (EEA) and you live in an EEA country, the charge may not apply.

Overseas
Pension Transfers

Pension transfer advice in Dubai

What is an overseas pension transfer?

What is a QROPS and should you consider it?

International pension transfers: rules and benefits

How to transfer your UK pension overseas

Critical facts about pension transfers

Finding the right pension transfer specialist

Understanding your choices

The role of financial advisers in pension transfers

Legal and tax implications of pension transfers

Pros and cons of moving your pension abroad

Pension transfer costs: fees and hidden charges

How long does a pension transfer take?

Investors in people

15-minute retirement plan for those with £1,000,000+ to invest

In just a few minutes, discover what it takes to live out your dream retirement after years of hard work as a senior international professional.