How To Transfer an Overseas Pension to the UK—Explained

However, the process involves multiple regulatory steps, and eligibility depends on the structure of your foreign pension and the receiving UK scheme.

This article outlines how to transfer an overseas pension to the UK, which schemes are eligible to receive such transfers, and the tax implications you must consider under current HMRC rules.

Is It Possible To Transfer an Overseas Pension to the UK?

You can generally transfer an overseas pension to a UK scheme approved by His Majesty’s Revenue and Customs (HMRC). However, not all pension funds held abroad can be transferred directly; some may require a withdrawal before they can be placed in a UK pension scheme.

The specifics of transferring an overseas pension to the UK are typically determined by three key factors:

1. The overseas pension scheme structure
2. The jurisdiction of the overseas pension scheme
3. The receiving pension scheme

The Overseas Pension Scheme Structure

Direct pension transfers to the UK are typically straightforward if your pension is in a qualifying recognised overseas pension scheme (QROPS) – an HMRC-approved overseas scheme designed to accept transfers from UK-registered pensions.

The QROPS list is updated regularly, and your provider must appear on the list at the time of transfer to ensure compliance with HMRC rules.

Note that some UK pension providers will accept transfers from non-QROPS schemes, but transferring from a non-recognised pension scheme may lead to unauthorised payment charges.

To avoid unexpected charges and penalties, the scheme’s compatibility and the tax implications of moving it to the UK should be carefully considered before commencing the transfer process.

One of the primary concerns when transferring your overseas pension to the UK is not being able to preserve the entirety of your pension benefits.

This usually occurs if you have already accessed some of your pension funds. For instance, if you withdrew a portion of your QROPS and purchased an annuity, the funds used to purchase the annuity can’t be transferred to the UK.

The Jurisdiction of the Overseas Pension Scheme

Some jurisdictions allow withdrawing funds from non-QROPS pension schemes and reinvesting them in a UK-based scheme, but only through a lump sum withdrawal.

For instance, if you saved for retirement in Swiss occupational or private pension funds and you are leaving the country permanently, you can receive the pension benefits as a lump sum.

Similarly, if you accrued pension benefits in a South African retirement annuity and decide to repatriate before reaching age 55 and accessing the funds, you will receive the pension value as a lump sum. This lump sum, which includes a South African tax deduction, can be placed in a UK-based scheme, provided you’ve been a non-resident in South Africa for at least three years.

Some overseas plans, such as 401(k) and IRA in the US, include specific limitations for expats who want to withdraw and reinvest their pension in a UK pension plan. For instance, you can only withdraw funds from a 401(k) without penalties when you reach age 59½. Withdrawing pension benefits before that age would trigger a 10% penalty, significantly eroding your pension fund.

Australian superannuation funds include similar limitations. You can withdraw a tax-free lump sum up to a cap of $235,000 once you reach preservation age, which ranges from 55 to 60, depending on your date of birth. The withdrawn funds can then be reinvested in a UK-based scheme.

Making an early withdrawal from an Australian super will expose the withdrawn sum to the following charges:

1. Additional income tax
2. Tax shortfall penalties
3. Interest

The Receiving Pension Scheme

UK-registered pension schemes are not obligated to accept transfers from overseas plans. Therefore, if you wish to move your foreign pension to the UK, you must select a provider that permits pension transfers under its scheme rules.

Self-invested personal pensions (SIPPs) typically accept transfers from abroad and offer tax advantages alongside flexible withdrawal options.

There is no limit on the amount that can be transferred into a SIPP from another pension plan. However, if you withdraw your overseas pension as a lump sum and then contribute the proceeds into a SIPP, this is treated as a personal contribution and subject to the UK’s annual contribution allowance of £60,000.

In contrast, direct transfers from recognised overseas schemes, such as Qualifying Recognised Overseas Pension Schemes (QROPS), do not count as contributions and instead fall under the Overseas Transfer Allowance (OTA).

The OTA is currently capped at £1,073,100, and any amount transferred above this threshold is subject to a 25% tax charge.

What Are the Benefits of Moving an Overseas Pension to a SIPP?

Standard and international SIPPs are UK-regulated personal pension schemes.

The funds you move to a SIPP are invested in various assets to enhance the growth of your retirement savings. The available investment options include:

• Cash
• Stocks
• Bonds
• Mutual funds
• ETFs

While standard and international SIPPs offer similar features and benefits, international SIPPs are more suitable for expats who may not retire in the UK and need access to a wider array of global investment opportunities.

Generally, transferring your pension to a SIPP provides the following benefits:

What Is the Difference Between SIPPs and QROPS?

If you plan to retire in the UK after transferring your overseas pension, SIPPs provide benefits designed for UK residents. The main differences between QROPS and SIPPs include:

What Are the Tax Implications of Reinvesting an Overseas Pension in a UK-Based Scheme?

The tax consequences of withdrawing and moving pension funds from an overseas scheme to the UK depend on the jurisdiction where your pension is based. For instance, withdrawing a lump sum from Swiss schemes and contributing to the UK plan is a taxable event. The tax payable is based on your residency as follows:

1. Swiss resident: If you are still a Swiss resident for tax purposes upon withdrawal, the pension lump sum is subject to the capital withdrawal tax, which varies from canton to canton.
2. Swiss non-resident: If you are no longer a Swiss resident at the time you withdraw your pension, a withholding tax is deducted, depending on your canton.

If you are a UK tax resident on the day you reinvest your funds into a UK scheme, the UK has the right to tax your pension income.

Where a direct transfer from a qualifying overseas pension scheme is made, it is tested against the Overseas Transfer Allowance (OTA). If the value exceeds £1,073,100, a 25% tax charge may apply.

However, leveraging the double taxation agreement (DTA) the UK may have with the foreign jurisdiction in which you hold your pension will protect you from being taxed twice on the same pension income.

Whether a double tax treaty is applicable depends on the specific provisions outlined in the UK’s DTA with different countries. In most cases, the country in which you are a resident has the primary right to tax your pension income.

Can You Avoid UK Taxation of Overseas Pensions Remitted to the UK?

Until 6 April 2025, individuals with a non-UK domicile could avoid UK tax on foreign income and gains, provided these were not remitted to the UK. This remittance basis of taxation has now been abolished and replaced by the Foreign Income and Gains (FIG) exemption.

To qualify for the FIG exemption, you must have been a non-UK tax resident for at least 10 consecutive tax years before returning.

The exemption applies for the first four tax years after becoming a UK tax resident again. During this period, qualifying foreign income and gains are excluded from UK taxation, even if brought into the UK.
However, eligibility for the FIG regime comes with specific restrictions. You will forfeit access to certain personal tax allowances, including:

• Income tax and capital gains tax-free allowances.
• Married couples allowance.
• Marriage allowance.
• Blind person’s allowance.

Additionally, if you lose UK tax residency during the four-year period—such as by spending sufficient time abroad—you cannot claim the FIG exemption for those tax years.

How Are QROPS Transfers to the UK Taxed?

Transferring a QROPS to a SIPP is tax-free, and there are no limits on the amount you can transfer, as the transfer doesn’t count toward your annual contribution allowance of £60,000.

Any QROPS funds transferred to a UK-registered pension scheme are not treated as contributions and do not count towards the annual £60,000 contribution allowance.

Instead, they are tested against the are measured against the following allowances:

These allowances apply to overseas pension transfers, meaning any lump sum withdrawals you make will reduce your LSA and LSDBA. Exceeding either allowance will expose you to income tax on the excess amount.

How Do You Move an Overseas Pension to the UK?

Transferring an overseas pension to the UK typically includes the following steps:

1. Confirm your overseas pension provider allows transfers: Contact your overseas pension provider to clarify whether a transfer to the UK is possible.
2. Contact a UK pension provider: Explore various SIPP providers in the UK and contact the one that matches your requirements and accepts pension transfers from abroad.
3. Gather and submit the required documents: Speak with your overseas pension provider and the UK provider to determine which documents you must obtain and complete, and submit them within the required timeframe.

Since moving a pension from a foreign jurisdiction to the UK is a complex process that requires expert knowledge of international laws, it’s advisable to work with an experienced pension transfer specialist.

They will help you navigate the process, ensuring your transfer meets all regulatory requirements and doesn’t incur any unnecessary tax charges.