Interactive Investor SIPP for Non-UK Residents: What to Consider When Living Abroad

You may be able to keep your existing ii SIPP, but the way you can use the account may change. Your country of residence can affect the services available to you, and additional charges may apply. You may also need to consider separate tax, investment and regulatory rules in the country where you live.

The options available to you can differ by country of residence, particularly where local regulatory or tax rules affect which UK pension providers, platforms or advisers can service you.

This raises a wider question for British expats living overseas: Is a UK retail SIPP still appropriate for your circumstances, or would an International SIPP be better suited to managing your pension while you live overseas?

Can You Hold an Interactive Investor SIPP If You Live Abroad?

There is an important distinction between moving overseas with an existing ii SIPP and trying to open an ii SIPP after you have become a non-UK resident.

If you opened an ii SIPP while eligible in the UK and subsequently moved overseas, you should inform ii of your change of residency and establish what services remain available from your new country of residence.

Someone who is already a non-UK resident cannot open a new ii SIPP. The relevant question for an existing customer is therefore what happens to the SIPP they already hold after their residency changes.

Being able to retain the pension does not necessarily mean you can continue using every feature in exactly the same way as you did while a UK resident.

What Happens to Your ii SIPP When You Become Non-UK Resident?

If you already hold an ii SIPP and become non-UK resident, you may be able to retain the pension, but you should expect your change of residence to affect how the account is serviced. Interactive Investor also lists an additional £4 monthly charge for non-UK residents.

The practical position can depend on your country of residence and the services ii is able to provide there. In particular, establish:

• whether any restrictions apply to trading or other account activity;
• whether you can make further personal or employer contributions;
• whether you can transfer another UK pension into your existing ii SIPP;
• whether all of your existing investments can continue to be held or traded;
• how pension withdrawals can be made while you are overseas; and
• whether your new residence affects any other services linked to your account.

The £4 monthly non-UK-resident charge is separate from the normal charges applying to the account. Charges and provider terms can change, so check ii’s current pricing and conditions for your circumstances.

The position on further contributions and pension transfers into an existing ii SIPP should also be confirmed directly with ii once you are non-UK resident. ii provides both facilities for eligible SIPP customers generally, but its public transfer information does not establish that the same facilities are available to an existing customer after becoming non-UK resident.

Interactive Investor currently provides access to UK and international investments through its SIPP and supports multiple currencies within its accounts.

Once you become a tax resident elsewhere, withdrawals from a UK pension, investment choices and retirement planning may also need to be considered under the rules of more than one jurisdiction.

Can You Continue Contributing to an ii SIPP After Moving Abroad?

Do not assume that being allowed to retain your ii SIPP means you can continue contributing to it on the same basis after becoming non-UK resident.

Confirm with ii whether it will accept further contributions from you in your country of residence.

The provider’s position is separate from the UK tax rules. Eligibility for UK pension tax relief depends on your circumstances, including relevant UK earnings and whether you continue to meet HMRC’s conditions as a relevant UK individual.

A member of a UK registered pension scheme who becomes non-UK resident can, in some circumstances, remain eligible for UK tax relief for a limited period after leaving the UK. This can apply where the individual was a UK resident at some point during the previous five tax years and was a UK resident when they joined the pension scheme.

Where the conditions are met but the individual has no relevant UK earnings, tax relief may be available on contributions up to the basic amount of £3,600 gross, subject to the applicable pension tax rules and the scheme operating relief at source.

If you want to continue contributing after moving overseas, establish both whether ii will accept the contribution and whether it qualifies for UK tax relief. You should also consider how the contribution is treated in your country of residence.

If you hold another UK pension that you want to consolidate into your existing ii SIPP, confirm separately whether ii will accept the pension transfer now that you are non-UK resident.

Can You Withdraw From an ii SIPP While Living Overseas?

Living overseas does not change the fact that your ii SIPP remains a UK pension, but taking benefits can have tax consequences in both the UK and your country of residence.

Interactive Investor provides pension drawdown and lump-sum withdrawal options through its SIPP. The UK pension rules governing access to those benefits continue to apply.

Your country of tax residence may apply its own tax treatment to pension income and lump sums. A relevant double taxation agreement, where one applies, can affect which country has taxing rights and how relief from double taxation is obtained.

Before taking benefits, establish how ii can make payments to you from your country of residence and how the withdrawal is likely to be treated there and in the UK.

Why Living Abroad Can Change What You Need From a SIPP

The suitability of a pension should not be judged solely by whether a provider will continue to hold it.

Your financial circumstances can look quite different after leaving the UK. You may earn and spend in another currency and eventually draw your retirement income somewhere other than the UK.

Your pension planning may therefore need to account for:

• your current country of tax residence;
• how that country treats UK pension income and lump sums;
• the currencies in which you invest and expect to spend;
• the investments available through your pension;
• how and where pension benefits can be paid;
• your expected retirement location;
• future moves between countries; and
• how your pension fits alongside your estate and succession planning.

These considerations are also why an expat pension review can become more important after a change of residence, especially where several jurisdictions or pension arrangements are involved.

What Is an International SIPP?

An International SIPP is a UK-registered pension arrangement used by people who live outside the UK or have more complex international circumstances.

Despite the name, an International SIPP is not an overseas pension scheme. It remains within the UK pension system and is subject to UK pension rules. The term generally describes a SIPP structured and serviced with expatriates and internationally mobile clients in mind.

This distinction matters. Transferring from a conventional UK SIPP to an International SIPP does not, by itself, mean transferring your pension outside the UK.

International SIPPs can provide access to pension trustees, administrators and investment platforms accustomed to dealing with non-UK residents. Depending on the provider and jurisdiction, they may also offer investment and currency options suited to internationally mobile clients.

This can make an International SIPP relevant to someone who wants to retain their pension within the UK pension framework but requires an arrangement capable of supporting their circumstances overseas.

It is not the only possible alternative to an existing retail SIPP. Depending on your country of residence and requirements, another UK SIPP provider that accepts and services residents of your jurisdiction may also be an option.

If you are considering both UK and overseas pension structures, our guide to transferring a UK pension to another country explains the distinction between an International SIPP and an overseas pension transfer in more detail.

The word “international” does not mean that the pension is suitable in every country. Providers have their own residency requirements, while tax and regulatory treatment depends on where you live.

Interactive Investor SIPP vs International SIPP for Expats

An ii SIPP and an International SIPP can both provide a way to hold and invest UK pension assets. They are designed with different circumstances in mind.

An International SIPP should not be assumed to offer greater investment choice or lower overall costs in every case. Its value depends on the provider selected and what you need from your pension. Any saving on currency conversion should therefore be considered alongside the total cost of the International SIPP.

For someone living overseas, however, selecting a pension arrangement with their international circumstances in mind can be an important planning consideration.

When Might an International SIPP Be Worth Considering?

An International SIPP may warrant consideration if your existing UK pension no longer fits comfortably with your life overseas.

This could be the case if ii cannot offer the services you need in your country of residence, or if restrictions make it more difficult to manage your existing SIPP as intended. You may also need a pension arrangement that can accommodate longer-term international plans.

Currency can also become more relevant. If your pension is invested primarily with the UK in mind but your future expenditure will be in euros, US dollars, dirhams or another currency, the relationship between your pension assets and future spending deserves consideration.

The cost of making those conversions should form part of the comparison. ii’s current FX charges vary by pricing plan. Core charges a flat 0.75%, Plus charges 0.75% on amounts up to £50,000 and 0.25% on amounts above £50,000, while Premium charges a flat 0.25%.

For example, converting £50,000 through an ii SIPP on the Plus plan at 0.75% would result in a £375 currency-conversion charge. Where an International SIPP provides multi-currency facilities without a separate conversion charge, this may be relevant for pension holders who expect to make substantial or repeated currency conversions.

International mobility adds another factor. An expatriate working in the Middle East today may retire in Europe or return to the UK later. Your expected retirement destination and the likelihood of further moves should therefore form part of the pension review.

For some expatriates, the costs, investment requirements, retirement income plans and cross-border tax position can make a broader review of the pension structure worthwhile.

What Are the Potential Drawbacks of an International SIPP?

An International SIPP can provide a pension structure designed with overseas residents in mind, but transferring to one will not improve every pension arrangement.

Costs can be higher than those of a straightforward retail SIPP. Depending on the arrangement, these may include trustee, administration, platform, investment and financial advice charges.

A transfer can also create additional administration and may require changes to the way your pension is invested. Existing pension benefits, guarantees or protections could be lost if they do not transfer to the new arrangement.

An International SIPP does not automatically improve the tax treatment of your pension. It remains a UK-registered pension, while the tax treatment of withdrawals can depend on your country of residence and any applicable double taxation agreement.

Provider restrictions can still apply. An International SIPP provider may work with overseas clients, but that does not mean it can accept residents of every jurisdiction.

The additional cost and complexity therefore need to be justified by a clear planning benefit.

Should You Retain Your ii SIPP or Consider an International SIPP?

There is no automatic need to transfer an ii SIPP simply because you have left the UK.

Retaining your existing SIPP may remain appropriate if ii can continue to provide the services you need, the investment options remain suitable, the costs are competitive for your circumstances and the pension continues to work alongside your overseas tax and retirement position.

An International SIPP may be worth investigating if residency restrictions materially affect how you can operate your existing pension, or if you need a structure and service model designed around more complex international circumstances. Another UK SIPP provider may also be relevant if it can provide the services you require in your country of residence.

The decision should therefore be based on what would actually change. Relevant factors include:

• the total cost of each pension;
• investment options and any assets that cannot be transferred;
• existing pension benefits or protections;
• the services available in your country of residence;
• currency requirements;
• how you intend to take retirement benefits
• your current and expected future tax residence; and
• how long you expect to remain overseas.

You should also establish whether your existing pension contains safeguarded or guaranteed benefits. Giving these up can have significant consequences.

Where the value of the defined benefit or other safeguarded benefits involved in a proposed transfer is more than £30,000, UK law generally requires the member to take appropriate independent advice from a firm with the relevant FCA permission before the transfer can proceed.

There needs to be a clear planning reason for changing pension arrangements.

International SIPP or QROPS?

Expats researching UK pension transfers often encounter both International SIPPs and Qualifying Recognised Overseas Pension Schemes (QROPS).

An International SIPP and a QROPS are not the same.

An International SIPP remains a UK pension arrangement. A QROPS is an overseas pension scheme that meets the applicable statutory conditions for a Qualifying Recognised Overseas Pension Scheme, with its scheme manager notifying HM Revenue & Customs and undertaking to meet the relevant requirements.

This distinction can have significant tax, regulatory and planning implications. A transfer to a QROPS may be subject to the 25% Overseas Transfer Charge unless an applicable exclusion applies.

The transfer is also tested against the member’s available overseas transfer allowance, and an amount transferred above that allowance can be subject to the 25% charge even where another exclusion from the Overseas Transfer Charge would otherwise apply.

For many expatriates, the decision is therefore not limited to retaining their existing ii SIPP or transferring to a QROPS. An International SIPP provides another route for someone who wants a pension structured around their overseas circumstances while retaining a UK pension arrangement.

Whether an International SIPP or QROPS should be considered depends on factors including your country of residence, pension value, retirement plans and expected future movements.

What to Check Before Transferring Out of Your Interactive Investor SIPP

A move overseas is not, by itself, a reason to transfer a pension.

Before transferring your ii SIPP to an International SIPP, establish what you already have and what the proposed arrangement would change.

Check the charges on both arrangements, including administration, platform, investment and advice costs. If you expect to convert pension assets into another currency, include the FX charges applying to your ii pricing plan in that comparison and establish whether the proposed International SIPP provides multi-currency facilities without an equivalent conversion charge. Review your existing pension for guarantees, protected pension ages or other benefits that could be lost on transfer.

Before making a decision, it is worth understanding the potential costs of transferring a pension and comparing these with the benefits you expect from the new arrangement.

The transfer itself may also be subject to pension and tax rules that need to be considered before proceeding. Our guide to UK pension transfer rules for expats covers these considerations in more detail.

If you hold other defined contribution pensions as well as your ii SIPP, it is also worth understanding the defined contribution pension transfer options available to UK expats before deciding how those arrangements should be managed.

Consider the tax position in your country of residence, including the treatment of pension withdrawals and lump sums and any relevant double taxation agreement with the UK.

Your expected retirement location matters too. If you intend to return to the UK in a few years, your requirements may differ from those of someone who expects to remain overseas throughout retirement.

Finally, consider the investment structure itself. Transferring the pension wrapper does not determine how the underlying money should be invested. Your portfolio still needs to reflect your objectives, time horizon, attitude to investment risk and retirement income requirements.