Transferring Your UK Pension to a QROPS in the UAE—A Detailed Guide

A well-structured pension transfer helps you avoid unnecessary tax charges, access a broader range of investment options, and manage your funds in a more favourable currency.

In this guide, we’ll explore whether you can transfer your UK pension to a QROPS in the UAE and offer alternatives to QROPS. We will also discuss the rules for transferring your UK pension and potential tax benefits you should be aware of before you move to Dubai.

Can You Transfer Your UK Pension to a QROPS in the UAE?

At present, a UK pension transfer to a qualifying recognised overseas pension scheme (QROPS) in the UAE is not possible. This is due to the fact that no UAE-based pension schemes are currently approved by His Majesty’s Revenue and Customs (HMRC).

Overseas pension schemes seeking the QROPS status must meet specific regulatory standards that allow them to accept pension transfers from the UK.

The UK government website publishes an updated list of approved QROPS providers on the 1st and 15th of each month; as of the most recent update, the list does not include any UAE-based schemes.

You can transfer your pension to a foreign pension scheme that isn’t on the list, but doing so may trigger the following penalties:

1. 40% tax charge on the transferred amount (classified as an unauthorised payment)
2. An additional 15% charge if the amount you transfer surpasses 25% of the pension value

If you decide to transfer your UK pension to the UAE indirectly by moving it first to a QROPS in another jurisdiction, you may be liable for the 25% Overseas Transfer Charge (OTC).

To avoid the OTC, both you and the receiving QROPS must be tax resident in the same jurisdiction at the time of the transfer. Since there are no QROPS schemes based in the UAE, this condition cannot be met, and the 25% OTC will apply.

Previously, transfers to QROPS in the European Economic Area (EEA) or Gibraltar were excluded from the OTC.

These exemptions ceased to be valid on 30 October 2024, which means that the only way to avoid the OTC is to transfer your pension to a QROPS based in the country where you are a resident.

Since there are no QROPS schemes in the UAE, transferring your pension without significant penalties is not possible. The charges can substantially impact your pension benefits, which is why careful consideration of your options is necessary.

A More Suitable Alternative—UK and International SIPP

Two of the most suitable QROPS alternatives for UK expats are:

1. A UK SIPP: A personal pension account designed for UK residents, making it suitable for expats who plan to repatriate in the future.
2. An international SIPP: A pension scheme tailored specifically to the needs of UK expats residing abroad.

Both domestic and international Self-Invested Personal Pension (SIPPs) are structured to provide individuals with more flexibility and control over their retirement fund investments. They are regulated by the Financial Conduct Authority (FCA) and approved by HMRC, ensuring regulatory oversight and security.

Transferring your UK pension to a SIPP offers several advantages, including:

• Flexible access to funds from age 55 (57 as of 2028)
• Tax relief on contributions and tax-free investment growth
• Access to a wide variety of assets
• Tax-free pension benefits transfer to beneficiaries if you pass away before age 75
• Lower fees compared to transferring a UK pension to a QROPS
• Simplified pension management through pension consolidation into a single plan
• Transparent pricing structure as SIPPs use only clean share classes (fund variants that exclude commissions)

Benefits of an International SIPP for UK Expats

An international SIPP provides several additional benefits beyond those of a UK SIPP, such as:

While they have the same core pension structure as domestic SIPPs, international SIPPs are better suited for non-UK residents who plan to retire abroad while maintaining their pension within the UK’s regulatory framework.

However, understanding the tax implications of the pension transfer process involves significant regulatory complexity. It is therefore recommended that you discuss your options and financial objectives with experienced pension transfer specialists.

At Titan Wealth International, our advisers offer personalised guidance to help you determine whether a pension transfer aligns with your long-term financial objectives. We can conduct a thorough assessment of your financial circumstances while ensuring full compliance with HMRC and FCA regulations.

Our expertise mitigates risks, optimises tax efficiency, and assists you in navigating the intricate rules surrounding pension transfers to the UAE, giving you greater confidence in your decision.

The UAE’s Golden Pension Scheme

The Golden Pension Plan (GPP) is a structured UAE pension scheme for expats working in the UAE’s private sector. It is managed by National Bonds, a Shari’a-compliant savings and investment company owned by the Investment Corporation of Dubai.

This voluntary scheme offers an alternative or a supplement to traditional end-of-service benefits, combining mandatory employer contributions and flexible employee investment options, as described in the table below:

The funds from the plan are allocated to bank deposits, sukuks (Sharia-compliant financial instruments), and the company’s real estate investments. All investment options under the GPP are licensed and regulated by the Securities and Commodities Authority (SCA) and the Ministry of Human Resources & Emiratisation (MOHRE).

Employees benefit from full visibility of their investments through National Bonds’ tracking tools. Voluntary contributions to the scheme can be withdrawn at any time without restrictions, but employer contributions and investment gains require employer approval before withdrawal.

While you cannot transfer your UK pension to the UAE Golden Scheme, you can accrue wealth alongside your end-of-service gratuity through additional voluntary contributions.

You do not need a retirement visa to qualify for the GPP. A retirement visa is only required if you plan to continue living in the UAE after you reach the retirement age of 55.

Understanding the Tax Benefits of Transferring Your UK Pension to the UAE

The UAE, particularly Dubai, continues to be a highly attractive destination for expats. One of the primary reasons for this is the favourable tax environment for individuals with tax residency in the UAE, which includes exemptions from:

1. Personal income tax
2. Inheritance tax
3. Investment taxes
4. Real estate taxes
5. Capital gains tax

Another benefit is that the United Arab Emirates has signed double taxation agreements with over 130 nations, including the UK. Double taxation agreements prevent the same income from being taxed twice, which facilitates cross-border trade and investment.

Under the UK–UAE DTA, the UK waives its right to tax pension income received by UAE residents, granting exclusive taxation rights to the UAE.

Since the UAE does not impose personal income tax, you are not required to pay taxes on your pension benefits. As a result, your UK pension funds can be withdrawn tax-free.

Note that some UK public sector pension plans, such as the National Health Service (NHS) pension scheme, remain subject to taxation.

Additionally, if you return to the UK within five full tax years, you may have to pay UK tax on income received while residing abroad, which includes pension withdrawals.

Since the UAE does not impose inheritance tax, you can pass your wealth without substantial local tax burdens. However, UK Inheritance Tax (IHT) may still apply if you are deemed UK-domiciled under the UK’s long-residency rules.

These rules apply if you have been a UK tax resident for at least 15 of the past 20 years, or if you return to the UK within five full tax years of emigration.

For expats, understanding these rules is crucial for effective cross-border succession planning.

How To Qualify as a UAE Tax Resident

To access the tax advantages available in the UAE, you must qualify as a UAE tax resident by meeting at least one of the following criteria:

• Your primary residence and financial interests are in the UAE.
• You spend 90+ days in the UAE within 12 months and are a UAE citizen, resident, or GCC national with a permanent home or business in the UAE.
• You spend 183+ days in the UAE within 12 months.

What If You Already Have a QROPS?

If you requested a pension transfer to a QROPS before 30 October 2024, you may still benefit from the Overseas Transfer Charge (OTC) exemption, even if the scheme is not based in the UAE.

However, to retain the exemption, the transfer must have been completed before 30 April 2025, and both you and the QROPS must have been tax resident in the same jurisdiction at the time of transfer.

In case you already hold a QROPS, you can choose to transfer your pension to an international SIPP. Note that some QROPS schemes may include exit fees, which vary depending on the provider and the jurisdiction governing the QROPS.

It is recommended that you consult a qualified financial adviser who can evaluate your financial circumstances and help you determine the most suitable pension transfer strategy.

By aligning your pension options with your retirement objectives, residency intentions, and current financial plans, an experienced financial adviser can guide you toward an informed decision that supports both long-term security and tax efficiency.