Will pension transfers incur extra tax costs post-Brexit?

As a British expat you have the right to transfer your pension to a qualifying scheme abroad. By moving your pension pot overseas, you can gain access to a number of benefits including tax-free growth and broader investment choices. However, there are a number of risks, not least the tax implications.

Following Brexit, many non-resident Britons are concerned that pension transfer costs for expats could negate the benefits of moving your pension abroad. We have investigated these concerns and taken a closer look at how post-Brexit tax changes could impact on your pension transfer plans.

Can I transfer my pension abroad?

If you have money held in a UK pension scheme, it is likely that you have the right to transfer to another UK scheme. This is also the case for many expats hoping to transfer their pension overseas. In order to make an expat pension transfer, you will need to seek out a qualifying overseas pension scheme, known as a QROPS, which will allow you to transfer your money without being taxed. To qualify for this type of transfer, you have to meet certain criteria as determined by tax law in the UK. The three conditions each overseas scheme must meet are as follows:

The scheme must meet tax recognition conditions – The scheme must be recognised for tax purposes in its jurisdiction. It must also be open to people living in that jurisdiction, be registered with the jurisdiction’s tax authority, and tax relief must be offered on member contributions
The scheme must be regulated by the local pensions body – The scheme must be regulated by the pensions regulatory body in the jurisdiction where it is set up
The scheme must be recognised overseas – the same tax rules on pensions benefits must apply to tax residents and non-residents alike.

Will my expat pension transfer reduce my tax liabilities?

It is possible to make an expat pension transfer that legitimately reduces your liabilities on your pension and pension income. Any QROPS scheme must comply with UK law in order to be registered as such, so schemes located in low or no-tax jurisdictions can offer legal tax liability reductions.

If you are resident in a country with low or no tax, it is likely that you will have the option to reduce or completely remove your tax liabilities related to your pension. However, you will need to gain independent expert advice to ensure you are benefiting legally and sustainably from your transfer to such jurisdiction.

Pros and cons of pension transfers

As with all financial decisions, the choice to move your pension to an overseas scheme will come with its pros and cons. Some of these will be personal to you, but we have highlighted some of the most common to help you work out whether an expat pension transfer might be right for you.


  • Potential for tax-free growth beyond the UK’s lifetime allowance limit
  • Pension income can be taxed based on local laws, which could include low or no tax rules
  • Explore broad investment choices
  • Only 90% of income from a QROPS is taxable, should you return to the UK
  • Allows consolidation of multiple pensions
  • Offers the potential to increase a spouse’s pension.


  • Benefits are often over-sold by companies hoping to secure your business
  • Some schemes are run by salespeople, so you may be sold an unsuitable fund
  • Commission costs will be taken from your pension pot
  • Mistakes can lead to tax charges of up to 55%, as well as other penalties and losses
  • If the scheme’s QROPS status changes in the future, you could be fined.

Will I pay tax on my expat pension transfer?

Pension transfer costs for expats can vary significantly. Whether or not you are liable to pay pension transfer fees or tax on your transfer depends on where you have chosen to move your pension.

The location of the QROPS scheme you have selected will have an enormous impact on your tax liabilities, with the UK government stating that a move to a QROPS based in the EEA area or Gibraltar does not require you to pay tax. However, you will pay 25% tax on this transfer if you live outside of the UK, the EEA or Gibraltar, or if you move outside of these areas within five years of moving your pension. It is also possible to make a tax-free transfer to countries outside of these areas, but you must live within that country. If that is not the case, you must pay 25% tax on your pension transfer unless you move to that country within five years of transferring your pension.

The 25% transfer fee also applies to the transfer of a pension that exceeds the UK’s lifetime allowance. Currently standing at £1,073,100, this allowance dictates the maximum private pension you are allowed to save before you are taxed. By exceeding this amount, you will be liable to pay tax both in the UK and on any percentage of your pension transferred to a QROPS scheme.

How does Brexit impact pension transfer tax costs?

Unfortunately, the post-Brexit changes to pension rules are still up in the air. While many aspects of Brexit have now been resolved, the ongoing impact of Britain’s decision to leave the EU is still being felt by expats who are yet to have received many definitive answers concerning the future of expat pensions.

For now, the 2021 budget has shed some short-term light on the new rules surrounding expat pension transfers. According to the announcement, there will be no changes to the tax conditions surrounding QROPS transfers within the EU/EEA. Similarly, the UK’s 25% overseas transfer charge does remain in place for any pension transfers to non-EU/EEA jurisdictions. For those who are planning to transfer a pension overseas, this should mean no imminent changes to the tax laws. However, if a pension transfer is a long-term plan for you, you may need to consider the possible impact any future changes could have on your financial plans.

While the news that there will be no immediate change has been welcomed, concerns have been raised for expats with UK pension providers and linked bank accounts who are yet to transfer overseas. If you are operating via a UK bank account, you should be informed if your account is likely to close. However, while post-Brexit changes to pension and tax rules remain uncertain, it is important to contact an independent professional who can provide you with tailored expert advice based on your personal circumstances.

Still concerned about extra costs?

We hope our guide has helped you gain a clearer idea of where you might stand in terms of post-Brexit changes to pension transfer costs for expats. As stated above, however, we are only able to provide general advice that may overlook some of your personal circumstances. To find out more about how Brexit has impacted pension transfers relevant to you – and whether you should consider transferring your pension overseas – please contact a financial adviser.

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