If you are thinking about moving a UK pension abroad to a Qualifying Recognised Overseas Pension Scheme, two related 25% charge mechanisms need to be distinguished. The overseas transfer charge generally applies where no exclusion applies, usually because you are not resident in the same country as the receiving scheme. If an exclusion applies but the transfer exceeds your available Overseas Transfer Allowance, currently £1,073,100, a 25% charge can apply to the excess. These are not normally cumulative charges on the same transfer, but they arise under different rules and the result depends on your circumstances. This guide explains how they work in 2026, when an exclusion applies, and the traps worth understanding before you move anything. Our illustrative QROPS charge calculator can help you picture the numbers, and if you want a clear view of your own position, we offer an initial, no-cost information-gathering conversation.
When a UK pension is transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS), the transfer must be tested under two separate parts of the legislation. First, determine whether an overseas transfer charge exclusion applies. If it does not, the 25% charge generally applies to the transferred value. If an exclusion does apply, the transfer must then be tested against your available Overseas Transfer Allowance, with a 25% charge applying to any excess. The same transfer should not be described as automatically subject to both charges: where a transfer is already subject to the overseas transfer charge because no exclusion applies, the fact that it also exceeds your allowance does not normally create a second 25% charge on the same excess. Understanding which, if either, applies is the whole basis of working out the tax, and it is what our illustrative QROPS charge calculator is built to picture.
The standard Overseas Transfer Allowance is £1,073,100 for 2026-27. This is also the standard amount shown for the Lump Sum and Death Benefit Allowance, but the two allowances are separate and should not be treated as interchangeable. Your available allowance may be higher if you hold valid transitional protection, and lower because of relevant pension benefits or transfers before 6 April 2024; the calculation depends on the type and value of earlier events and any protection, so the standard figure should not be assumed. When you transfer to a QROPS under an exclusion, the transfer is tested against your remaining allowance, and any amount above it is subject to the 25% charge under those rules.
The overseas transfer charge can be avoided where an exclusion applies at the time of the transfer. The main one applies where, at the time of the transfer, you are resident in the same country as the country in which the receiving QROPS is established; the residence position must be established under the relevant rules and supported by appropriate evidence, and no residence certificate is automatically conclusive. There are also narrower exclusions for certain occupational, overseas public service and international-organisation schemes. Importantly, the exclusion that used to allow someone resident anywhere in the European Economic Area to transfer to a QROPS elsewhere in the EEA or Gibraltar was removed for transfers requested on or after 30 October 2024; for transfers requested before that date, the former exclusion could remain relevant only where the transfer was completed by 30 April 2025. So the route many European-based expats previously relied on is gone, and for many individuals the practical question is whether they live in the same country as the scheme, although those narrower exclusions can still apply.
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For expats in places without a local QROPS, the same-country exclusion is often impossible to meet. As at the date of review, HMRC’s recognised overseas pension schemes list does not show a QROPS established in the UAE, and this should be checked against the latest list before acting, because the position can change. A UAE resident considering a QROPS established in another country would generally not meet the same-country residence exclusion, unless another statutory exclusion applies, and they cannot rely on the former EEA or Gibraltar exclusion for transfers requested on or after 30 October 2024. The result is that such a transfer would generally be subject to a 25% overseas transfer charge on the transferred value, unless another statutory exclusion or special rule applied. If the relevant transferred value were £400,000, the illustrative charge at 25% would be approximately £100,000, leaving approximately £300,000 before other costs. The statutory transferred value is not necessarily the headline fund value and should be confirmed. This is why, for many UAE-based expats, transferring is not automatically the right move, and keeping the pension in a UK arrangement is often worth comparing.
A transfer made under an exclusion is not necessarily settled for good. It can remain subject to later rules during a statutory relevant period, often covering five tax years after the transfer. The precise period depends on the date and type of transfer and must be checked under the legislation. If an exempt transfer is followed by a change of circumstances during the relevant period, the overseas transfer charge may become due on the original transfer if the statutory conditions are met. In some circumstances a charge can also be revisited or reclaimed if the conditions that would have excluded it are subsequently met, but this is subject to specific statutory conditions and deadlines and should not be assumed to follow automatically from a later move. Onward transfers within the relevant period have their own rules. The point is that a QROPS transfer is not a one-off event you can forget; where you live in the years after it can change the tax.
Where a charge applies, it is generally deducted by the transferring UK scheme before the funds move, so the money reaching the QROPS is already reduced. In some cases it can be paid from other funds instead, preserving more of the pension, but that needs planning. Beyond the charge itself, a transfer abroad carries wider considerations that are easy to overlook. Pension scheme and member reporting obligations can continue in relation to certain overseas transfers and subsequent payments, depending on the transfer, the scheme and later events; currency risk runs both ways; access can be slow; and the governance and protection of overseas schemes vary. Separately, UK tax rules can continue to apply to certain payments from transferred funds during the relevant post-transfer period; the treatment depends on the type of payment, the source of the funds and the applicable rules, and this guide does not analyse those withdrawal rules in detail. The charge is the headline, but it is not the only thing to weigh.
People assume these two rules stack, and that living abroad makes a transfer tax-free. Neither is right. For a UAE resident transferring to a QROPS in another country, a 25% overseas transfer charge will often need to be considered, unless a statutory exclusion applies, but it is one charge tested on the transferred value, not two charges piled on top of each other. Once people understand the potential charge and compare the alternatives, keeping the pension in the UK may look more attractive. Either way, understand the position properly before you move anything.
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The overseas transfer charge and the allowance charge arise under different rules and are not normally cumulative on the same transfer: where the full charge applies because no exclusion is available, exceeding your allowance does not add a second 25% charge on the same excess. Test the position under each rule rather than assuming they stack.
Relevant pension benefits or transfers before 6 April 2024 can reduce your available Overseas Transfer Allowance, and protection can raise it; the calculation depends on the type and value of earlier events. Assuming the standard £1,073,100 without checking your own history can misstate the position on a large transfer.
The route that let EEA residents transfer to a QROPS elsewhere in the EEA or Gibraltar without the charge was removed for transfers requested on or after 30 October 2024. Plans built on it no longer work, and using it as a mental model leads people badly astray.
An exempt transfer can become chargeable if you move within the relevant period so the exclusion no longer applies. People treat the transfer as done and dusted, then a later move creates an unexpected bill. Where you will live matters after the transfer, not just at the time.
For many expats, particularly in the UAE, a transfer would generally be subject to the 25% overseas transfer charge on the transferred value, and even where an exclusion applies, the wider costs and risks may outweigh the benefits. Being able to transfer is not the same as it being the right move; keeping the pension in the UK is often worth comparing.
Illustrative example only, not a real client and not a guarantee of any outcome. This illustration is simplified and omits facts that could materially change the outcome. Tom lived in Dubai and had a UK pension worth around £400,000. He had been told that moving it into a QROPS would give him more flexibility, and he assumed that because he was a non-resident, the transfer would be straightforward and tax-free. He had not heard of the overseas transfer charge or the Overseas Transfer Allowance, and did not realise the old European route had been closed for transfers requested on or after 30 October 2024.
A review explained the two separate charge mechanisms and worked through his position. As at the review date, HMRC’s recognised overseas pension schemes list did not show a QROPS established in the UAE, so Tom could not meet the same-country residence exclusion for a scheme elsewhere, and the old EEA route had been removed. On the stated assumptions, and assuming no other statutory exclusion applied, the transfer would be expected to be subject to a 25% overseas transfer charge. If the relevant transferred value were £400,000, the illustrative charge at 25% would be approximately £100,000; the statutory transferred value and final liability would need to be confirmed. Because the transfer was assumed to be subject to the overseas transfer charge on the transferred value, the example does not add a separate allowance charge on top. His wider pension history and remaining Overseas Transfer Allowance would nevertheless need to be recorded and checked, but the example does not impose a second 25% allowance-excess charge on the same transfer. The review also compared keeping the pension in a UK arrangement, using the illustrative calculator to picture the figures.
Rather than transfer on the assumption it was tax-free, Tom used the review to see the real cost and to compare it against staying in the UK, then took the decision to a qualified pension transfer specialist. A review of this kind does not recommend or arrange a transfer or guarantee a tax result; it establishes the position so the right specialists can advise.
Illustrative example, not a real client.
Clarity Global Wealth helps expats understand the real tax position on moving a UK pension abroad before they commit to anything. We help you see whether an overseas transfer charge would apply to your situation, how much of your Overseas Transfer Allowance you actually have, whether the transfer would fall above it, and how a later move could change the outcome. Just as importantly, we help you weigh whether transferring is worth it at all against keeping the pension in a UK arrangement, rather than assuming a transfer is the goal. Because pension transfers are a specialist, regulated activity, we coordinate with qualified, appropriately regulated pension transfer specialists rather than giving that advice or arranging the transfer ourselves. We offer an initial, no-cost information-gathering conversation; it is not a pension-transfer recommendation, tax calculation, suitability assessment or personal recommendation. Our illustrative QROPS charge calculator lets you picture the numbers first, and its results are illustrative only and may not reflect the statutory transferred value or all relevant exclusions, protections and historic pension events, and it does not confirm that a proposed receiving scheme is a QROPS or that a transfer is legally available, so the output should not be relied on to decide whether to transfer.
Related guides and tools: our QROPS transfer charge calculator, Transferring a UK Pension to Australia, Transferring a UK Pension to the UAE, and UK Pension Options for British Expats.
This guide is provided for general information only and reflects our understanding of the rules as at the date of publication. It is not personal financial, investment, pension or tax advice, and should not be relied upon as such. Rules and tax treatment can change and depend on your individual circumstances and country of residence. You should always seek regulated advice specific to your situation before taking action.
It is a 25% UK tax charge that generally applies when a UK pension is transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS) and no exclusion is available, usually because you are not resident in the same country as the receiving scheme. Where it applies, it is generally charged on the transferred value.
No, not normally on the same transfer. A transfer is first tested for the overseas transfer charge: if no exclusion applies, the 25% charge generally applies to the transferred value. If an exclusion applies, the transfer is instead tested against your available Overseas Transfer Allowance, with a 25% charge on any excess. Where the full charge applies, exceeding your allowance does not add a second 25% charge on the same amount.
The standard Overseas Transfer Allowance is £1,073,100 for 2026-27. This is also the standard amount shown for the Lump Sum and Death Benefit Allowance, but the two are separate. Your available allowance can be lower because of relevant pension events or transfers before 6 April 2024, or higher with valid protection.
As at the review date, HMRC’s recognised overseas pension schemes list did not show a QROPS established in the UAE, so a UAE resident transferring to a scheme elsewhere would generally not meet the same-country exclusion, and such a transfer would generally be subject to the 25% overseas transfer charge on the transferred value unless another statutory exclusion applied. Always check the current HMRC list before acting.
Yes. A transfer made under an exclusion can remain subject to later rules during a statutory relevant period, often covering five tax years after the transfer. If your circumstances change during that period so the exclusion no longer applies, the charge may become due on the original transfer if the statutory conditions are met. The precise period depends on the date and type of transfer.
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