There Are Ways To Save Tax On Your Pension

If you have not been resident in the UK for five years or intend not to be resident for five years, transferring your pension out of the UK can result in large UK tax savings.

This can be achieved through a vehicle called a Qualifying Recognised Overseas Pension Scheme (QROPS). For the QROPS to be approved by the UK Government it also has to be approved and regulated by the tax authorities in the jurisdiction where it is located.

Once an approved scheme is set up, the UK Government allows transfers from certain UK pension schemes into a QROPS tax free.

The Benefits Of A QROPS ?

  • Retirement age is 55 – 75 but this can be reduced to 50 on certain medical grounds;
  • The full amount of funds remaining in the scheme at the time of your death will be distributed to your nominated beneficiaries free of UK tax provided that you have not been resident in the UK for 5 years;
  • Pension rights in QROPS are not subject to UK Inheritance Tax;
  • If you plan to live abroad you can pay into a QROPS scheme prior to leaving the UK;
  • After 5 full tax years of not being a resident in the UK your scheme is not subject to the UK pension rules;
  • There is more flexibility in how your pension funds are invested;
  • 50% of the value of the Member's fund can be invested in residential property and it is not restricted to property in Gibraltar.
  • Gibraltar is within the EU Jurisdiction.

How Long Will It Take To Process A QROPS Application ?

The process will normally take 25 working days. However, it may vary slightly due to the influx of forms received by HMRC at one certain time.

QROPS And Lifetime Allowance

A transfer to a QROPS will be a benefit crystallisation and will give rise to a lifetime allowance charge if the amount transferred goes beyond the individual's lifetime allowance which at present (2008/09 tax year) amounts to £1.65 million and which will rise to £1.8 million in 2010/11.


The costs associated with establishing and maintaining a QROPS will be as follows:

A Formation Fee

The cost for transferring the pension in to a QROPS is a minimum of £5,000 or 1% of the pension fund.

An Annual Management Fee

The annual administration charge of the pension fund will amount to 0.5%.

There will NOT be an option to withdraw 100% of the pension fund even after the five year non UK residency period. We are, as a firm adopting HMRC's view in that a pension is to provide benefits for the life time of the pensioner.

At Hassans we can offer expert advice on how to transfer your current UK scheme into a QROPS. We will provide the following:

  • A Personal Pension Plan;
  • Pension Trustees;
  • Pension Administrators; and
  • We will liaise directly with HM Revenue & Customs with regard to the transfer of your pension across to Gibraltar.

The advice is given by qualified lawyers and tax advisors. We will provide the best solution to your individual situation and advise accordingly. We also provide full tax planning if you intend to move abroad or have already done so.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.