Employment Tax

Qualifying recognised overseas pension schemes (QROPS)

Produced by Tolley in association with John Hayward
  • 22 Dec 2021 14:32

The following Employment Tax guidance note Produced by Tolley in association with John Hayward provides comprehensive and up to date tax information covering:

  • Qualifying recognised overseas pension schemes (QROPS)
  • A pension scheme
  • An OPS
  • The ‘regulation requirements’ test
  • The ‘tax recognition’ requirement
  • ROPS
  • The benefits exemption test
  • The conditions
  • The 2015 changes
  • More...

Qualifying recognised overseas pension schemes (QROPS)

Until 6 April 2006, transfers from UK pension schemes overseas were relatively unusual. This was because of HMRC restrictions and the fact that some transfers overseas required HMRC consent.

It is possible to make transfers from UK registered pension schemes to overseas pension schemes (OPS) so long as they are registered with HMRC as QROPS. A transfer from a UK registered pension scheme to a QROPS is a ‘recognised transfer’ and so does not involve any tax charge as it is an ‘authorised payment’. It is nonetheless an ‘event’ that a UK pension scheme administrator must report to HMRC. However, transfers to QROPS from 9 March 2017 may be subject to an overseas transfer tax charge at 25% (see below).

Although, generally, the term QROPS is used, from an HMRC perspective the term ROPS is often used instead because the statutory definitions are concerned with what constitutes a ROPS. A QROPS is simply an ROPS which has given certain undertakings to HMRC.

HMRC publishes a list twice a month of what it understands to be ROPs at the appropriate time, but does not provide any guarantee that the scheme is actually one that meets the necessary conditions to be an ROPS.

There are four tests that a scheme must meet in order to be a QROPS. It must:

  1. be a pension scheme

  2. be an OPS as defined by the relevant UK legislation

  3. be a recognised overseas pension scheme (ROPS)

  4. give the necessary undertakings in order to be

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