QROPS 5 Year Tax Rule

Hi, I moved permanently from UK to India in April 2022. I am now in the process of transferring a personal pension from a UK provider to an Indian QROPS. Is it correct that if I withdraw income from the QROPS within five years after the transfer I will be subject to UK income tax? (I am already over 55, and I know the conditions with regard to transfer charges).

Hi,

You need to be a non UK resident for 5 years to have the full benefits of the QROPS system. If you withdraw funds within these 5 years you are liable to UK tax.

Thank you.

Hi, I moved to Switzerland permanently 17 years ago and am planning to transfer my UK pension to a QROPS in Switzerland when I reach 65 early next year. The QROPS manager tells me that usually the pension must be kept in the QROPS for a minimum of 5 years but that there are exceptions to this rule. What are those exceptions and would my situation qualify?

Hi cop2hogs,
Please refer to guidance at:
Overseas pensions: pension transfers
Thank you. 

Hi, I have moved my pensions into a QROPS in Canada about 3 years ago. Do I still need to wait 5 years before accessing the pension even if I turn 65 within the 5 years?

You can access your QROPS from age 55 onwards. The 5 year rule refers to UK tax liability.

Hi Tammy,

To obtain full QROPS benefits you must leave the UK for more than 5 full tax years. If you wish to access your QROPS in less than 5 years then there can be significant tax issues.

In particular, if you access a large amount of the fund while outside of the UK and then return to live in the UK, all within a 5 year period.

Doing so may mean that you fall foul of an anti avoidance wording in ITEPA 2003 s.574A which can hit a pension saver even if there was no intent to avoid tax.

According to the wording, when someone withdraws flexi-access pension payments during a non-UK residency, should the non UK residency not exceed 5 years, then any “relevant withdrawals” are to be treated under foreign pension tax rule as if they arose in the year of return and s.576A (7) specifically overrides any double tax treaty.

A Relevant Withdrawal is an amount (other than an annuity) that the member is paid from the member’s drawdown pension fund or flexi-access drawdown fund.

If the amount exceeds £100,000 as a withdrawal then the nature of that payment will determine if the QROPS holder is liable to UK Income Tax:

If the payment had an element of Pension Commencement Lump Sum (PCLS) then the threshold is not likely to be exceeded and HMRC will have no interest in this.
However, if the £100,000 was an income withdrawal then any amount above this will be taxable by HMRC.

Thank you.

I moved to Australia permanently in Sep 2020. Had transferred my UK pension to QROPS in Australia. I have now reached age 65 and met the regulated release condition of Australia QROPS pension requirements. If I withdraw from the Australian QROPS, e.g., large lump sum (over GBP 250K) or regular draw down (say annual GBP 30K, they are not annuity), would I be caught by the 5 years rules, and if so does that mean I have to file an income tax return with HMRC.

Hi Tanny

To obtain full QROPS benefits you must leave the UK for more than 5 full tax years.
If you wish to access your QROPS in less than 5 years then there can be significant tax issues.
In particular, if you access a large amount of the fund while outside of the UK and then return to live in the UK, all within a 5 year period.
Doing so may mean that you fall foul of an anti avoidance wording in ITEPA 2003 s.574A which can hit a pension saver even if there was no intent to avoid tax.
According to the wording, when someone withdraws flexi-access pension payments during a non-UK residency, should the non UK residency not exceed 5 years, then any “relevant withdrawals” are to be treated under foreign pension tax rule as if they arose in the year of return and s.576A (7) specifically overrides any double tax treaty.
A Relevant Withdrawal is an amount (other than an annuity) that the member is paid from the member’s drawdown pension fund or flexi-access drawdown fund.
If the amount exceeds £100,000 as a withdrawal then the nature of that payment will determine if the QROPS holder is liable to UK Income Tax:
If the payment had an element of Pension Commencement Lump Sum (PCLS) then the threshold is not likely to be exceeded and HMRC will have no interest in this.
However, if the £100,000 was an income withdrawal then any amount above this will be taxable by HMRC.

Thank you

My U.K. pension is crystallised pension. I took 25% tax free cash from the pension when I was a U.K. tax resident. I moved to Australia and became an Australian tax resident in Sep 2020. The crystallised pension was transferred to QROPS in Australia after I became an Australian tax resident. As of today I am still within 5 years of non-U.K. tax resident. I like to draw down the Australia QROPS in small amount, e.g. GBP30K p.a. while I’m within the 5 years non-U.K. tax resident period. I meet the Australian QROPS pension release rules. My questions - 1. Would such drawdown/withdrawal be subject to U.K. income tax? 2. Would I have to file a U.K. tax return to report such drawdown in the U.K. tax year of the drawdown? Thanks

Hi Tanny,

You would not need to complete a Self Assessment Tax Return. Drawdown/withdrawal of your pensionwould not be subject to UK tax, but will be subject to Australian tax.  

A transfer to another QROPS would need to be reported to HMRC.

Overseas pensions: pension transfers

Thank you.

Hello, I understand the 5 year rule and the fact that the QROPS scheme operator will have to provide you information for 10 years about my whereabouts. Can you clarify if there is a Tax liability if I transfer my UK Pensionfund to a QROPS in Switzerland where I am a tax resident. If I leave Switzerland after 6 years to move to SIngapore (so full 5 UK tax years I was a Swiss tax resident) is there any UK tax involved ?

Hi HUBERT Hammer

No, as you have met the condition of the 5 years being a non UK resident.

Thank you

Hi Team, I move to Australia in 2010 and moved two private pensions through QROPS to a self managed super fund. This was done in August 2019 and want to move from the qrops recognised fund to a standard retail super fund. Under the 5 year rule, my understanding is this requires 5 full UK tax years, can I confirm based on the date above August 2019 I can do this after April this year 2024 without tax implications?

Hi, I am 60 and have been an Australian resident for over 20 years. I have an International QROP (Malta) that was started in 2016. Can I transfer this fund to a standard retail (non-QROPS) Australian Superannuation fund without UK tax implications. If not how long does the QROP have to exist before I can do that? Thanks

Hi Andrew Blair,

As August 2019 falls into the 2019 to 2020 tax year, no. 

Thank you.

Hi Michael Rose,

You would need to discuss this with the actual pension provider to see if it can be done. You can see further guidance here:

Transferring your pension

Thank you.

Thanks for your response. It can be done . I’m trying to understand the UK tax implications of transferring from a QROP to a non QROP pension fund after 8 years. I obviously don’t want to do this if there is a large tax penalty. The pension company were not sure and said I should contact HMRC

Hello there. Moved from the UK to New Zealand in 2015 and have been tax residents only in New Zealand since 2016. Then, transferred a UK pension to a QROPS in February 2019. In September 2024, turning 55 years of age, am I correct in thinking there is no UK tax obligations for taking a 25% lump sum? Thank you 

Name removed admin 

Hi,
Please refer to:
PTM112010
Thank you.