HELPLINE: 
When transferring a UK pension to a QROPS, bear in mind the tax implications of Britain’s new overseas transfer allowance (OTA), says financial adviser Daniel Butcher.
UK pension holders in France should be mindful of the overseas transfer allowance (OTA), which was introduced by the British government on 6 April 2024. The OTA is one of three new pension schemes replacing the abolished Lifetime Allowance (LTA).
Set at £1,073,100 for the tax year 2024/25, UK pension holders exceeding this limit when transferring funds to a QROPS (Qualifying Recognised Overseas Pension Scheme) will pay a 25% charge on the excess amount.
“If you transferred funds from your pension overseas before 6 April 2024, your allowance might be different under the previous lifetime allowance rules,” said Daniel.
He added: “The UK government is still finalising the details so if these scenarios could apply it’s really important to speak to a regulated financial adviser and to sit tight until the exact tax implications are clear.”
It has been an erratic time for overseas pension transfers. The LTA dropped to 0% in April 2023, then removed a year later as the OTA and two other schemes were introduced. Ensuing legislation errors led HMRC to advise QROPS holders to delay transfers from drawdown or pre-April 2006 benefits until they were amended.
“Pension holders shouldn’t have to wait too much longer as these problems are being resolved and should be laid into law next month,” said Daniel. “So those waiting to make a move can start thinking about a transfer.”
There are numerous benefits tied to transferring to a QROPS, such as potential tax savings, currency flexibility, greater control over how and when you access your pension, better options for inheritance planning – and protection from more UK law changes.
“Depending on a client’s unique needs and desired outcome there are many different variables we can work with to optimise income,” said Daniel. “At DTB Wealth Management we’re experienced at navigating legal and tax rules in the UK and France to keep our clients’ financial goals on target and minimise the impact of new regulations.”
