244AAOverseas transfer charge: introduction

A charge to income tax, to be known as the overseas transfer charge, arises under the following sections—

a

section 244AC (overseas transfer charge: transfers where no exclusion applies);

b

section 244IA (overseas transfer charge: transfers exceeding available allowance).

244ABOverseas transfer charge: interpretation

1

In this section and in sections 244AC to 244N—

• “former QROPS” means a scheme that has at any time been a QROPS;

• “onward transfer” means (subject to subsection (3)) a transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement under a QROPS or a former QROPS in relation to a member so as to become held for the purposes of, or to represent rights under, an arrangement under another QROPS in relation to that person as a member of that other QROPS;

• “original transfer”, in relation to an onward transfer, means (subject to subsection (3))—

  1. a

     the recognised transfer or relieved relevant non-UK scheme transfer in respect of which the following conditions are met—

     1. i

        it is from a registered pension scheme or a relieved relevant non-UK scheme to a QROPS,

     2. ii

        the sums and assets transferred by the onward transfer directly or indirectly derive from those transferred by it, and

     3. iii

        it is more recent than any other recognised transfer or relieved relevant non-UK scheme transfer in respect of which the conditions in sub-paragraphs (i) and (ii) are met, or

  2. b

     where there is no such recognised transfer or relieved relevant non-UK scheme transfer, the relevant transfer (see paragraph 1(6) of Schedule 34) in respect of which the following conditions are met—

     1. i

        it is from a relevant non-UK scheme (see paragraph 1(5) of Schedule 34),

     2. ii

        it is a transfer of the whole or part of the UK tax-relieved fund (see paragraph 3 of Schedule 34) of a member of the scheme,

     3. iii

        it is to a QROPS, and

     4. iv

        the sums and assets transferred by the onward transfer directly or indirectly derive from those transferred by it;

• “QROPS” means a qualifying recognised overseas pension scheme;

• “recognised transfer” has the meaning given by section 169;

• “the relevant period” means—

  1. a

     in the case of a recognised transfer or a relieved relevant non-UK scheme transfer made on 6 April in any year, the five years beginning with the date of that transfer,

  2. b

     in the case of any other recognised transfer or relieved relevant non-UK scheme transfer, the period consisting of the combination of—

     1. i

        the period beginning with the date of the transfer and ending immediately before the next 6 April, and

     2. ii

        the five years beginning at the end of that initial period,

  3. c

     in the case of an onward transfer, the period—

     1. i

        beginning with the date of the transfer, and

     2. ii

        ending at the end of the relevant period for the original transfer (see paragraphs (a) and (b) or, as the case may be, paragraphs (d) and (e)),

  4. d

     in the case of a relevant transfer that—

     1. i

        is made on 6 April in any year, and

     2. ii

        is the original transfer for an onward transfer,

     the five years beginning with the date of the relevant transfer, and

  5. e

     in the case of a relevant transfer that—

     1. i

        is made otherwise than on 6 April in any year, and

     2. ii

        is the original transfer for an onward transfer,

     the period consisting of the combination of: the period beginning with the date of the relevant transfer and ending immediately before the next 6 April; and the five years beginning at the end of that initial period;

• “relieved relevant non-UK scheme” means a pension scheme that is a relevant non-UK scheme within the meaning of sub-paragraph (5) of paragraph 1 of Schedule 34 in respect of which at least one of paragraphs (a) to (c) of that sub-paragraph applies;

• “relieved relevant non-UK scheme transfer” means a transfer, other than a block transfer, of sums or assets held for the purposes of, or representing accrued rights under, an arrangement under a relieved relevant non-UK scheme in relation to a relieved member of the scheme so as to become held for the purposes of, or to represent rights under, an arrangement under a QROPS in relation to that person as a member of that QROPS;

• “ring-fenced transfer fund”, in relation to a QROPS or former QROPS, has the meaning given by paragraph 1 of Schedule 34.

2

For the purposes of the definition of “relieved relevant non-UK scheme transfer”—

a

a transfer is “a block transfer” in relation to a member of a pension scheme if it involves the transfer, in a single transaction, of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the scheme which relate to the member and at least one other member of the scheme;

b

an individual is “a relieved member” of a relieved relevant non-UK scheme if—

i

any of the contributions in respect of which relief has been given as mentioned in paragraph (a) or (b) of the definition of “relevant non-UK scheme” in paragraph 1(5) of Schedule 34 were contributions paid by or on behalf of, or in respect of, the individual, or

ii

the individual is the member, or one of the members, who has been exempt from liability to tax as mentioned in paragraph (c) of that definition.

3

Where, apart from this subsection, there would be different original transfers for different parts of an onward transfer, each such part of the onward transfer is to be treated as a separate onward transfer for the purposes of this section and sections 244AC to 244N.

244ACOverseas transfer charge: transfers where no exclusion applies

1

The overseas transfer charge arises where—

a

a transfer within subsection (2) is made to a QROPS, and

b

the transfer is not excluded from the charge by or under any of sections 244B to 244H.

2

A transfer to a QROPS is within this subsection if it is—

a

a recognised transfer,

b

a relieved relevant non-UK scheme transfer, or

c

an onward transfer that is made during the relevant period for the original transfer.

3

Sections 244B to 244H are subject to section 244I (circumstances in which exclusions do not apply).

244IAOverseas transfer charge: transfers exceeding available allowance

1

The overseas transfer charge arises where—

a

a transfer to a QROPS is made that is—

i

within section 244AC(2)(a) or (b), or

ii

an onward transfer within section 244AC(2)(c) in relation to which the original transfer is a transfer within paragraph (b) of the definition of “original transfer” (see section 244AB(1)),

b

the transfer is excluded from the charge under section 244AC by or under any of sections 244B to 244H, and

c

the transferred value (determined in accordance with section 244K) exceeds the amount of the member’s overseas transfer allowance that is available on the making of the transfer.

2

The overseas transfer charge also arises where—

a

a transfer of the kind mentioned in subsection (1)(a) is made to a QROPS,

b

a charge under section 244AC (“the original charge”) arises in relation to the transfer,

c

a person liable to the original charge becomes entitled under section 244M to a repayment in respect of the original charge, and

d

the transferred value (determined in accordance with section 244K) exceeds the amount of the member’s overseas transfer allowance that is available on the making of the transfer.

244IBMember’s overseas transfer allowance

A member’s “overseas transfer allowance” is an amount equal to the member’s lump sum and death benefit allowance.

244ICAvailability of member’s overseas transfer allowance

1

This section is about the availability of a member’s overseas transfer allowance on the making of a transfer of the kind mentioned in section 244IA(1)(a) (“the current overseas transfer”).

2

If no transfer of the kind mentioned in section 244IA(1)(a) has been made in relation to the member before the current overseas transfer, the whole of the member’s overseas transfer allowance is available.

3

Otherwise, the amount of the member’s overseas transfer allowance that is available is—

a

so much of that allowance as is left after deducting the previously-used amount, or

b

if none is left after deducting that amount, nil.

4

For this purpose “the previously-used amount” is the aggregate of the transferred value (determined in accordance with section 244K) of each transfer (if any) of the kind mentioned in section 244IA(1)(a) that has been made in relation to the member before the current overseas transfer.

5

A reference in this section to a transfer of the kind mentioned in section 244IA(1)(a) is to a transfer made on or after 6 April 2024.

244JAAmount of charge

1

Where the overseas transfer charge arises under section 244AC in relation to a transfer, the charge is—

a

in a case where the transfer is an onward transfer and the overseas transfer charge under section 244IA(1) arose in relation to the original transfer, 25% of so much of the transferred value of the original transfer as did not exceed the amount of the member’s overseas transfer allowance that was available on the making of the original transfer;

b

in any other case, 25% of the transferred value.

2

Where the overseas transfer charge arises under section 244IA in relation to a transfer, the charge is 25% of so much of the transferred value as exceeds the amount of the member’s overseas transfer allowance that is available on the making of the transfer.