Managing a UK pension from the EU, Switzerland, or the USA? It’s a maze of cross-border tax, currency risk, and complex rules. Many expats leave their funds “frozen” or underperforming, unaware of their options or the risks.
This definitive Q&A guide demystifies SIPPs for expats, providing clear, expert answers on tax, contributions, withdrawals, and the crucial differences between a SIPP and a QROPS. We also cover the urgent inheritance tax changes coming in 2027.
Read on to discover how to take control of your UK pension and build a secure financial future abroad.
If you’ve worked in the UK and now live abroad, managing your old pension can be a challenge. Navigating cross-border tax, currency risk, and complex rules often leaves your retirement funds “frozen” and underperforming. This guide provides the clear answers you need.
This definitive Q&A guide is designed to provide clear, expert answers to your most pressing questions about using a Self-Invested Personal Pension (SIPP) as a non-UK resident.
While this guide is comprehensive, every expat’s situation is unique.
For a personalised assessment of your UK pensions and a clear strategy tailored to your country of residence, schedule a complimentary consultation with a PCC Wealth expat pension specialist today.
Understanding the basic structure and purpose of a Self-Invested Personal Pension is the first step towards taking control of your retirement savings from overseas.
A SIPP is a UK-registered personal pension approved by HM Revenue & Customs (HMRC). Its defining feature is the high degree of control and investment flexibility it offers.
Unlike traditional pensions where the provider makes all investment decisions, a SIPP allows you to choose and manage your own investments. Functionally, it operates as a tax-efficient “wrapper” for your retirement savings.
Once inside the SIPP, your investments can grow free from UK Capital Gains Tax (CGT) and UK Income Tax, allowing for more effective compounding.
You can typically begin to access the funds from age 55 (rising to 57 from 2028).
We have a full detailed article explaining what SIPPs are here.
For an individual who has left the UK, old workplace pensions can become difficult to manage. Consolidating these scattered pots into a SIPP offers several compelling advantages for expats:
The term “International SIPP” is a practical one, not a legal one.
It’s a standard UK SIPP offered by a provider who specialises in meeting the administrative and practical needs of non-UK residents.
Many mainstream UK pension companies are unwilling or unable to service clients who live abroad. Key features that distinguish an International SIPP provider include:
You can find out more about international SIPPs in our complete guide here.
One of the most common areas of uncertainty for expats is whether they can still open or pay into a UK pension once they have moved overseas.
Yes, in principle, any individual with existing UK pension benefits can open a SIPP while living abroad.
The critical factor is finding a specialist “International SIPP” provider who explicitly welcomes applications from expats in your country of residence.
For US residents, it is crucial to be aware of stringent IRS reporting requirements. Holding a SIPP will likely require you to complete several annual informational filings, including:
Failure to file these can result in severe penalties, so specialist cross-border tax advice is essential.
You can find out more about SIPPs when living in the USA here.
Yes, but the rules regarding UK tax relief are restrictive for most non-residents.
For most expats, a SIPP’s primary purpose shifts from a wealth accumulation tool to a wealth management tool for existing UK pension funds.
The ability to receive a top-up from the UK government on your pension contributions is limited but not eliminated for non-residents.
The choice between a SIPP and a QROPS is one of the most significant strategic decisions an expat can make.
The core distinction is that a SIPP keeps your pension in the UK system, while a QROPS moves it to an offshore one. This has wide-ranging implications, as shown in the table below.
Feature | Self-Invested Personal Pension (SIPP) | Qualifying Recognised Overseas Pension Scheme (QROPS) |
Jurisdiction & Regulation | UK-registered pension scheme. Regulated by the UK’s Financial Conduct Authority (FCA).6 | Offshore pension scheme in a jurisdiction like Malta or Gibraltar. Regulated by the local authority in that jurisdiction.23 |
Consumer Protection | Protected by the UK’s Financial Services Compensation Scheme (FSCS).8 | Protection depends on the compensation schemes, if any, in the host country.8 |
Tax on Transfer | No transfer charge. A transfer from one UK scheme to another is not a taxable event. | A 25% Overseas Transfer Charge (OTC) may apply unless specific exemptions are met.24 |
Tax on Withdrawals | Subject to UK income tax at source, unless a Double Taxation Agreement applies and an “NT” tax code is secured from HMRC.10 | Income is typically paid gross (without tax deducted at source). Tax is determined solely by the rules in your country of residence.25 |
Cost | Generally lower establishment and annual administration fees.10 | Typically higher fees, often involving an offshore investment bond structure which adds another layer of charges.25 |
UK Inheritance Tax (IHT) | Currently outside the IHT net. Expected to be brought within the scope of UK IHT from April 2027.11 | Currently outside the IHT net. Also expected to be brought within the scope of UK IHT from April 2027 for UK-domiciled individuals.11 |
The UK government’s decision to abolish the Lifetime Allowance (LTA) from April 2024 was a game-changer.
It removed the single most compelling reason for many expats to undertake a complex and sometimes costly QROPS transfer.
With the LTA threat gone, a SIPP is now often the superior choice in these common scenarios:
The pension landscape has changed. Is your current strategy still the right one? Request a free, no-obligation review of your existing pension structure.
Do You still Have A Questions About SIPPs?
This is the most critical and complex area for any expat managing a UK pension.
This is governed by the Double Taxation Agreement (DTA) between the UK and your country of residence. Most treaties grant the sole right to tax private pension income to your country of residence.
To benefit from this, you must formally apply to HMRC for an “NT” (No Tax) code. Once approved, this instructs your SIPP provider to pay your income gross, with no UK tax deducted. You are then responsible for declaring that income on your local tax return.
No. The fundamental purpose of a DTA is to ensure you do not pay tax on the same income twice. The treaty allocates taxing rights to one country (usually your country of residence for pensions), meaning the other country gives up its right to tax that income.
For private pensions, which include SIPPs and most workplace pensions, the DTA almost invariably contains a clause stating that the pension “shall be taxable only in” the country where the individual is resident. This means the UK effectively gives up its right to tax the income of a non-resident living in a treaty country.
It is important to distinguish this from UK government service pensions (e.g., Civil Service, Armed Forces, teachers, police). Under most DTAs, these specific pensions remain taxable only in the UK, irrespective of where you live.
This is one of the most misunderstood aspects of expat pension planning. The UK allows you to take 25% of your pension tax-free, but that tax-free status is not automatically recognised abroad.
Attention – The Lump Sum Tax Trap: Many countries, including France, Spain, and potentially the USA, will treat your “tax-free” lump sum from the UK as taxable income.
Taking this lump sum without specialist advice can result in a large, unexpected tax bill in your country of residence.
Currently, SIPP funds sit outside of your estate for UK Inheritance Tax (IHT) purposes. However, the UK government has announced a fundamental reform to this rule.
Urgent IHT Warning: From April 2027, the UK government plans to bring UK pensions within the scope of UK Inheritance Tax. For expats, this means your SIPP could be exposed to a 40% IHT charge. An urgent review of your estate plan is now critical to mitigate this future liability.
A Double Taxation Agreement (DTA) prevents your pension from being taxed in both the UK and your country of residence.
You must apply to HMRC for an “NT” (No Tax) code to receive your income without UK tax deducted.
The 25% tax-free lump sum is often taxable in your new country. Always check local rules before withdrawing.
Beyond the complexities of tax, there are practical considerations to managing your SIPP as an expat.
An International SIPP gives you the freedom to build a truly global portfolio. The typical investment universe includes:
This breadth of choice is a significant advantage, but it also necessitates a clear and coherent investment strategy that considers your retirement timeline, risk tolerance, and currency exposure.
Yes, this is a core and essential feature of a specialist International SIPP.
It allows you to align your pension assets with the currency of your future liabilities, creating a natural hedge and providing much greater certainty over your financial future.
Specialist International SIPP providers are designed for this.
You simply provide your international bank details (IBAN/SWIFT), and they will transfer the funds electronically to your nominated overseas account, handling the currency exchange if necessary. attempting this with a standard UK SIPP provider not geared for expats can be fraught with challenges.
Many will only make payments to a UK bank account. This forces you to maintain a UK bank account, receive the pension payment in GBP, and then arrange a separate international transfer and currency exchange yourself.
This adds an unnecessary layer of administration, cost, and potential delays to accessing your own money.
When managing your life savings from another country, peace of mind is paramount.
This adds an unnecessary layer of administration, cost, and potential delays to accessing your own money.
Yes, absolutely. This is a key advantage of keeping your pension within the UK system. The protection offered by the Financial Services Compensation Scheme (FSCS) is tied to the regulated status of the UK financial firm, not the country of residence of its clients. As long as your SIPP is administered by a UK-authorised and regulated firm, you are covered by the FSCS regardless of where you live in the world.
It is vital, however, to understand what is and what is not covered. The FSCS provides different levels of protection for different types of failure:
Crucially, the FSCS does not cover poor investment performance. If the value of the stocks, bonds, or funds within your SIPP decreases due to market movements, this is an investment risk you assume and is not eligible for compensation.
This robust, government-backed protection is a significant benefit of the SIPP structure when compared to a QROPS, where any available protection is dependent on the compensation schemes of the offshore jurisdiction, which can be less comprehensive or non-existent.
The SIPP itself is a secure wrapper.
Your investments are held by a separate, regulated custodian, meaning they are your legal property even if the SIPP provider fails.
The “safety” of your pension’s value is therefore directly related to the investment strategy you choose.
A well-diversified portfolio is key to ensuring long-term security.
For any individual with UK pension benefits now living abroad, an International SIPP stands out as a powerful and flexible tool.
It offers a clear solution to managing scattered UK pensions, providing global investment choice, currency flexibility, and the robust protection of the UK’s regulatory framework.
However, a SIPP is not a “set and forget” solution. Navigating cross-border taxation, evolving inheritance tax rules, and making prudent investment decisions requires specialist knowledge.
Don’t leave your retirement to chance.
Gaining clarity and control over your UK pension is one of the most important steps you can take for your financial future abroad.
We’ve Moved Offices on 1st August 2025!
Private Client Consultancy is excited to announce that we have moved to a brand-new office space, designed to better serve our clients and reflect our continued growth.
Effective Date: Friday, 1st August 2025
New Address: Urb Jazmin De Miraflores, C. Jazmín, 2, Mijas Costa 29649, Malaga, Spain
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All in-person meetings scheduled from 1st August onwards will take place at our new location. Please update your records accordingly.
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