Avoid the 25% UK Pension Transfer Tax – A Smarter Solution for UK Expats

If you’re a UK private pension holder considering a transfer, you may have heard about the new 25% transfer tax. But here’s the truth – it’s not actually new....

What Changed?
Previously, there was an exemption:
✔ No tax was charged if both the individual and the QROPS were within the EEA.
✔ Example: A UK expat in Cyprus transferring their pension to a QROPS in Malta was exempt from the 25% tax.
However, this exemption has now been removed. 

What Does This Mean for You?
If you transfer your UK private pension to a QROPS outside of the UK, you could now face a 25% tax charge on your entire transfer amount. If however you leave your private pension in the UK, it will soon be included in your total wealth for Inheritance Tax purposes. Up to 40% could be lost to UK Inheritance Tax and your beneficiaries could lose a further 45% in Income Tax on what they receive.

For example - a pension of £100k less 40% Inheritance Tax = £60k
£60k less 45% Income Tax = £33k only left after Taxes
= £67k going to HMRC and only £33k going to your loved ones should you die

A Tax-Efficient Alternative for Cyprus Residents
Thankfully, if you live in Cyprus, this tax does not have to affect you. Thanks to the Double Taxation Agreement (DTA) between Cyprus and the UK, you have a smarter, tax-efficient option:

✅ Avoid the 25% transfer tax and set up an International Retirement Account (IRA) in Cyprus.
✅ Protect your pension from UK Inheritance Tax, which could cost you up to nearly 70% of your pension wealth.
✅ Enjoy a tax-free pension strategy as a Cyprus resident, ensuring more of your money stays where it belongs – with you and your family.

By setting up an International Retirement Account in Cyprus, you can also enjoy:
✅ Flexible, tax-efficient pension withdrawals
✅ Zero ongoing income tax - even if you return to the UK
✅ Zero inheritance tax where the tax man could take up to nearly 70% of your pension

Cyprus residents still have a way to transfer their private pension tax-efficiently, so don’t Let HMRC take the pension that you've worked all your life for. Protect your retirement savings and legacy before it’s too late.