QROPS, ISA or SIPP: For expat savers, endless possibilities

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Written By Saeed Maleki

questions-confusedPersonal pensions aside, for British expats wishing to save for retirement, there is a bewildering array of acronyms on offer.

Even if retirement is still a long way off, saving a little from an earlier age makes building a pension fund that will last the duration of your retirement easier.

Every option in this list has its ups and downs, but one of the biggest questions is which type of pension best saves tax on your investment – and this depends on whether you are still a British tax payer or not.

With this in mind, the following options outline your tax liabilities, savings, and some of the main points to consider if you believe the option may be the best for you.

Expat ISA options

The fund in a personal pension is generally tied up until you reach 55 years of age. Any fund growth within the pension grows tax free, contributions are tax-relieved, and a 25% a tax-free lump sum is available upon retirement.

Usually, unless you start a fixed term ISA (which sets the time you can withdraw the funds), your fund can be withdrawn from your ‘easy access’ ISA at any time in case of emergencies or otherwise, making this a good option for those who may not have an additional emergency fund. In addition, there is no tax due on ISA growth.

The ISA investment cap is GBP 11,520, and a maximum of half of this (GBP 5,760) can be cash.

If your plan does in fact involve saving within an ISA – fixed term or easy access – time is running out, as the deadline for investing in this tax year is the 5th of April.


Self-invested personal pensions (SIPPs) allow a retirement saver to manage their own investments within their own pension fund – though a fund manager can also do the job.

Essentially, a SIPP is near identical to ISA investor’s fund supermarkets. The main difference is the ‘wrapper’ – which means you won’t have to pay income tax on your contributions.

This can be particularly beneficial for higher rate tax payers.


Investing via the Seed Enterprise Investment Scheme (SEIS) legislation may also be an opportune option for expats – but only if they still pay income tax in the UK.

SEIS allows tax-effective investment in startup companies; and is generally considered more high risk than other forms of investment. However the Chancellor has mitigated the risk with large tax reliefs, including 50% income tax reduction on an investment up to GBP 100,000, exemption from capital gains tax and loss relief in case the company fails.

Due to the risks involved in funding a startup business however, this may be best utilised by expats with a larger disposable income.


A Qualifying Recognised Overseas Pension Schemes (QROPS) is a retirement saving option suited to those who no longer pay British taxes.

The rules of a QROPS state that after a five-year period, your transferred UK pension will begin to follow the rules in the jurisdiction in which it’s based.

Similar to a SIPP in that they allow a much wider investment choice then personal pensions, they also offer numerous substantial benefits, such as a 30% tax-free lump sum, no tax on pension income, complete inheritance tax mitigation, and even increased income drawn down (dependent on your circumstances and QROPS jurisdiction).

A Qualifying Non-UK Pension Scheme (QNUPS) is a specialist pension fund similar to QROPS and SIPPs – but can be utilised for British taxpayers.

Like a QROPS, a QNUPS must save 70% of the retirement fund to be paid out as pension income, is registered outside of the UK, offers a wide range of investment choices and, because the QNUPS manager has no obligation to report to HM Revenue and Customs, qualifies for UK IHT exemption.

The Next Step

The list is not exhaustive, and each saving vehicle has its own merits and pitfalls which are heavily dependent on your circumstances.

The key to making the right choice is information, and a firm understanding of you tax and residency status, which you may not be able to confidently work out.

To find out more, you should enlist the help of a regulated independent financial advisor (IFA) who will be able to help with this process. They can not only outline your tax obligations, if indeed there are any, but help choose the right pension vehicle for your unique circumstances and future plans.