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If you are a UK expat living in the Middle East (UAE, Dubai, Abu Dhabi, Qatar, Bahrain, Saudi Arabia and the wider GCC) and you have one or more UK pensions, your main consolidation choices usually come down to International SIPPs and QROPS. This guide focuses on the issues that genuinely drive the decision for Middle East residents: the 25% Overseas Transfer Charge (OTC) and the planned UK change from 2027 that is expected to bring many UK pensions into scope for UK Inheritance Tax (IHT).

QROPS or International SIPP?

Last Updated: Monday, January 12, 2026.

Quick answer for most UAE / GCC residents: If you are considering a QROPS, the first thing to check is whether the transfer would trigger the 25% Overseas Transfer Charge (OTC). In practice, many Middle East residents do not live in the same country as the QROPS jurisdiction, which is when the OTC most commonly applies. That is why an International SIPP is often the practical default for expats who want consolidation and flexibility.

“For Middle East residents, the decision is often not ‘which is better?’ — it is ‘can a QROPS be done without losing 25% up-front?’”

What is an International SIPP?

International SIPP is still a UK-based SIPP, but administered with non-UK residents in mind. It can be used to consolidate UK pensions into a single plan and to build an investment portfolio appropriate for expats, while remaining inside a UK-regulated pension framework.

What is a QROPS?

QROPS (Qualifying Recognised Overseas Pension Scheme) is a pension scheme outside the UK that is recognised by HMRC for receiving transfers. QROPS is often discussed as “moving a pension offshore”, but the modern reality is that the benefits must be weighed against the OTC rules, costs, jurisdiction choice and longer-term reporting obligations.

The 25% Overseas Transfer Charge (OTC)

The Overseas Transfer Charge can apply when transferring a UK pension to a QROPS. The key point for Middle East residents is simple: if you are not resident in the same country as the QROPS at the time of transfer (and no exemption applies), a 25% charge can be applied to the amount transferred.

This is why many UAE/GCC expats decide either to keep their pension where it is, or to use an International SIPP rather than a QROPS, unless residency and planning make the QROPS transfer viable.

Key Benefits of an International SIPP for Middle East expats

  • Avoid the QROPS OTC problem: For many Middle East residents, consolidating into an International SIPP avoids the typical QROPS overseas transfer charge scenario.
  • UK regulated framework: You retain a UK pension structure, which many expats prefer for transparency, governance and familiarity.
  • Consolidation & clarity: Bring multiple pensions into one plan that is easier to manage and easier for your family/executors to understand.
  • Investment flexibility: Build a portfolio appropriate for expatriate needs and your intended retirement location (currency planning included).
  • Cost control: In many cases, an International SIPP can be simpler and more cost-effective than an overseas pension structure with layered fees.
  • Practical future planning: If your long-term plan changes (returning to the UK, moving to Europe, etc.), it is often easier to manage within a UK pension wrapper.

When a QROPS can make sense (and when it does not)

  • It can make sense when: the transfer can be completed without triggering the 25% OTC, and the overall benefits outweigh complexity and cost.
  • It often does not make sense when: you would lose 25% of your pension immediately due to the OTC. In those cases, the maths usually becomes very difficult to justify.
  • It must be judged on the whole picture: residency now, planned retirement destination, beneficiary planning, costs, and how confident you are that you will stay outside the UK long-term.

UK IHT changes from 2027 (why QROPS may be considered again)

From 2027, UK legislation is expected to change so that many UK pension funds are brought into scope for UK Inheritance Tax (IHT). Historically, UK pensions have often been outside the estate for IHT purposes, which made them a powerful legacy-planning tool. If pensions are brought into IHT, this could materially increase tax exposure for families with larger pension values.

This is a genuine reason some expats are revisiting the QROPS conversation: if a UK pension (including a SIPP) becomes more exposed to IHT, an overseas pension structure may be considered as part of a wider legacy plan. However, for Middle East residents this argument only works where the QROPS transfer can be made without the 25% OTC. Paying 25% up-front can easily outweigh any potential inheritance planning benefit.

Real Life Examples (Middle East expats)

  • OTC reality check: A Dubai resident investigates a QROPS in a popular jurisdiction. The transfer would trigger the 25% OTC, so he consolidates via an International SIPP instead, preserving capital and avoiding an immediate tax hit.
  • Legacy planning focus (post-2027): A high-value pension holder becomes concerned about pensions being brought into scope for UK IHT from 2027. A QROPS is reviewed as part of a broader estate plan, but only proceeds if the transfer can be structured without triggering the OTC.
  • Moving countries again: A UAE resident expects to relocate to Europe before retirement. The pension plan is structured to remain flexible, because what works in Dubai may look different once residency changes.

Frequently Asked Questions

Is an International SIPP the same as a standard UK SIPP?

It is still a UK SIPP, but it is typically administered with expatriates in mind. In plain English: you keep a UK-regulated pension wrapper, but with expat-friendly servicing and investment options.

Does every QROPS transfer trigger the 25% Overseas Transfer Charge?

No. The OTC depends on residency and whether an exemption applies. The issue for many Middle East residents is that they are not resident in the same country as the QROPS jurisdiction at the time of transfer, which is when the OTC is most likely to apply.

Does the 2027 inheritance tax change mean everyone should move to a QROPS?

No. It means the decision should be reviewed. A QROPS may be relevant for some legacy-planning cases — but only where the transfer can be done without triggering the 25% OTC and the overall maths makes sense.

Does Dubai (or the UAE) tax pension withdrawals?

At the time of writing, the UAE does not generally levy personal income tax on residents in the way the UK does, so pension withdrawals are not typically taxed locally. However, UK rules and provider treatment can still be relevant, and your position can change if you move countries or return to the UK. Always check the current position for your residency and your specific pension type before taking withdrawals.

Is it sometimes better not to transfer at all?

Yes. In many cases, after proper analysis, the most sensible recommendation is to leave the pension exactly where it is.

Patrick Macdonald Financial Adviser
Patrick Macdonald ASCI
International Financial Adviser
Middle East & International Clients


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