SIPP for Expats &
International SIPPs
A self-invested personal pension for expats, also know as the 'international SIPP', is a UK registered pension scheme with additional features designed with expats in mind.
The ability to invest in currencies other than British pounds and internationally focused client support teams makes policy management more efficient than other UK-based schemes.
While many 'international SIPPs' adhere to UK investment guidelines, some still allow the purchase of expensive commission-paying funds, so it's vital to use an advisor with you best interests at heart.
The International SIPP
With many UK schemes unsure of how to administer policies for overseas members, using a SIPP designed for expats can make life much easier. It's important to remember that contributions to a SIPP in the UK enjoy tax incentives, but as an expat those tax breaks are generally only available to 'relevant UK individuals' or employees of the Crown.
If you're looking to make further contributions towards your retirement, using more flexible products may be advisable as you won't benefit from tax relief and your funds are inaccessible until age 55. However, if you are looking for a way to consolidate multiple UK schemes into one for ease of administration at a low cost, the international SIPP makes perfect sense.
Investment Choice
The guidelines for SIPPs allow for diversification with a wide range permitted investments categorised as 'standard assets' by the UK regulator, the Financial Conduct Authority.
They include:
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Cash funds
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Cash deposits
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Managed pension funds
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Exchange traded products (ETFs)
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Real estate investment trusts (REITs)
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Government, local authority and other fixed interest stocks
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Collective investment schemes (CIS) in the UK (or overseas and recognised by the FCA)
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Stocks, equities and shares
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Structured products (with a degree of secondary market liquidity)
Assets not permitted include:
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Residential property
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Movable assets (wine, collectable cars, antiques and art)
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Personal loans
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Ground rents
Income Options
Drawdown from a SIPP can begin from age 55 even if you are still working and allows you to choose how you take benefits. PCLS (pension commencement lump sum) of up to 25% is available tax-free at the time you decide to access your pension with remainder of the fund being taxed at your prevailing tax rate as income, lump-sums or a combination of both options by:
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Purchasing annuities
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Drawdown of pension income
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Uncrystalised funds pension lump-sums (UFPLS)
Benefits on Death
On death, the member benefits are paid to the nominated beneficiaries either by a lump-sum, flexi-access drawdown or an annuity purchase. Scheme administrators decide how and to whom the benefits are paid, taking into account wishes specified by the deceased member.
How the benefits on death are distributed differs according to age at the time of death:
• On death before 75, benefits will be paid free of UK tax whether taken as either lump sum or income.
• Death at or after 75, income payments will be subject to UK income tax at the beneficiaries marginal rate of tax.
The Costs
The cost of SIPPs for expats is generally the same as in the UK with the right provider, with prices falling in recent years and set-up fees removed. Annual fees can be as low as £180, so always make comparisons if you've been recommended a QROPS as the difference in costs can be significant, and it might not be necessary.
Pension Tax Relief
SIPP contributions are permitted under the age of 75. For non-UK residents the rules differ, but if you are receiving UK earnings you should qualify for tax relief which under Section 188 of the Finance Act 2004 should not in any one tax year surpass the greater of:
• £3,600 - the basic gross amount for the current tax year, or
• 100% of all relevant UK earnings in the current tax year (subject to limits below)
Annual allowances apply to payments that qualify for tax relief into any number of your own registered pension schemes during a Pension Input Period. For 2023 / 2024 the allowance is £60,000 and for individuals that do not have relevant UK earnings, including expats, the allowance is £3,600 gross.
Contact us today to learn more about expat pension transfers, International SIPPs, QROPS and how to consolidate multiple schemes into one, easy to manage investment.