Written by Simon Huften, QROPS Specialist | Strata QROPS

How a Canadian RRSP Transfer Removes Your UK Pension from IHT - and When It Does Not

The April 2027 UK pension IHT change has prompted many British expats in Canada to ask a straightforward question: if I transfer my UK pension to a Canadian RRSP before April 2027, am I protected from UK inheritance tax?

The short answer is: for most British expats who have been in Canada for more than 10 years, yes – a completed transfer to a Canadian RRSP removes your pension from UK IHT. But the mechanism behind that protection is more specific than most of the content you will find online, and getting it wrong matters.

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This page sets out the accurate picture: what the 2027 change does to QROPS specifically, how a Canadian RRSP is different, why your Long-Term Residence (LTR) status determines the degree of protection, and when a transfer may not be the right move. If you have not yet read what the 2027 change involves, start with the previous page in this series.

What the 2027 IHT Change Does to QROPS - and Why Canada Is Different

QROPS structures based in Malta, Gibraltar, and the Isle of Man will lose their UK IHT protection from April 2027. If you hold one of those structures and are within the UK IHT net, your pension will be subject to 40% IHT on death under the new rules.

A Canadian RRSP is different. Once your UK pension has transferred into a Canadian RRSP, it is no longer a QROPS. It is no longer a UK-connected pension of any kind. It is a Canadian domestic retirement account – and it is outside the scope of the 2027 IHT change entirely.

That is the core of the protection. Here is the technical reason why. how QROPS transfers work in Canada

Why QROPS Lose Their IHT Protection in 2027

The April 2027 change brings unused pension funds and death benefits into the UK IHT estate. Most commentary focuses on UK-registered pensions – SIPPs, workplace schemes, and so on. What is less prominently discussed is that the change also applies to Qualifying Non-UK Pension Schemes (QNUPS).

A QROPS will normally also be a QNUPS. This means the historic IHT advantage of holding a QROPS in Gibraltar, Malta, or the Isle of Man – which was a legitimate estate planning tool for many years – is being removed from April 2027. Titan Wealth International, whose legal analysis of the 2027 change is among the most cited in the expat financial press, confirms: “The historic IHT exemption that QROPS enjoyed is effectively being removed.”

If you are a British expat in Canada and you hold a Malta or Gibraltar QROPS, you need to review your position with a specialist before April 2027.

Why a Canadian RRSP Is Different

When your UK pension transfers into a Canadian RRSP via the QROPS framework, two things happen that are decisive for IHT:

Your UK pension is wound up. The funds leave the UK-registered scheme permanently and land in a Canadian RRSP - governed by iA Clarington or Industrial Alliance under HMRC's approved ROPS list.
The Canadian RRSP that receives your pension is not a QROPS. It is not a QNUPS. It is a registered Canadian retirement plan, governed by Canadian tax law under paragraph 60(j) of Canada's Income Tax Act.

The 2027 IHT rules target UK-registered pension schemes and QNUPS. A Canadian RRSP is neither. Once the transfer completes, your pension is outside both categories – and outside the scope of the 2027 change.

How Your Long-Term Residence Status Determines the Degree of Protection

UK inheritance tax does not apply to everyone automatically. It applies based on your connection to the UK, and from April 2025 that connection is determined by the Long-Term Residence (LTR) test.

Under the LTR test, you are subject to UK IHT on your worldwide assets if you have been UK tax resident for at least 10 of the previous 20 tax years. The operative word is “worldwide” – meaning non-UK assets, including a Canadian RRSP, can be in scope if you are within the LTR test at death.

This creates a distinction that the transfer cannot override – your IHT position on the Canadian RRSP depends on your LTR status at the time of your death, not just at the time of transfer.

Your Situation	UK IHT Position on Canadian RRSP After Transfer	What This Means
Left UK more than 10 years ago and have been Canadian resident since	Outside UK IHT net for non-UK assets in most cases – Canadian RRSP not subject to UK IHT	IHT exposure removed for most in this group – RRSP passes under Canadian succession rules only. Important caveat: if your prior UK work history was very long (20+ years), an LTR tail period may still apply – Simon Huften confirms your exact position before transfer.
Left UK within the last 10 years, still within LTR count	Potentially still within UK IHT net on worldwide assets including Canadian RRSP	Position depends on exact year count and years of prior UK residence. Simon Huften confirms with a UK tax specialist as part of the pre-transfer assessment.
Left UK more than 10 years ago but had a very long prior UK residence (20+ years)	May still be within LTR tail period – LTR rules allow up to 10 year tail for long-term residents	Individual assessment required. Transfer may still be beneficial for other reasons (consolidation, currency, income planning) – IHT benefit may be time-delayed rather than absent.
Still holding UK pension – no transfer	UK pension is always a UK-situs asset – in scope for UK IHT regardless of LTR status under the 2027 change	Maximum exposure. UK pension in scope whether or not LTR test applies – no LTR test exemption for UK-situs assets.

Why Transferring Before April 2027 Still Matters - Three Reasons

Given the LTR complexity above, you might ask: why does the April 2027 deadline matter if my IHT position depends on my LTR status rather than whether I hold a UK pension or a Canadian RRSP? There are three concrete answers.

What Happens to Your Canadian RRSP When You Die

Once your UK pension has transferred to a Canadian RRSP, it is governed entirely by Canadian rules on death. The UK IHT event that would have occurred on your UK pension does not occur on your Canadian RRSP – provided you are outside the LTR test at death.

Beneficiary	Canadian Tax Treatment on Death	UK IHT?
Surviving spouse or common-law partner in Canada	Tax-deferred rollover to surviving spouse’s RRSP or RRIF – no immediate tax event at first death	No UK IHT if outside LTR at death – full RRSP value transfers to spouse tax-deferred
Adult children or grandchildren in Canada	RRSP value included in your income in year of death – taxed at your marginal rate; or designated as refund of premiums if beneficiary is financially dependent	No UK IHT if outside LTR at death – Canadian income tax applies at drawdown only
Estate (no named beneficiary)	RRSP winds up – full value included in estate income for year of death	No UK IHT if outside LTR at death – Canadian income inclusion applies
Named beneficiaries in the UK	RRSP passes under Canadian rules – beneficiary subject to Canadian withholding tax on withdrawal	No UK IHT if outside LTR at death – UK beneficiary pays Canadian withholding on withdrawal, not UK IHT

Compare this to the position if your pension remains in a UK scheme after April 2027:

The pension pot is included in your estate for UK IHT at 40% above the nil-rate band before your beneficiaries touch a penny – and then they pay income tax on withdrawal in their own jurisdiction. The RRSP route eliminates the first tax event for those outside the LTR net and reduces the second to standard Canadian income tax on drawdown.

Is a Transfer Right for You? - The Reconsider If Check

A QROPS transfer to a Canadian RRSP is not automatically the right answer for every British expat in Canada. Simon Huften’s first step in every consultation is to confirm eligibility and establish whether a transfer genuinely improves your position.

Factor	Consider Carefully If…	Why It Matters
LTR status	You left the UK within the last 5–10 years – your LTR tail period may still apply	Your Canadian RRSP could still be subject to UK IHT on death during the tail period. The IHT benefit of transfer is time-delayed, not absent. Simon Huften confirms your exact LTR position before proceeding.
DB pension income value	Your DB pension provides a guaranteed income for life that you depend on in retirement	Giving up guaranteed DB income for a RRSP pot requires careful modelling of both scenarios. Simon Huften models the comparison before any DB transfer recommendation.
Age	You are approaching 70 or over	The RRSP must convert to RRIF by December 31 of the year you turn 71. Transfers before 70 allow a planning window around the RRIF conversion. Simon Huften structures the transfer around your RRIF timeline.
Pension size and OTA	Your pension pot is very large, or you have made prior overseas pension transfers	The Overseas Transfer Allowance (OTA) is the lifetime cumulative limit for UK pension transfers to overseas schemes. Transfers above the OTA may trigger a 25% overseas transfer charge. Simon Huften confirms your OTA position – including any prior transfers – before proceeding.
Prior overseas pension transfers	You have already transferred a previous UK pension to a QROPS (Malta, Gibraltar, Isle of Man, or a prior Canadian transfer)	Your prior transfer will have consumed OTA headroom. The remaining allowance covers your second transfer – but must be confirmed before proceeding. If you currently hold an overseas QROPS and have relocated to Canada, a separate re-transfer process applies. See our guide to existing overseas QROPS holders
Time before April 2027	A DB transfer takes 12–16 weeks – you are reading this after January 2027	Completing a DB transfer before the April 2027 deadline may not be realistic. A post-deadline transfer still removes ongoing UK IHT exposure from the point of transfer – it is still worth doing, just with different urgency framing.

Frequently Asked Questions

Does a QROPS transfer to Canada remove my pension from UK inheritance tax after April 2027?

For most British expats who have been in Canada for more than 10 of the previous 20 years, yes – a completed transfer to a Canadian RRSP removes the pension from UK IHT. The key distinction is that a Canadian RRSP is not a QROPS and not a QNUPS. The 2027 IHT change targets UK-registered pension schemes and QNUPS – a Canadian RRSP falls into neither category. Whether your RRSP is subject to UK IHT on death then depends on your Long-Term Residence status at that time. Simon Huften confirms your individual LTR position as part of the pre-transfer assessment.

Is a Canadian RRSP treated as a QROPS for the 2027 IHT rules?

No. A Canadian RRSP is not a QROPS and not a QNUPS. It is a registered Canadian retirement plan governed by Canadian tax law under paragraph 60(j) of Canada’s Income Tax Act. The 2027 IHT change targets UK-registered pension schemes and QNUPS. Once your pension has transferred into a Canadian RRSP, it is not within those categories and is outside the scope of the 2027 change.

I hold a Malta QROPS. Am I affected by the 2027 change?

Yes, if you are within the UK IHT net under the LTR test. A QROPS will normally also be a QNUPS, and the 2027 IHT change removes the historic IHT exemption from QNUPS structures. If you hold a Malta, Gibraltar, or Isle of Man QROPS and have relocated to Canada, you should review whether a re-transfer to a Canadian RRSP is possible and appropriate – the dedicated page for existing overseas QROPS holders covers this in full.

What if I am still within the UK Long-Term Residence tail period?

If you have been UK resident for a significant period and left relatively recently, you may still be subject to UK IHT on your worldwide assets – including your Canadian RRSP – for a period after leaving. This is assessed on your specific UK residence history. Simon Huften works with a UK tax specialist to confirm your LTR position as part of the pre-transfer assessment. The transfer may still be beneficial for consolidation, currency, and income planning reasons even during the tail period – the IHT benefit may be time-delayed rather than absent.

What is the Overseas Transfer Allowance and does it affect me?

The Overseas Transfer Allowance (OTA) is the lifetime cumulative limit for UK pension transfers to overseas schemes without triggering a 25% overseas transfer charge from HMRC. The OTA applies across all overseas pension transfers you have ever made – not just the current one. Simon Huften confirms your OTA position – including any prior transfers – before proceeding. For most clients making a single first transfer, the OTA is not an issue. For clients with multiple prior transfers or very large pension pots, it requires careful management.

My UK pension is a DB scheme - can I still transfer it before April 2027?

Yes, subject to eligibility. DB transfers require a Cash Equivalent Transfer Value (CETV) from your UK scheme and, where the CETV exceeds £30,000, a mandatory FCA-regulated advice step. Simon Huften manages the full DB transfer process including CETV coordination – typically 12–16 weeks from start to finish. Starting before December 2026 gives the safest buffer for a pre-April 2027 completion. The full DB transfer guide covers the process in detail.

→ Should you transfer before April 2027?

Understand Your IHT Position Before April 2027

Simon Huften offers a free 20-minute consultation to confirm your LTR status, assess your UK pension’s IHT exposure, and establish whether a Canadian RRSP transfer is the right move for your situation. No obligation. No charge.