The charge is targeted at those seeking to reduce the tax payable by moving their pension wealth to another jurisdiction. The measure is effective from 9 March 2017.

Exceptions will apply to the charge allowing transfers to be made tax-free where people have a genuine need to transfer their pension, including when the individual and the pension are both located within the European Economic Area or the QROPS is provided by the individual’s employer.

When the tax charge is made, it will be deducted before the transfer by the scheme administrator or scheme manager of the pension scheme making the transfer.

It also widens the scope of UK taxing provisions so that, following a transfer to a QROPS on or after 6 April 2017, and applies to payments out of those transferred funds in the five tax years following the transfer.

The government said the move supports its objective of ‘promoting fairness in the tax system’.

‘It continues to allow overseas transfers from pension schemes that have had UK tax relief that are made when people leave the UK and take their pension savings with them,’ it said.

The government expects to make £315m through the regime by 2021-22.

Steven Dicker, chief actuary at PwC, said: ‘This could in effect be an exit tax for those who want to leave the UK and take their pension with them. As Budgets go, it was a quiet day for pensions, which many will welcome as they continue to struggle with the array of challenges already before them.’

Qualifying recognised overseas pension schemes: charge on transfers can be read here.