Just £1.4m was paid in Qualifying Recognised Overseas Pension Schemes (Qrops) transfer charges to HM Revenue & Customs (HMRC) during the 2017 to 2018 tax year.
According to data gleaned from a Freedom of Information request £1.4m was paid to HMRC from 30 transfers, compared with the £65m that the Exchequer expected to raise once a tax loophole was closed.
The Freedom of Information request submitted by Canada Life revealed there has been a 52 per cent reduction in the number of Qrop transfers between 2016 to 2017 and 2017 to 2018.
When the 25 per cent tax charge for Qrops transfers was introduced in the March 2017 Budget, the government published figures suggesting that the charges would raise £65m for the Exchequer in 2017 to 2018.
Andrew Tully, pensions technical director at Canada Life, said: "Going by the low number of transfers where a charge has been applied, it would appear many people have had second thoughts about moving their pension overseas.
"The pension freedoms may also have had an impact on the general decline in the number of transfers to Qrops as there is much greater flexibility in how people can access their benefits in the UK.
"Although the number of transfers attracting a charge is very small, and the resulting tax raised very low compared to the government’s own assumptions, HM Treasury will be pleased another tax loophole has effectively been closed and further tax leakage prevented."
According to data from HMRC the number of pension transfers to Qrops peaked in 2014 to 2015 with 20,100 transfers valued at £1.76bn.
The number of transfers has reduced substantially over the following tax years, and for 2016 to 2017, HMRC recorded 9,700 transfers worth £1.22bn.
For the last tax year (2017 to 2018), these numbers fell by 52 per cent to 4,700 transfers worth £740m.
Transfer charge on Qrops apply unless the scheme member is resident in the same country in which the Qrops was established, or the member is resident in a country within the European Economic Area (EEA) and the Qrops is established in a country within the EEA.
Last month FTAdviser reported HM Treasury confirmed it was uncertain whether pension transfers to an EEA-based Qrops would be exempt from tax after Brexit.
The economic secretary to the Treasury, John Glen, stated at the time that the tax status of such transfers would depend on the Brexit deal achieved.
Fiona Tait, technical director of Intelligent Pensions, said before the charges, there were some individuals that were making transfers purely to make overseas investments that aren't overseen by the UK regulator.
Ms Tait said: "The reduction in transfers puts Qrops where they should be as they are being used by people who are actually moving residency, which is understandable as you would want to take your pension with you when you move abroad."
Phil Billingham, financial planner and director at Perceptive Planning, said: "The reduction in Qrops is welcome and should continue. HMRC is becoming increasingly hostile and Brexit will accelerate this as the EU becomes subject to the 25 per cent non resident tax charge