Helping To Unlock Your UK Pension Benefits
If you have built up a UK pension fund and now are no longer UK-resident, you
may not realise that your pension is still subject to UK taxation rules.
You might have moved abroad to escape the UK, but if your pension has not, it is
still subject to constantly changing restrictive UK taxation rules.
This may lead to you paying a lot more in tax than is necessary.
There is now an
alternative. Imagine a fully-regulated overseas pension scheme which provides:
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more
flexible benefits in retirement – more choice, less rules
-
more
tax-efficiency, with no tax deducted from your pension, and a higher
tax-free lump sum than previous legislation allowed
-
the
widest possible investment choice, both before and after retirement
-
the
opportunity (if you so wish) to change at any time the currency of your
pension fund and your retirement pension, to match your local currency
-
a scheme
especially designed for UK pension transfers – a scheme which fully
recognises and satisfies the relevant UK rules, but maximises the
opportunities that you have as a
UK non-resident
-
on your
death, for funds to be paid without tax deduction to your family or nominated beneficiaries
!!! Such a scheme now exists under
the newly ratified Isle Of Man HMRC 50C QROPS legislation (June 2011) !!!
Simply click on the icon below
to request further details.
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What Are QROPS ?
QROPS is an acronym for a Qualifying
Recognised Overseas Pension Scheme that has met criteria set by HMRC
(Her Majesty's Revenue & Customs) and is
recognised by HMRC.
By establishing a QROPS clients
gain access to and exert far greater control of the investment direction
of their retirement fund(s).
QROPS can therefore accept transfers from UK
registered and Protected Rights pension schemes. |
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QROPS For Expatriates
For many years, British expatriates and those moving overseas have been
faced with difficulties when dealing with UK pensions, as the pension is
usually ‘trapped’ in the UK. One of the main difficulties has been
the tax treatment of UK pensions. Until very recently it has been
extremely difficult in practice and virtually impossible to move
a UK pension to an overseas jurisdiction without being forced to pay basic
rate tax on the transfer.
On the 6th April 2006 (known as Pensions 'A' Day),
new regulations for pensions came into play.
This created extremely attractive options for transferring UK pensions into
foreign jurisdictions.
For individuals who are or will
be non UK-resident transfers
from UK
pensions can be made without tax deduction and ultimately draw
benefits without UK tax
liability.
To achieve QROPS status the overseas Scheme has to meet certain criteria
and give undertakings to HMRC as specified by relevant regulations.
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What Other Benefits Are There To QROPS ?
- UK pension income is subject to UK
tax whether the individual is UK resident or not – this is not
the case with overseas pension income via a QROPS.
- No Inheritance
Tax (IHT) –
Funds within
a QROPS are protected from IHT.
- Tax free cash
of up to 30% of the fund value (new Isle Of Man rules allow for not
just 30% of the transferred amount but effectively 30% of growth
within the fund also !!)
- Retirement age
can commence from age 55
- Tax free roll up on income or
capital gains arising within the
QROPS. However any withholding tax
(for example dividend income) cannot be reclaimed.
- Access to a
global universe of investment
choice.
- There are no
restrictions on where clients live outside the UK.
- There are no requirements under a QROPS
to purchase an insurance annuity ever although
clients can choose to.Clients have far
greater flexibility in using income drawdown facilities.
- The QROPS fund
remaining upon the member’s death, even if they have been receiving
an income, is all available to be passed on to their loved ones.
This is a significant departure to the very penal tax imposed on
funds held in the UK.
Even if you have left the
UK,if your pension has not, it continues to be subject to UK tax
laws and restrictions whilst it remains in the UK.
Pension tax rules in the UK result in a 55% tax charge when a UK
pension fund is wound up after the death of the member/spouse,
i.e. the majority of the fund is
confiscated in the form of a death tax charge !!
- Consolidate several smaller
pension funds to create greater buying power and potentially better
investment opportunities.
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Who can transfer their pension?
QROPS are ideal for those persons planning to retire abroad on a
permanent basis, or who already live abroad. They are
generally not suitable (but exceptions do
exist) for
expatriates who intend to move back to the United Kingdom to retire.
A QROPS can be established currently with transfer
values as low as GBP 30,000.00
How long after a transfer into a QROPS can
benefits be taken?
Assuming the member is old enough to take benefits, technically the
benefits can be taken from the day of transfer (subject to the rules of
the QROPS provider).
What can a QROP
invest in?
A number of investment vehicles such as a single premium bond can be
used.
Portfolio bonds
are a suitable and
extremely rfficient investment vehicle for a QROPS
and provide clients a vehicle to access investments from a global
universe of Mutual Funds ,Deposit Accounts, ETF's in addition to Stocks
& Shares. |
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What can be transferred?
Most UK pension rights including those in drawdown,
provided
the rules of the individual scheme(s) permit.
Protected Rights can also be transferred, but completion of HMRC forms
need to be completed by the Member stating
that he/she understands that all protection associated with UK pensions
legislation is being given up on transfer.
State Pensions, Annuities in payment and pensions in payment from
occupational final salary schemes are not permitted.
What are the restrictions?
Any member payments to the client from their QROPS will be subject to UK
reporting requirements if, at the time of payment, the client is either
UK resident or has been UK resident in any of the previous 5 tax years.
The “Reporting Period” is counted from when the Member becomes UK non
resident, not when the pension is transferred.
A
Choice Of Jurisdictions
QROPS are established worldwide. The HMRC list contains schemes in
countries such as Australia, Austria, Bangladesh, Barbados, Belgium,
Bermuda, Canada, China, Cyprus, Czech Republic, Denmark, Finland,
France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Hungary,
Iceland, India, Ireland, Isle of Man, Italy, Jamaica, Jersey, Latvia,
Luxembourg, Malta,Netherlands, New Zealand, Norway, Portugal, South Africa,
Spain, and Switzerland.
Some jurisdictions will have more tax advantages over others.
For example, an Isle of Man based QROPS can be particularly advantageous
if used as an IHT planning tool.
The important issue here is that advise to your
specific circumstances is sought.
We at CSM Ltd are here to provide that help, advise and guidance to
ensure that not only the best possible QROPS product is selected but
equally the jurisdiction in which it resides.
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Finding Out More
As you will have come
to understand there are many potential benefits that QROPS can offer the
individual.
You will have also come to understand that the QROPS arena can be
complex to maximise the benefits on offer and is conditional on each
clients circumstances and QROPS Jurisdiction.
For these and other
reasons it is critically important that you consult with us in
order that we can provide the detailed and specific guidance you require
in order to make an informed decision on your pension and QROPS options.
CSM Ltd are a leader in the field of offering QROPS specific advise.
We will welcome your enquiry
Simply click on the icon below and we
will respond to your request.
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