As a leading chartered accountant firm in London, we have explained the recent tax changes and how they’ve affected QROPS (Qualifying Recognised Overseas Pension Scheme). Keep reading to find out.
If you move abroad, you can still keep your pension savings in the UK; this will remain to grow tax-free unless you withdraw money. Instead, you can transfer your pension to a QROPS (Qualifying Recognized Overseas Pension Scheme). This rule tightened death taxes. Firstly it was a 55% death tax; now, it has been stopped, which means your heir can inherit all your pension savings without any tax deduction. In some cases, they still have to pay some income tax on the amount they withdraw, which is better than paying 55%.
When QROPS May Be a Bad Idea
A person who should not transfer their pension to QROPS consists of:
- Temporary settlers (emigrants)
- Those with less pension
- Participants of absolute salary pension schemes.
Changes Announced in March 2017
If you move to any foreign country like Australia, you wish to transfer your pension to QROPS in Australia. The logic is that you do not have to transfer your QROPS to the state you are moving to. These “third-party QROPS” are only promoted by financial consultants and are founded in countries like Gibraltar, Isle of Man, and Malta. Many changes have been made, including QROPS being accountable for a 25% tax charge called the “overseas transfer charge.”
Which QROPS Are Affected?
In many cases, if you live in any country dissimilar to where your QROPS is established, then you will be subject to a 25% fine. You have QROPS of Isle of Man, but you live in any other state.
Other QROPS Dangers
Foreign pension schemes must obey HMRC rules. If the pension transfer is completed illegally, at least 55% or more charge can be fined.
For more details and queries, get a 15-minute tax consultation at IBISS & CO free of charge. You can also get business tax advice or property tax consultation from our experts. Contact us now to get started.
