Are
you no longer a resident of the UK? Did
you know that, subject to conditions, it
is often possible to transfer your
pension fund out of the UK to Guernsey
(or other location) with significant
potential benefits?
These potential benefits include the
ability to control investments, access
income or capital without punitive UK
tax consequences. Importantly, it is
often possible to allow the transfer of
the fund to future generations upon
death.
How does it
work?
HM Revenue and Customs (HMRC) allow non
UK residents to transfer UK pension
rights to an approved offshore scheme
known as a Qualifying Recognized Overseas
Pensions Schemes or “QROPS” for short.
HMRC maintain a list of approved schemes
that is updated twice a month. An
important safeguard is that if the
proposed pension transfer is to an
unapproved scheme the transfer can not
take place.
The transfer to an approved scheme can
take place as soon as the person becomes
non-resident from the UK but it is
important that they intend to remain
non-resident for the foreseeable future.
For someone who has been a non UK
resident for less that five complete tax
years the benefits provided under the
new scheme will be similar to those
provided under UK law. After that point
in time everything changes.
Advantages of
transferring a UK pension scheme
Regardless of when the transfer is made,
as soon as the person has been non UK
resident for a period of five complete
tax years the onerous and rigid HMRC
regulations relating to pensions fall
away.
As it is not necessary for the member to
be a resident in the country to which
the transfer takes place transfers can
be made to tax friendly jurisdictions
such as Guernsey or New Zealand.
Some of the
significant benefits to such
jurisdictions include:
-
Freedom to control investments –
the possibilities become more or
less unlimited and can include
antiques, jewelry, fine wines
and in certain circumstances,
residential property.
-
No requirement to purchase an
annuity – under a UK scheme a
possible tax charge of 82 % is
payable if an annuity is not taken
by the age of 75.
-
The possibility to access income
and capital without deduction of
tax at source.
-
Flexibility to access funds at any
time between the ages of 50 and 75
with the potential to access the
funds outside these ages.
-
Upon death of the member - the
ability to transfer the full value
of the fund to nominated
beneficiaries.
-
No deduction of tax at source.
Taxation will apply in accordance
with the legislation governing the
QROPS scheme member’s country of
residence.
|
Who is a QROPS
for?
QROPS transfers tend to be arranged for
non UK residents with a UK pension pot
in excess of £50,000. Typically, this
can include anyone with (a.) Deferred
benefits in a Company Pension Scheme,
(b.) members of a Public Sector Scheme
including for example, teachers,
doctors, nurses, members of the Armed
Forces, (c.) Personal Pensions.
QROPS are not available to anyone who
has started to take their pension as an
annuity but are available to those who
are “drawing down” income from their
pension fund but have not secured an
annuity.
What happens if
I return back to the UK?
Once your fund has been transferred into
a QROPS if you subsequently move back to
the UK then there is the possibility to
transfer your QROPS to an alternative
scheme. The fund does not have to become
once again subject to UK rules if this
method is adopted.
Advice?
QROPS transfers are not to be taken
lightly and taxation will apply in
accordance with the legislation
governing the member’s country of
residence. It is therefore important to
obtain specialist advice from a suitably
qualified pension adviser with the
relevant permissions from the UK
authorities.
Further
information
All of the above advantages become
possible after your UK pension fund has
been transferred to a QROPS and you have
been a non UK resident for five complete
tax years.
For further information regarding the
transfer of a UK pension scheme please
complete this form. |
