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Qualifying Recognised Overseas Pension Scheme: Do you have a UK Pension? Take control with the option to transfer offshore (under the right circumstances), giving you more flexibility without leaving the benefits or residue to the UK taxman or an insurance company! For more information contact us and request our QROPS fact sheet or speak to an adviser.
QROPS is a relatively new international pension scheme, which was launched on 6th April 2006. It allows for non-UK tax residents who are overseas and currently hold a UK pension, which is registered with Her Majesty’s Revenue and Customs (“HMRC”) to transfer these UK pension assets to a QROPS.
A QROPS is structured in a similar manner to a UK pension, i.e. there is an investment vehicle, which is owned on your behalf by a pension trustee (administrator). The difference arises in that the pension trustee is based outside the UK and only needs to report back to HMRC until such time as you have been non-resident for five years for tax purposes, after which there is no longer any obligation to report back to HMRC.
A QROPS may be used to receive transfers from any UK registered scheme including protected rights funds.
Transfer values may be taken into a QROPS from any UK arrangements (other than from annuities) even when benefits have been taken through income drawdown.
For example, if you have an existing UK self-invested pension scheme (SIPP) and even when unsecured income is being drawn (generally referred to as drawdown) it may be beneficial to transfer to a QROPS if you are a non-UK resident and intend to remain so for the long term.
If you are looking for asset protection and tax efficient planning a QROPS could be the right pension solution for you.
a) Since the Finance Act 2008 the argument for transferring UK pension rights to a QROPS has become even more compelling. A new clause inserted in the Inheritance Tax Act 1984 gives QROPS freedom from UK inheritance tax, based on our understanding of this new legislation.
This means that not only is there no requirement to buy an annuity with a QROPS, but that the remaining fund following death should be available to the beneficiaries without any deduction of UK tax.
b) No 35% tax charge on death before the age of 75.
c) No 82% tax charge on death after the age of 75, if in a ASP (Alternative Secured Pension).
d) No requirement to purchase a compulsory UK annuity at the age of 75.
e) Potential for payments to be received without a deduction from HMRC. However the individuals will be responsible for declaring the income in their country of residence.
f) Investments domiciled in any major convertible currency.
g) Access to leading independent investment advice.
h) Flexibility to choose your own investment strategy.
The benefits paid by the plan (cash and income) and any death benefits will be taxed in accordance with the tax rules of the country where the QROPS is based, providing that the individual is still overseas at the time of drawing benefits and has been so for at least 5 years.
Please contact us for a free initial consultation to see if QROPS is the right option for your pension.