Further to Global QROPS Ltd’s recent item regarding permitted investments within QROPS (Qualifying Recognized Overseas Pension Schemes), the position and our thoughts on this matter can now be viewed in financial journal Money Marketing:
http://www.moneymarketing.co.uk/pensions/hmrc-spells-out-qrops-property-ban/1002818.article
Essentially the rules regarding ‘taxable property’ in QROPS have always been clear from the UK’s HMRC (Her Majesty’s Revenue and Customs) perspective since the QROPS rules were introduced. However, the legislation that had been set down, had made some advisers and QROPS schemes unclear as to what is allowed, as an investment, after the QROPS ‘5 year reporting period’. Therefore HMRC felt compelled to publish an update clarifying exactly what is possible.
To clarify what the rules are, residential property and tangible moveable assets (such as jewellery, classic cars, antiques etc) would all be treated as taxable property investments regardless of how long an individual QROPS member has been resident outside of the UK for tax purposes.
Global QROPS Ltd have been aware of these rules from outset and the difference between the reporting period for payments to members from QROPS ( 5 complete tax years of the member’s overseas residency) and the reporting period for taxable property investment (essentially, for the life of the member).
For those individuals that have invested in such assets, the HMRC tax charges are clear in the pension scheme manuals: an unauthorized payment charge will be levied on the member of 40% of the property’s value plus the scheme administrator will be liable for a scheme sanction charge of 15%.
In the case of a residential property, there would be additional tax charges of up to 40% on rental income and 40% tax on any capital gains.
For further clarification, please feel free to speak to an adviser at Global QROPS Ltd.