Posts Tagged ‘QROPS reporting period’

A UK Pension Transfer to Australia – The latest HMRC QROPS list

Friday, January 29th, 2010

The UK Pension Scheme Services (PSS) have updated the QROPS (Qualifying Recognized Overseas Pension Scheme) list on the HMRC (Her Majesty’s Revenue and Customs) website on 15th December 2009. Individuals looking at a UK pension transfer to Australia, would observe that there are over 450 Australian QROPS schemes currently on the list.

For full details of the HMRC update see link: http://www.hmrc.gov.uk/NEWS/INDEX.HTM

If an individual does want to complete a UK pension transfer to Australia, they may be tempted to look at the list and work from there. However, HMRC stress that the QROPS list is not a recommendation or advertisement for any particular scheme, it is merely for information purposes for an individual to check that an Australian QROPS that they have received professional QROPS advice on is indeed approved.

Global QROPS Ltd advise many people migrating to Australia on their pension options. It is not, in all circumstances, best advice to transfer pensions to Australia and people need to be aware of all of the advantages and disadvantage before making a decision.

Many of the Australian QROPS on the HMRC list are either Australian employer’s pension schemes or Self Managed Super Funds (SMSF). These schemes may be available for an employee of a company or to an individual that has set up a SMSF but someone looking down the QROPS list could not simply pick out a scheme and apply to become a member.

For advice on a UK pension transfer to Australia, speak to an adviser at Global QROPS Ltd.

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Global QROPS Ltd quoted in Money Marketing regarding ASP and QROPS

Wednesday, January 27th, 2010

Qualifying Recognised Overseas Pensions Scheme (QROPS) specialists, Global QROPS Ltd, have been quoted in the UK financial publication, Money Marketing, regarding the use of QROPS for UK expat pension members.

A study by a leading UK Self Invested Personal Pension (SIPP) provider suggests that there is an increase in overseas pension transfers over UK pension transfers to a SIPP (for example) because of the steep UK tax charges on death whilst in Alternatively Secured Pension (ASP).

Once a UK pension member reaches the age of 75, they will be required to take pension benefits (if they haven’t already). Since 6th April 2006 (A-day), as an alternative to purchasing an annuity with accrued pension funds, a UK pension member can go into ASP – which is a form of pension income drawdown, paid from the fund. ASP was introduced as an ‘alternative’, to buying an annuity as certain religious groups objected, on moral grounds, to the concept of annuities.

One of the main problems with ASP is, once it has commenced for a member, the death benefits are severely restrictive for beneficiaries. In short, if a beneficiary was to receive death benefits as a lump sum from a deceased member of a UK pension, who was receiving benefits in the form of ASP, a tax charge as high as 82% could apply to the fund.

UK expat pension members, in retirement, have the option to transfer to a QROPS. The study suggests that many consider this as, once the 5 year reporting period falls away, the local rules of the QROPS scheme, for tax on death benefits, apply and not the UK’s rules. This could lead to the removal of the ‘82%’ tax charge on death, for beneficiaries.

Whether this is the main reason for a UK pension transfer to QROPS is by no means certain, however, it is definitely a consideration.

Please see link to the article: http://www.moneymarketing.co.uk/£500m-transferred-to-qrops/1005325.article

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What is the QROPS Reporting Period?

Wednesday, December 9th, 2009

Any client that has completed a UK pension to overseas pension transfer would first have to have ensured that the receiving scheme was approved by the UK’s HMRC (Her Majesty’s Revenue and Customs) as a QROPS – which is a Qualifying Recognized Overseas Pension Scheme.
Beyond the actual transfer, the receiving QROPS scheme has a continued responsibility to behave as a UK scheme – when it comes to the payment of pension benefits – for the Reporting Period.
During this period the QROPS provider has an obligation to report to HMRC any income, annuity, lump sum or death benefits payments to the member (or member’s dependents) in respect of the fund. But for how long, after the UK pension transfer to the QROPS has been made, does the scheme have an obligation to report payments?
A QROPS provider has to report any payment as long as the QROPS member:
• is resident in the UK when the payment is made (or treated as made), or
• although not resident in the UK at that time, has been resident in the UK earlier in the tax year in which the payment is made (or treated as made) or in any of the five tax years immediately preceding that tax year.
In short, the Reporting Period is 5 complete tax years of the member’s overseas residency. A return to the UK, in that period, could lead to the ‘5 year clock’ starting again and the QROPS scheme continuing to distribute and report any payments, as per HMRC legislation.

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The UK’s HMRC Issue New Guidance Regarding QROPS and Residential Property

Thursday, November 19th, 2009

On 16th November 2009, the UK’s HMRC (Her Majesty’s Revenue and Customs) have issued an update in their Registered Pension Scheme Manuals confirming the situation regarding residential property (and other taxable property) within QROPS (Qualifying Recognized Overseas Pension Schemes).

This update has been issued by HMRC because there has been much misinterpretation in some quarters regarding residential property as an investment, within QROPS, after the 5 year reporting period.

What has the guidance confirmed?

The guidance has confirmed what the Global QROPS Ltd advisory team already knew, which is the 5 year QROPS reporting period that applies to the payment of QROPS benefits, to a member, does not apply to permitted investments within a QROPS.

It has been incorrectly assumed by people, in the past, that because after 5 complete UK tax years of a QROPS member’s overseas residency benefits can be paid in accordance with local rules of the jurisdiction  (such as income and tax free cash), that investments would also be outside of the UK HMRC’s reporting requirement after the 5 year period.

However, because taxable property investments (such as residential property) are not subject to the same rules as member payment charges in the Finance Act 2004, the ‘5 year rule’ does not apply. There is, in fact, no time limit on the requirement for the QROPS ‘manager’ to report a purchase of a taxable property. Therefore, regardless of how long an individual has been outside the UK, they can not purchase a residential property as an asset within a QROPS.

Global QROPS Ltd would like to stress that these taxable property rules have always applied. The recent guidance HMRC have updated, on their website, has been produced to make this clear.

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UK Pension Transfer to Australia – retirement considerations.

Saturday, September 12th, 2009

As the advisers at Global QROPS Ltd have had many years of experience in advising people considering a UK pension transfer to Australia, they are frequently referred to for their opinion on the subject.

Most people assume that, when they migrate ‘Down Under’ that they should transfer their pension to Australia. However, Global QROPS Ltd is of the opinion that whether a UK pension transfer to Australia is a good idea should be taken on a case by case basis.

Before the UK introduced Qualifying Recognised Overseas Pension Schemes (QROPS), an individual migrating to Australia, who was approaching retirement, could have the option of affecting a UK pension transfer to Australia and taking the benefits immediately, in the form of 100% lump sum – as Australian rules allowed for this from their schemes. From 6th April 2006, an individual has to have been abroad for 5 complete UK tax years before their UK funds, transferred to a QROPS, fall outside the UK reporting requirements and revert to local rules.

This QROPS rule change made a UK pension transfer to Australia less attractive in the immediate term than before. However, this does not necessarily mean an individual should hold onto their pension assets in the UK either. Due to the Australian FIF (Foreign Investment Fund), some assets held in UK pensions could be taxed on the growth – on an annual on going basis – whether they are moved to Australia or not. Depending on their visa type (amongst other issues) Global QROPS Ltd can advise the best pension strategy.

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