Posts Tagged ‘QROPS Rules’

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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Changes to Tax on Short Service Refunds for UK Occupational Pension Members

Wednesday, January 20th, 2010

In the pre Budget Report, changes were announced (on 9th December 2009) to the tax that is charged when an individual leaves an occupational pension scheme within 2 years of joining and takes a refund of their contributions.

Global QROPS Ltd will explain the impact to UK occupational pension scheme members in this position and if there is any QROPS advice that may be affected by this.

What is a Short Service Refund?

Lump sums paid to members who leave an occupational pension schemes within 2 years of joining (known as short service refund lump sums), are permitted by the UK’s HMRC (Her Majesty’s Revenue and Customs) in order to ease the administrative burden for a scheme and reduce the cost of providing an extremely small pension for life for a member.

 The pre Budget Report declared that changes are being made to take into consideration the new 50% upper rate of income tax – coming into force from April 2011.

Short service refund lump sums, made on or after 6 April 2010, will now be taxed at a rate of 20% on the first £20,000 of the refund and 50% on the remainder. (Previously this was 20% on the first £10,800 and 40% on the amount above this).

For potential migrants, taking QROPS advice, there may be little option but to take the refund. Occupational scheme administrators will not always provide a transfer value for members with less than 2 years membership and therefore a transfer to QROPS may not be an option.

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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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Why use Guernsey QROPS?

Thursday, October 22nd, 2009

There are many jurisdictions that provide QROPS (Qualifying Recognized Overseas Pension Schemes) for receiving UK transferred pensions. Amongst the jurisdictions considered, by overseas pension transfer specialists Global QROPS Ltd, is Guernsey.
Benefits of Guernsey QROPS 
QROPS in Guernsey are generally considered as being tax friendly schemes for pension funds to grow. If a non-Guernsey resident transfers their UK pension funds to a Guernsey QROPS, there will generally be no Guernsey capital gains tax or income tax on any growth or investment within the scheme.
As with UK pension schemes, a Guernsey QROPS can pay a 25% tax free cash lump sum on retirement.
But probably the major benefit of a Guernsey QROPS is that the pension income can be paid tax free to non-residents, at source, from Guernsey. This means that the only income tax, that a Guernsey QROPS pension member would be subject to on income, would be in their country of residence. This would be a more tax efficient way of drawing your benefits than if the pension funds remained in a UK scheme, especially if the new country of residence does not have a double taxation agreement with the UK.
In some cases, a UK pension member may retire to a country that is a ‘tax haven’. In which case, pension income from a Guernsey QROPS could be completely tax free.
Before deciding to transfer you UK pension benefits overseas, an individual should speak to an overseas pension transfer specialist, such as Global QROPS Ltd, for advice on QROPS in all jurisdictions.

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