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OFFSHORE
PENSION PLANNING
- QROPS -
(QUALIFYING RECOGNISED OFFSHORE PENSION SCHEMES)
Expatriates can benefit enormously from Qualified Recognised Offshore Pension
Schemes (QROPS). It can give them the ability to move pension funds offshore, to
effect tax free withdrawals and on death the pension fund can pass to heirs free
of Inheritance Tax free.
An outline for rules governing these transactions, first introduced in the
Finance Act 2004, came into place on April 6th 2006 – Pension A Day. This gave
the go-ahead for UK pensions to be transferred abroad if the receiving scheme
has the approval of the UK’s HMRC. To qualify the overseas scheme has to fulfil
strict criteria including reporting to the HMRC. For individual transfers of the
UK pension to a QROPS for the requisite five complete tax years, scheme payments
have to be reported in line with UK limits. However those limits payments may be
more flexible than those of a UK scheme.
In summary, it is possible to benefit from a transfer to QROPS in the following
ways:
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No UK tax liability is incurred
when pension funds are drawn down if you are no longer UK resident.
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Assuming the receiving scheme
is in Guernsey, a popular and recognised transition area, there will be no
local tax on the fund as it grows and no taxes on payment of lump sums,
drawdown amounts or on death.
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On death, funds can continue to
be paid to dependants, unlike the case of pensions remaining UK based.
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There is a wider range of
investment choice available including attractive allowances for property
investment.
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Access to funds is available
from age 50, unlike the UK where 55 is about to become the minimum age.
Whilst International Mortgage Plans
do not give advice on pension planning and are not authorised to do so, we will
be happy to effect introductions to specialists in this field dependent on your
area of residence. Contact Us.
10th March 2010
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