Who qualifies for a QROPS Pension Transfer?

Anyone with a UK pension scheme who now lives overseas as an expatriate, or who is planning to leave the UK in the next 12 months, can transfer their existing pension provisions into an HMRC approved QROPS Pension Scheme. You will need to meet the following criteria:

You will need to be a non-UK tax resident for at least ten tax years. (A tax year runs from 6 April to 5 April) Or you plan to be out of the UK for more than ten years. You need to have a private pension as opposed to a state pension.

You have not taken an annuity on your pension. Your pension is in excess of £50 000. (if it is under this, you can top it up, then transfer it) In most pension situations, provided you are a non-UK resident and intend to remain so, the benefits are sizeable if you transfer your UK pension offshore through a QROPS transfer.

However, some older pension’s plans have annuities set with higher interest rates and it may not be beneficial to transfer these?

I’m currently a UK tax resident, can I still apply for a QROPS transfer?

  • Yes, provided that you have a clear intention to become a non-UK tax resident within the next 12 months.
  • You have already arranged or are in the process of arranging accommodation in the country to which you are moving.
  • You will remain in that country for a settled purpose. (e.g. retirement or employment) To arrange an initial, no obligation, confidential discussion regarding QROPS or other pension issues with one of our highly qualified advisors, please contact us.

HMRC will allow UK expatriates to keep their UK pension schemes providing the scheme rules and trustees allow it. There are no residence restrictions for tax purposes on members of UK registered pension schemes. This is because HMRC will tax UK pension schemes equally with no bearing on the residential status of the member. Alternatively, you can consider moving your UK pension assets to an overseas arrangement. Transfers out of UK registered pension schemes are tested against the lifetime allowance (LTA) and any amounts transferred above your lifetime allowance are subject to a tax charge of 25%. Transfers below the LTA will not attract a tax charge on transfer, providing the overseas scheme is a ‘qualifying recognised overseas pension scheme’ ( QROPS ).

Transfers to an overseas pension scheme that is not a recognized QROPS will be treated as ‘unauthorised payments’ and subsequently will be subject to tax charges. Here at Balquidder we only deal with leading authorised QROPS providers based in the most respectable locations such as Malta. If you choose to leave your pension in the UK, and you left the UK before 6 April 2006, but your UK pension later comes into payment, it will be subject to a test against the lifetime allowance which is 1.65 million GBP for 2008/2009, 1.75 million GBP for 2009/2010.

The advantages of a QROPS are as follows –

  • No requirements to purchase an annuity even at age 75.
  • The freedom to choose where your money is invested including ‘non standard’ assets such as private equity and property through a separate, wholly owned offshore Company
  • There are no limits to the value of assets held in the plan
  • Pass your remaining funds to your loved ones upon death without punitive IHT charges
  • Asset protection and tax effective planning opportunities
  • Flexibility to access up to 30% of funds at any time (depending upon circumstances)

If you live outside the UK, or are planning to live outside the UK for more than five years, then 9 out of 10 times, the benefits of a QROPS Pension Transfer for you will be extensive. For example, should you die, your hard earned money can be passed on to your loved ones, and not back to the government or life company! Currently if you die before 75 you will probably have a 35% tax charge before you can pass on the proceeds to your beneficiaries, but if you die after 75 you will probably have an 82% tax charge! Huge gains can be made on proper Inheritance Tax Planning (IHT) with a correctly setup QROPS Pension Transfer.

This means if you die, you can pass on more benefits to your loved ones, and not to the pension company, state or previous employer pension scheme.

  • Pension income is more tax efficient.
  • Tax free lump sum of up to 30%.
  • Benefit payments made gross of tax.
  • Much greater investment freedom.
  • Access to global funds with higher returns.
  • Take income and benefits in the currency of your choice.
  • Benefit payments made gross of tax.
  • All unused pension funds can be left to your beneficiaries.
  • No need to take an annuity or pay a UK tax charge upon death.
  • Greater confidentiality.
  • Protection against possible future creditors (depending on jurisdiction).