QROPS Pension Transfers. Are QROPS Dead?
Are QROPS Dead? HMRC have now posted their new rules for 2012. More than 309 Guernsey QROPS were delisted, leaving just 3 schemes. Jersey fell from 138 to just 64 QROPS schemes. The number of Isle of Man registered QROPS fell from 185 to 173 between March and April, while the number of schemes registered in New Zealand fell from 64 to 23.
This has, at least for the time being, wiped out the QROPS industry for non-residents in Guernsey, the Isle of Man and New Zealand for expats living outside these countries.
Anyone who transferred to a QROPS scheme before April 6th, 2012 to these jurisdictions will not face any unauthorized tax charges and their schemes will be locked in under the old rules. So, the people who got into QROPS early and transferred should count themselves as the lucky ones.
Are QROPS Dead or is it still a Viable Option?
Whilst QROPS on Guernsey, the Isle of Man and NZ have suffered due to the ‘condition 4′ clause which states that non-residents and residents should be taxed the same, this has arguably strengthened QROPS in the long run. The point of QROPS was based on freedom of movement of capital within Europe.
These new conditions about taxing non-residents and residents equally has strengthened the case for a Malta QROPS which is within Europe and has over 59 Double Taxation Treaties with countries around the world. Where a DTA is in place, the Malta QROPS pension income will be paid out gross.
What about 100% lump sum cash-ins?
Forget it! These QROPS cash-ins which typically took place in New Zealand are now dead. You need to be a resident in New Zealand in order to transfer to a QROPS there.
If you have transferred to a NZ QROPS and want to access your pension, here is the link to see who can get their NZ QROPS money?
Here is a link to see who qualifies for a NZ QROPS?
What QROPS options are available now?
Here is a full list of all the new QROPS schemes which was updated on the 12th of April, 2012. A lot of the schemes are group schemes for members only.
So what are the main choices now:
- UK SIPP still remains a tax efficient vehicle, especially if you have a pension pot at retirement which is under £100k
- Malta QROPS may become the de facto QROPS destination. Malta has over 59 Double Taxation Agreements with countries around the world. It is also based in the EU which allows freedom of movement of capital. This is the QROPS to use if you are a UK expat and you are living in the USA for example.
- Local QROPS if you live in that country, e.g. Australia, NZ QROPS
- Gibraltar QROPS for those living in countries who do not have a DTA with Malta, e.g. Thailand
These are the QROPS which are allowed for the time being. As we saw with Guernsey and Isle of Man QROPS, those who transferred already have been shielded from unauthorized tax charges. It is hard to say when HMRC will next change their mind. For now, these QROPS are the best options to avoid high UK taxes on your pension. For high net worth individuals, use the HMRC approved QROPS schemes whilst you can before they change the rules again.
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