QROPS Hong Kong
UK Pension Transfers for British Expats in Hong Kong
QROPS Hong Kong is now open for business again. QROPS were shut down before for flaunting HMRC rules, but since the loopholes have been closed, Hong Kong QROPS have upped their game and have ironed out any previous flaws in order to become a leading jurisdiction in Asia for QROPS pension transfers. See some of our articles from April last year here: QROPS Hong Kong. For those that have been waiting, QROPS in Hong Kong are up and running again. For those that are on the fence about a Hong Kong QROPS, you can transfer to a QROPS in Malta which has a Double Taxation Agreement with Hong Kong meaning that your pension would be paid out gross. This could be paid straight into a Hong Kong account or offshore account. The added benefit of a Malta QROPS is that if you ever decided to settle in Europe, you would still have your pension pension paid out gross in Malta avoiding the 55% tax upon death that the UK imposes on your pension pot whilst receiving your pension income. You would then just pay the relevant income tax in the country you live in.
QROPS Hong Kong. Benefits of Transferring a UK Pension to Hong Kong
So, why would you transfer your pension to Hong Kong, when you could leave your pension in the UK?
- In the UK, you only get a 25% lump sum upon retirement.
- Your income is capped at 100% of UK GAD rates.
- You would pay a 55% tax upon death whilst drawing your pension income in retirement.
- If you don’t draw an income by the time you are 75, you would still pay a
- 55% tax upon death.
- Your investment options are more limited and restrictive.
- Your pension is in GBP and taxed at UK income rates.
What are the benefits of transferring a pension to a QROPS for a British expat?
- You can take a 30% lump sum at retirement at 55.
- You can take up to 120% of GAD rates. So, let’s assume your pension pot is £200,000 and for argument’s sake, your income at drawdown is 5% or £10,000 per year. Under a QROPS, this could increase to £12,000 per year. You could also opt for a lower pension in order to try to accumulate a larger pot for later in life.
- You can choose the currency of your pension. You may think it is better to hold USD or EUR or keep it in GBP.
- You avoid UK income taxes. Your pension would be paid gross.
QROPS Hong Kong Vs QROPS Malta
QROPS based in Hong Kong offer the same flexible tax and investment options as thousands of others QROPS around the world, except for Asian residents it may have some additional benefits. One of the benefits of using a Hong Kong QROPS is that Hong Kong has a range of Double Taxation Treaties with countries in Asia that other QROPS may not have.
Hong Kong QROPS are an option for people residing in countries that do not have a Double Taxation Agreement with Malta.
For example, Thailand and Hong Kong have a Double Taxation Agreement (DTA) whereas Thailand and Malta do not. Of course, there are other factors such as the cost of the QROPS in each jurisdiction and the quality of the trustees themselves.
Choosing your QROPS requires an experienced advisor and for many schemes it may not be worth transferring at all depending on the benefits you are currently getting. For British Expats in Hong Kong, it is worth getting QROPS advice and exploring your options, especially when it comes to estate planning, so that your family are set up should anything happen to you.
For more information, please email info@qropsspecialists.com
