QROPS, QROPS Isle of Man

QROPS Isle of Man Pension Transfer for British Expats to Avoid Paying Taxes


QROPS Isle of Man

The Isle of Man used to be one of the leading jurisdictions for QROPS around the world. But, new regulations enforced by HMRC in 2013, meant that the newer Isle of Man 50c QROPS were closed down and it looked like that might be the end for Isle of Man QROPS, but the older Isle of Man QROPS are still going strong. Basically, HMRC didn’t like the Isle of Man writing in new regulations to get round their rules and punished both the Isle of Man 50c QROPS as well as the Guernsey 157e QROPS. But, the older Isle of Man scheme which taxes locals and non-residents the same at a flat rate at 20% income tax is still available and there are some benefits of an Isle of Man QROPS which neither Gibraltar, New Zealand, nor Malta can boast such as a higher drawdown. This may seem irrelevant at first with the new UK pension freedoms, but UK pensions get taxed at up to 45% income tax. Also, in other QROPS jurisdictions, if you draw your pension as lump sums there is always the chance that the country you retire in will tax those retirement distributions as capital rather than income, which could mean a higher tax. Whereas a larger drawdown as income in the IOM would just face 20% flat rate income tax or none at all if you are in Bahrain, Qatar or the few other countries who have a DTA with the Isle of Man.



Like the Gibraltar and Malta QROPS, the Isle of Man Scheme allows quite a free range of investments. You can invest in most shares, ETF’s, mutual funds, bond funds, hedge funds, etc. which are listed on the major exchanges and accepts a wide range of currencies. But, it also allows a higher pension income to be drawn at retirement, because they are not locked into 120% of UK GAD rates. This can mean quite a substantial difference in pension income when it comes time for retirement. In fact, the income could be 50% or more per year than under other schemes. For those with large pensions and especially for those in poor health, a higher pension income may be the number one priority rather than just tax, in which case, the Isle of Man QROPS may be a better fit.

What is a QROPS Isle of Man?

A Qualifying Recognized Overseas Pension Scheme (QROPS Isle of Man) allows your UK pension to be transferred offshore to reduce your tax burden. Effectively, you will no longer pay UK tax on your pension whilst you are offshore and after 10 years of living offshore, the reporting requirements to HMRC cease.

If you are living in Isle of Man at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS to avoid further UK taxes down the line. A QROPS Isle of Man is an appropriate vehicle to avoid UK taxes if you are considering living or retiring abroad.

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Why move to an Isle of Man QROPS?

No matter where you retire in the world, the Isle of Man is one of the most popular and secure jurisdictions for a QROPS pension transfer. One of the original QROPS jurisdictions with hundreds of QROPS providers, the Isle of Man QROPS still has stringent QROPS rules despite the Isle of Man 50c being closed down.

Tight financial regulations and excellent tax advantages has made the QROPS Isle of Man one of the surest jurisdictions to place your QROPS.

Why Transfer My UK Pension to the Isle of Man?

• Higher pension income possible than what was previously allowed in the UK
• Secure structure with strong regulations
• Freedom of investment
• Easily manageable in one place close to home

The Isle of Man is a secure place to transfer your UK pension to even if you don’t live there. You could live in Bahrain or Qatar for example and hold your pension in the Isle of Man. The Isle of Man has its own tax rules separate from the UK which means you can avoid UK and Isle of Man taxes on your pension as long as you live abroad.

What are the Benefits of Transferring My Pension to a QROPS Isle of Man

What are the benefits of a QROPS Isle of Man Pension Transfer for British expats?

• Avoid UK income tax
• Avoid UK dividends tax
• Avoid UK capital gains tax (CGT)
• Avoid 45% tax upon death that is imposed in the UK after 75

• Currency choice. You can choose to have your pension transferred to a QROPS denominated in USD, EUR or keep it in GBP

• Have the ability to make higher returns with freedom of investment

Family Protection: Upon death, the entire pension pot gets passed on to your nearest and dearest

Security: The pension is held in the secure jurisdiction of the Isle of Man which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient

Larger Pension Income allowed: Pension income figured out by actuaries and not UK GAD rules.

What Would the Tax Be On My QROPS in the Isle of Man?

  • You avoid all UK taxes
  • There is a 7.5% tax upon death in the Isle of Man if you are already drawing your pension
  • There is a 20% income tax*

*this does not apply in countries who have a Double Taxation Agreement with the Isle of Man. In Australia, Bahrain, Belgium, Estonia, Ireland, Malta, New Zealand, Norway, Poland, Qatar and Slovenia, income tax would be 0%.

Who are the QROPS Providers in the Isle of Man?

There are many providers in the Isle of Man, but Boal & Co. are probably one of the leading trustees. They have warned awards before for their QROPS offerings and are a long standing company.

What happens to a QROPS when I leave the Isle of Man?

If you hold a QROPS rather than a SIPP and return to the UK, there are advantages. Firstly, you can take an extra lump sum of 30% rather than 25% as long as you have been offshore for 5 years and aged 55 or older.

Furthermore, none of the growth earned after transfer to the QROPS is subject to the normal 45% tax charge on death and the 45% charge that would finally apply is levied against a much smaller amount. Whilst abroad your pension would be paid free from UK tax. If you are abroad and intending to return back to the UK, you should take the maximum lump sum to leave a smaller pot to be taxed in the UK.

How much would a QROPS in the Isle of Man cost?

There are hundreds of QROPS providers and the QROPS choices change on a regular basis.

For enquiries, please send email to info@qropsspecialists.com

QROPS Isle of Man article was written by QROPS Specialists.

QROPS Isle of Man Pension Transfer for British Expats to Avoid Paying Taxes by

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