QROPS Nepal. Pension Tax Relief for Brits in Nepal
British expats living in Nepal or wishing to retire in Nepal can now transfer their pension into a QROPS Nepal to maximize pension tax relief. UK expats living or working in Nepal can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like Gibraltar and will no longer have to pay UK taxes on their pension if they stay offshore.
Nepalese can also transfer their pensions out of the UK into a QROPS to avoid the 55% tax upon death whilst drawing benefits. This includes Sherpas who have a pension from the British Armed Forces. Unfortunately, a transfer out is only available if they are in the pension scheme which started after 1986. Traditionally Gurkhas received a smaller pension than the Brits. However, on the 8th March 2007, the British Government announced that all Gurkhas who signed up after 1st July 1997 would receive a pension equivalent to that of their British counterparts. So, those Nepalese who are in receipt of such a pension can transfer into a QROPS to avoid UK taxation.
Why live or retire in Nepal as a UK expat?
More than 2,700 Brits live and work in Nepal. Nepal is near India, Bangladesh, Bhutan and China. It has a population of over 30 million people and the capital is Kathmandhu. A mountainous area, many Brits work here as NGO’s or school teachers. Whilst most British expats don’t retire in Nepal. Many Brits spend time here whilst looking to retire elsewhere in Asia. If you are currently in Nepal, you can look into transferring your pension offshore to mitigate UK taxes.
If you are living or working in Nepal, you can take advantage of your offshore address to transfer your pension to a QROPS in a secure jurisdiction such as the Gibraltar or NZ where it will grow tax free and be paid gross. You can then draw your income into a Nepalese bank account or to another offshore account.
Benefits of a Pension Transfer to a QROPS Nepal
What are the benefits of a QROPS Nepal Pension Transfer for UK expats?
• 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 a secure jurisdiction such as Guernsey or the Gibraltar which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient
What QROPS Jurisdiction is Best for British Expats in Nepal?
QROPS in New Zealand
Avoids UK taxation
Avoids tax in New Zealand
Must have a discretionary fund manager appointed
Limited range of five strategies based on your risk profile
Can take a 30% lump sum upon transfer plus 100% of any increase in your pension pot after transfer
QROPS in Gibraltar
Avoids UK taxation
Flat rate of 2.5% tax in Gibraltar
Can invest in a much wider range of investments: shares, mutual funds, ETF’s, hedge funds, precious metals, etc.
Can only take a 30% lump sum upon transfer and the rest must provide you with an income for life based on 120% of UK GAD rates
What is Personal Income Tax in Nepal
Personal income tax is between 1% and 25% if you are working in Nepal. Gain from lump sum retirement payment made by an approved retirement fund or GON is taxed at the rate of 5% as a final withholding tax. Gain is calculated by deducting 50% of the payment or Rs.500,000 whichever is higher from the total lump sum payment.
What is a QROPS Nepal?
A Qualifying Recognized Overseas Pension Scheme (QROPS Nepal) 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 Nepal at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Nepal to avoid further UK taxes down the line. A QROPS Nepal is an appropriate vehicle to avoid UK taxes if you are considering living or retiring abroad.
Are there any QROPS in Nepal?
Do I need to move my pension to Nepal?
No. There are no QROPS in Nepal. Your pension can be transferred to a secure jurisdiction such as NZ or Gibraltar where it will be out of the UK tax system and your pension will grow free of tax and the whole lot will be passed on to your loved ones or nominated beneficiaries upon death.
Do I need to live and retire in Nepal?
No, you can live anywhere offshore. As long as you are outside the UK, your QROPS will grow free of UK tax. If you ever return to live permanently in the UK, your pension will simply return to UK Self Invested Personal Pension (SIPP) rules.
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Pension tax relief for British expats, QROPS Nepal article written by QROPS Specialists.QROPS Nepal Pension Transfer for UK Expats to Avoid Paying Taxes by Richard Malpass