QROPS Nigeria. Pension Tax Relief for British Expats in Nigeria
British expats living in Nigeria or wishing to retire in Nigeria can now transfer their pension into a QROPS Nigeria to maximize pension tax relief. British expats living or working in Nigeria 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 as long as they stay offshore.
Nigerians who have worked in the UK and are returning to Africa can also avoid UK taxation, particularly the 55% tax upon death that the UK government takes.
The name Nigeria was taken from the Niger River running through the country. This name was coined by Flora Shaw the wife of Baron Lugard, a British colonial administrator, in the late 19th century.
Nigeria is one of the most populated in Africa, the 7th most populous country in the world, and the most populous country in the world in which the majority of the population is black. It is listed among the “Next 11 Emerging Economies” and is a member of the Commonwealth of Nations. The economy of Nigeria is one of the fastest growing in the world, with the IMF forecasting growth of between 8% and 9%.
Why live and work in Nigeria as a British expat?
Rich in oil and natural resources, more than 16,000 British expats live and work in Nigeria. Most come to work in the energy industry or in the security industry. Most British expats who come to work in Nigeria work in protected compounds. The pay grade tends to be quite high for British expats in Nigeria.
Benefits of a QROPS Nigeria
What are the benefits of a UK Pension Transfer for British expats in Nigeria?
• 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 Gibraltar which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient
What is QROPS Nigeria?
A Qualifying Recognized Overseas Pension Scheme (QROPS Nigeria) 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 Nigeria at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Nigeria to avoid further UK taxes down the line. A QROPS Nigeria can be an appropriate vehicle to avoid UK taxes if you are considering living or retiring abroad, but they aren’t for everyone. Please ask us for a free pension transfer analysis.
Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. The country joined OPEC in 1971. Petroleum plays a large role in the Nigerian economy, accounting for 40% of GDP and 80% of Government earnings. However, agitation for better resource control in the Niger Delta, its main oil producing region, has led to disruptions in oil production and currently prevents the country from exporting at 100% capacity.
Nigeria also has a wide array of underexploited mineral resources which include natural gas, coal, bauxite, tantalite, gold, tin, iron ore, limestone, niobium, lead and zinc. Despite huge deposits of these natural resources, the mining industry in Nigeria is still in its infancy. Agriculture used to be the principal foreign exchange earner of Nigeria.
GDP is estimated to grow by 6.9% in 2011. GDP per capita in PPP terms is $2,547 International Dollars (2006 estimate). GDP in Nigeria comprises agriculture: 33.1%, industry: 33.8% and services: 33.1% (2009 estimate).
What are the taxes for expats in Nigeria? What is the banking like in Nigeria?
Most expats tend to hold an offshore account and have a Nigerian account for day to day living. The local currency is the Nigerian Nira (NGN) and is broken up into 100 kobo, where 100 kobo = 1 Nira. It is not recommend that expats carry any substantial amount of cash, rather carry only the necessary amount that may be required. More places are starting to accept debit/cash cards as standard forms of payment for goods and services. Salaries are paid into foreign accounts, and then changed over into the currency of choice by the employee, usually from the US Dollar. Local banks are seen as behind the times, internet systems are often down and security is an issue.
ATM machines are available at some banks, but not all of them accept foreign cards. The ATMs that do accept foreign cards have a daily withdrawal limit of 100 NGN, however, ATM fraud is prevalent, so vigilance and communication with your bank will be essential. As carrying cash can be dangerous and often impractical, it’s recommended that you get either a locally or internationally issued ATM/debit Card, as these can be used for POS (Point of Sale) payments.
Resident individuals are taxed on their worldwide income; non-residents are subject to tax on Nigerian-source income only. A person who is in Nigeria for 183 days in the tax year is regarded as resident. Tax is charged at progressive rates up to 25% on total income. Dividends received are grossed up and included in total income, with a credit for the withholding tax deducted. A minimum tax of 0.5% of total income applies. Capital gains are taxed separately. Under a proposed tax reform, the top individual tax rate would rise to 35%, and employees would be entitled to a tax-free allowance of 40% of their total income. Corporate tax is 30% + 2% education tax.
Companies and individuals are liable to capital gains tax at 10%. Exemptions from capital gains tax include gains on motor vehicles that are not normally used for commercial purposes, gains on furniture and fittings, gains on gifts, gains on stocks and shares, and gains on life-assurance policies.
Many British expats work in Nigeria, but later retire abroad, but not in Nigeria. As long as you are outside the UK, you can take advantage of your offshore address in Nigeria to move to a QROPS in Gibraltar where your pension will grow tax free and you will no longer pay any UK income taxes. Furthermore, if anything happens to you, the wife gets the whole lot rather than the 55% charge you would have to pay in the UK. Then, when it comes time to draw your income, you would pay the income tax in the country you live in, which is often zero. Alternatively, you can have your pension paid into an offshore account in the Isle of Man for example.
What Would the Tax Be on My QROPS in Nigeria
You would avoid all UK taxation
You would pay a flat rate of 2.5% income tax at source in Gibraltar
You would pay local income tax in the country you retire in when you draw pension income. Many retire to places such as Thailand to avoid taxation.
Where is the Best Place to Hold My QROPS
Do I need to move my pension to Nigeria?
No. Nigeria does not have a QROPS. Your best bet is to move to a QROPS in Gibraltar or in NZ to avoid UK income taxes. Your pension can then be paid into your local bank account or an offshore bank. You only pay Gibraltar income tax when receiving your pension, plus any local income taxes in the country you live in. Many countries don’t charge any tax.
Do I need to live and retire in Nigeria?
No. But, you need to have an offshore address in order to move your pension abroad. You can then live or retire anywhere outside the UK. If you ever move back to the UK, your pension will revert to typical UK SIPP rules.
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Pension tax relief for British expats, QROPS Nigeria article written by QROPS Specialists.QROPS Nigeria UK Pension Transfer for British Expats to Avoid Paying Taxes by Richard Malpass