QROPS Zimbabwe. British Expats in Zimbabwe Can Now Transfer their UK Pension Offshore
British expats living in Zimbabwe or wishing to retire in Zimbabwe can now transfer their pension into a QROPS Zimbabwe to maximize pension tax relief. British expats living or working in Zimbabwe can take advantage of their offshore status and transfer their UK pension offshore to somewhere secure like the Gibraltar or New Zealand and will no longer have to pay UK taxes on their pension as long as they stay offshore. Zimbabweans who have worked in the UK can also transfer to a QROPS Zimbabwe if they have built up a substantial pension in the UK.
Zimbabweans who have worked in the UK can also transfer their pensions to a QROPS to avoid UK taxes.
Zimbabwe, officially the Republic of Zimbabwe and formerly Southern Rhodesia, Rhodesia, the Republic of Rhodesia, and Zimbabwe Rhodesia is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia to the northwest and Mozambique to the east. Zimbabwe has three official languages: English, Shona and Ndebele.
Zimbabwe began as the British crown colony of Southern Rhodesia, created from land held by the British South Africa Company. President Robert Mugabe is the head of State and Commander in Chief of the armed forces. Morgan Tsvangirai is the Prime Minister. Mugabe has been in power since the country’s internationally recognized independence in 1980.
Mugabe points to foreign governments and alleged “sabotage” as the cause of the fall of the Zimbabwean economy, as well as the country’s 80% formal unemployment rate. Critics of Mugabe’s administration, including the majority of the international community, blame Mugabe’s controversial programme which sought to seize land from white commercial farmers.
Government spending is about 2/3rds of GDP. In an effort to combat inflation and foster economic growth the Zimbabwean Dollar was suspended indefinitely on 12 April 2009. Zimbabwe now allows trade in the United States Dollar and various other currencies such as the South African Rand, Euro, Sterling, and Botswana Pula. If you transfer your pension offshore to a QROPS Zimbabwe, you mitigate UK tax and you hold your pension in a range of currencies, Sterling, Euros, Rand or Dollars or keep the whole lot in Pounds.
Why live or retire in Zimbabwe as a British expat?
Over 6,100 Brits live and work in Zimbabwe, of which 2,921 are pensioners. For the Brits living in Zimbabwe, you can take advantage of your offshore address to reduce UK tax on your pension as well as protect your wife and children from high UK taxation should anything happen to you. If you move your pension to a QROPS Zimbabwe, you can avoid UK taxes on your pension. You would also avoid Zimbabwe taxes as expats don’t pay taxes on worldwide income only Zimbabwe-sourced income.
Victoria Falls, one of the world’s biggest and most spectacular waterfalls, is located in the country’s northwest as part of the Zambezi river. The country has a tropical climate with a rainy season usually from November to March. The climate is moderated by the altitude. Zimbabwe has many different cultures which may include beliefs and ceremonies, one of them being Shona. Zimbabwe’s largest ethnic group is Shona. The Shona people have many sculptures and carvings of gods (idols) which are made with the finest materials available.
Traditional arts in Zimbabwe include pottery, basketry, textiles, jewelry and carving. Like in many African countries, the majority of Zimbabweans depend on a few staple foods. “Mealie meal”, also known as cornmeal, is used to prepare sadza or isitshwala and bota or ilambazi. Sadza is a porridge made by mixing the cornmeal with water to produce a thick paste. After the paste has been cooking for several minutes, more cornmeal is added to thicken the paste.
Cricket is the most popular sport, although rugby and football also have a following. Zimbabwe have also done well at golf in the past.
The Benefits of Moving a UK Pension to a QROPS Zimbabwe
What are the benefits of a QROPS Zimbabwe Pension Transfer for British 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 Gibraltar or New Zealand which is under the protection of the British Crown, but has its own strong financial regulations which are tax efficient
What is QROPS Zimbabwe?
A Qualifying Recognized Overseas Pension Scheme (QROPS Zimbabwe) 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 5 years of living offshore, the reporting requirements to HMRC cease.
If you are living in Zimbabwe at the moment, you can take advantage of your offshore address in order to move your UK pension into a QROPS Zimbabwe to avoid further UK taxes down the line. A QROPS Zimbabwe is an appropriate tax-planning structure to avoid UK taxes if you are considering living or retiring abroad.
What is the economy like in Zimbabwe?
Mineral exports, agriculture, and tourism are the main foreign currency earners of Zimbabwe. The mining sector remains very lucrative, with some of the world’s largest platinum reserves being mined by Anglo-American and Impala Platinum. The Marange diamond fields, discovered in 2006, are considered the biggest diamond find in over a century. They have the potential to improve the fiscal situation of the country considerably, however almost all revenues from the field have disappeared in to the pockets of army officers and ZANU-PF politicians. Zimbabwe is the biggest trading partner of South Africa on the continent.
The downward spiral of the economy has been attributed mainly to mismanagement and corruption of the Mugabe regime and the eviction of more than 4,000 white farmers in the controversial land redistribution of 2000. Zimbabwe was previously an exporter of maize but has become a net importer. Tobacco exports and other exports of crops have also declined sharply.
Tourism was an important industry for the country, but has been failing in recent years. The Zimbabwe Conservation Task Force released a report in 2007 estimating 60% of Zimbabwe’s wildlife has died since 2000 due to poaching and deforestation. The report warns that the loss of life combined with widespread deforestation is potentially disastrous for the tourist industry.
Since the formation of the Unity Government in 2009, The Zimbabwean economy has been on the rebound. Zimplats, the nation’s largest platinum company, has proceeded with US$500 million in expansions, and is also continuing a separate US$2 billion project, despite threats by Mugabe to nationalize the company. Zimbabwe has demonstrated growth rates of 6% (2009), 9% (2010) and 7.3% (2011). Public debt is 70.5% of GDP.
What are the taxes for expats living in Zimbabwe?
Zimbabwe individual income tax is imposed at progressive rates up to 35%. There is also a 3% AIDS Levy.
Income Tax Rates Deduction
0 – 1,980 0% –
1,981 – 6,000 20% 396
6,001 – 12,000 25% 696
12,001 – 18,000 30% 1,296
Above 18,001 35% 2,196
Individuals pay tax on Zimbabwe-sourced earnings only. This includes income from shares and investments. This means that a QROPS Zimbabwe will protect your pension from both UK taxes and Zimbabwean taxes.
There is no tax on a QROPS in Zimbabwe. However, if you transfer your pension to Gibraltar, you will pay a flat rate tax of 2.5% at source. There is no tax if you hold your pension in New Zealand.
An individual is resident if he/she is ordinarily resident and resides in Zimbabwe for an aggregate period of 183 days in a year of assessment. Spouses are taxed separately; joint filing of tax is not permitted.
Taxation of Capital gains in Zimbabwe: The rules applicable to companies also apply to individuals. Rollover relief is available on the disposal of a principal private residence or land purchased for the purposes of constructing such a residence. The same applies to transfers between spouses. A taxpayer over the age of 55 is not subject to capital gains tax on the disposal of a principal private residence.
Tax Deductions and allowances – With effect from 1 January 2010, the first $1,920 of taxable income per annum and up to a maximum of $5,000 on a retrenchment package is tax free. With effect from 1 November 2009, a $400 of bonus is tax free. Employee NSSA and pension contributions are also tax free up to a combined amount of $5,400 per annum.
TAX CONCESSIONS FOR ELDERLY PERSONS IN THE 2010 TAX YEAR
Current tax legislation provides for a number of tax concessions which are meant to provide tax relief for elderly persons.
– Exemption from Income Tax of the first US$3 000.00 per annum on rental income earned by persons aged 55 years or above.
– Exemption from Income Tax of the first US$3 000.00 per annum on income earned by persons aged 55 years or above from bankers acceptances
– Exemption from Income Tax of the first US$3 000.00 per annum on income earned by persons aged 55 years or above from interest on deposits to financial institutions.
– Taxpayers aged 55 years or above are entitled to an elderly persons’ credit of US$900.00 per annum.
– Pensions received from a pension fund or the Consolidated Revenue Fund by taxpayers aged 55 years or above are exempt from Income Tax.
– Where an employer disposes of a motor vehicle to an employee aged 55 or above whether on termination of employment or otherwise, the benefit is exempt from tax.
A QROPS Zimbabwe will be exempt from income tax as it is not Zimbabwe-sources. A QROPS Zimbabwe also would avoid UK taxes as well as protecting your family from IHT. Normally, under UK pension law, if you pass away there would be a 55% tax upon death. A QROPS Zimbabwe avoids UK inheritance tax (IHT), so the entire pension pot is passed on to your nearest and dearest.
Capital Gains Tax
– The full amount arising from the disposal of a Principal Private Residence (PPR) by persons who are 55 years or above on the date of the sale is exempt from Capital Gains Tax.
– The first US$1 800.00 that accrues to a person aged 55 years or above on the sale of any unlisted marketable security is exempt.
QROPS Gibraltar for British Expats in Zimbabwe
Avoids UK and Zimbabwe taxation
Flat 2.5% income tax rate at source in Gibraltar
Currency choice of GBP, EUR or USD
30% lump sum at 55 available
120% GAD rates allowed when drawing an income at retirement age
Much wider investment range allowed including shares, mutual funds, ETF’s, bond fund, hedge funds, high interest bank notes, etc.
QROPS New Zealand for British Expats in Singapore
Avoids All Taxation
Currency choice of GBP, EUR or USD
30% lump sum at 55 available
100% of any increase in pension pot after transfer available as a further lump sum
5 investment strategies available dependent on your risk profile
QROPS Zimbabwe Providers
Do I need to move my pension to Zimbabwe?
No. There are no QROPS providers in Zimbabwe, so you need to transfer to a 3rd jurisdiction such as New Zealand or Gibraltar where it can grow without having to pay any UK taxes. Your pension can then be paid into your local bank account or an offshore bank.
Do I need to live and retire in Zimbabwe?
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.
For enquiries, please send email to email@example.com
QROPS Zimbabwe article written by QROPS Specialists.QROPS Zimbabwe Pension Transfer for British Expats to Avoid Paying Taxes by Richard Malpass