UK Pension Transfers: UK Budget Will Spark Pensioners Move Abroad
UK pension transfers for UK pensioners moving abroad.The new UK budget will spark a move abroad for UK pensioners following the increase in UK taxes on middle income earners. Middle income earners slammed in new UK budget. 325,000 more workers are to pay a higher rate of tax of 40% as the income tax threshold was lowered. The report said the higher-rate threshold will be frozen at £42,475 in 2012-13. The next year, it will be reduced to £41,450. This could affect 4 million people by 2014 which could provoke pensioners to move abroad, especially to places such as Cyprus with it’s 5% income tax and Thailand which currently does not tax pension income for expats.
From this April 6th, 2012 the first £10,500 of income will be tax free for people aged between 65 and 74, and £10,660 for those aged 75 and up. But from 6th April 2013, the personal allowance will be frozen for current pensioners and not available for anyone retiring after that date.
Inland Revenue figures show in 2013-14 over 4 million people will be worse off by £83 a year on average. Within the total, 360,000 individuals aged 65 will lose £285 a year on average.
Currently, in the UK taxes include:
- 20% – 45% income tax
- 18% – 28% capital gains tax
- 10% – 42.5% dividends tax
- 55% tax upon death on pensions in drawdown
- 40% inheritance tax
Pensioners Moving Abroad. What are the options?
For pensioners moving abroad they have a number of options. For existing pensions, they can move their pension into a QROPS (Qualifying Recognized Overseas Pension Transfer). This will enable them to:
Avoid UK income tax
Avoid UK CGT
Avoid UK Inheritance Tax
Avoid UK 55% tax upon death on pensions in drawdown
For moving to Thailand, have a look at retirement in Thailand.
UK Pension Transfers Pensioners Moving Abroad
The biggest misconception when you are moving abroad is that you have to move your pension with you. That is not the case and often, for tax reasons as well as political ones, it may not be the best choice.
UK Pension Transfers Case Study
Here is a case study and QROPS example…
John and Mary move to Singapore and have a £200,000 pension pot. They can move to a QROPS in Malta which has a Double Taxation Treaty with Singapore and so income is paid out gross. This can then be paid into your Singapore bank account or paid into an offshore account.
You would avoid all UK taxes on your pension.
UK Pension Transfer Links
UK Pension Transfers to NZ
UK Pension Transfers to Isle of Man
UK Pension Transfers to Malta
UK Pension Transfers to Gibraltar
UK Pension Transfers to NZ
UK Pension Transfers to Australia
UK Pension Transfers to USA
UK Pension Transfers to Canada
UK Pension Transfers to India
UK Pension Transfers to Shanghai
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