The British tax man has thrown another spanner in the works for expats planning to switch their retirement savings to a Qualifying Recognised Overseas Pension Scheme (QROPS).
Just days after more than 400 of the offshore pensions were removed from the official HM Revenue and Customs (HMRC) list of QROPS that can accept transfers, the tax authority is giving early warning another cull may be on the way.
In a pensions newsletter for providers and advisers, HMRC has signalled the list will be suspended again on June 2 and a revised list published on June 5.
HMRC suspended the list on April 14 and published a revised list on April 18.
In the new list, nine financial centres lost their QROPS status and 410 schemes stopped receiving pension transfers.
HMRC declines to discuss why QROPS are delisted.
Delisting QROPS
“We told you about planned changes to the scheduled publication of the QROPS Notification List following recent changes to the pension tax rules relating to overseas pension schemes,” says the newsletter.
“There are additional changes planned to the scheduled publication of the QROPS notification list.”
QROPS can be delisted for several reasons, including:
- The last member of the scheme has died, withdrawn their pot or transferred their funds out of the pension
- The QROPS fails to meet the scheme rules
- The provider decides not to offer QROPS any longer
QROPS rules have changed dramatically in 2017.
The government introduced a controversial 25% exit tax on switching pension funds outside of the European Economic Area in Budget 2017 and other administrative changes about how an overseas pension is regulated.
Australia QROPS at risk?
The HMRC warning puts QROPS transfers in limbo again just days after the last round of changes came into effect.
HMRC is unlikely to comment on why the June list is suspended and the timing comes before the General Election 2017 on June 8, which suggests a legislation change is not on the way.
The remaining option is HMRC is reviewing the status of QROPS providers or their regulatory framework.
Australia QROPS are considered most at risk due to payments allowed from the country’s superannuation schemes to retirement savers under 55 years old. Such payments are not allowed under British law.
Australia lost 89 QROPS in the last delisting, reducing the number of pensions available there for expats from 442 on April 6 to 353.
QROPS Information and Guidance
For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.
