Retirement

QROPS Rule Changes Steered Through Westminster

Tories and the opposition are colluding to see changes to Qualifying Recognised Overseas Pension Scheme (QROPS) regulations through to the statute book before General Election 2017.

In a viciously slimmed down Finance Bill that has seen the government shelve many proposed tax and pension changes in the hope they can be resurrected after General Election 2017, QROPS legislation has remained unscathed.

All parties have horse traded legislation to ensure any necessary business before Parliament is concluded in the limited time available before dissolution and MPs go to the hustings in their constituencies.

Clearly, both sides of the House considered QROPS fell into that camp.

Proposed rules beat election guillotine

Financial Secretary to the Treasury Jane Ellison addressed the house to confirm the QROPS changes – including the 25% transfer charge – would all go ahead before the election.

“The Finance Bill will make changes to ensure that pension transfers to QROPS requested on or after 9 March 2017 will be taxable. The charge will not apply if the individual and the pension savings are in the same country, if both are within the European economic area or if the pension scheme is provided by the individual’s employer,” she said to MPs.

“Before the changes were announced in the Spring Budget, an individual retiring abroad could transfer up to £1 million in pension savings, without facing a charge, to a pension scheme anywhere in the world provided that it met certain requirements.”

Ellison then claimed retirement savers with QROPS were gaining an unfair tax advantage.

Unfair tax advantages

“Overseas pension transfers had become increasingly marketed and used to gain an unfair tax advantage on pension savings that had had UK tax relief. That was obviously contrary to the policy rationale for allowing transfers of UK tax-relieved pension savings to be made free of UK tax for overseas schemes,” she said.

“This charge will deter those who seek to gain an unfair tax advantage by transferring their pensions abroad. Exemptions allow those with a genuine need to transfer their pensions abroad to do so tax-free.”

Other clauses that align tax on overseas pensions with those of UK pensions for anyone tax resident in the UK were also agreed between the parties.

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.

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