Loading

wait a moment

A 5 Minute Guide To QROPS and QROPS Transfers 

QROPS pensions were introduced in the UK to allow British citizens who decide to retire abroad to move their privately funded pensions away from the UK to a more tax efficient system. This means you are no longer under the auspices of the HMRC, but can select the tax regime of your choice. You do not actually have to be living in the same country where your pension plan is based.

Why has the HMRC accepted QROPS?

Obviously, they did not want to, but the UK government was forced to comply due to an EU directive. However, they still do have some restrictions and control. The two main ones that should concern you are whether the provider is recognised by the HMRC, and if you do return to the UK within five years you will be subject to what could be very severe tax repayments. HMRC do have a list of qualifying QROPS providers for you to inspect and choose from.

Do I qualify for QROPS?

If you are a UK citizen who has retired abroad, or are planning to in the near future, there is a good chance that you qualify for this scheme. This is where it is a good idea to contact a company like the QROPS Help Centre where QROPS advisers will help you find suitable providers of this scheme. Though it might seem obvious to select a provider from the country you are retiring in, they might not be the best choice for you. They can also help you sort out any associated fees and legalities involved.

QROPS and the USA

A great many UK citizens retire to the USA, and a lot of those have had difficulty sorting out their private pensions as the IRS do not willingly accept QROPS as being legal. This is where you need a good QROPS USA adviser to help you. In principle, this scheme has always been available, though the IRS has fought against it. However, it was not just British citizens who were affected; US citizens living abroad also could not use the scheme.

Some QROPS providers have managed to restructure the way that they manage their trusts so it is now IRS friendly, and works with the 401(k). This works both ways so that UK citizens in the USA, and US citizens retiring outside of their country can both benefit.

Nevertheless there is still a lot of red tape to get over, and you need the expertise of a QROPS USA adviser to get you through it. But the good news is that it does open a lot more investment opportunities.

March 2017

As of March 2017, some changes were introduced to the system after the UK Budget announced a new tax charge would be added to some overseas transfers. The changes have had limited impact as they were intended to thwart transfers to exotic destinations that might enable access to the full pension fund while paying little or indeed any tax. The modifications had nothing to do nothing to do with Brexit, and are only enforced in certain situations.

For full details see gov.uk.

 

Leave a Reply

Your email address will not be published. Required fields are marked *