Date: 26 September 2008
QROPS represent a valuable investment and tax planning opportunity for individuals with UK pensions rights who are not resident in the UK or who are considering leaving the UK. The benefits of a QROPS will depend on the country in which it is established, and your country of residence, but in general terms include:
- The purchase of an annuity before the age of 75 is not compulsory;
- the normal minimum pension age of 50/55 need not apply, giving you greater investment freedom;
- unused pension funds may be left to your beneficiaries on death, free of tax at source; and
- pension payments may be made without deduction of tax at source, and are possibly only subject to income tax in your country of residence and are potentially or favourably treated.
To qualify for these benefits, an individual transferring UK pensions rights to a QROPS must become non-UK resident for at least 5 years and not intend to return for the foreseeable future.
In order to be eligible, a QROPS must be:
- Approved by HM Revenue & Customs (a number of approved QROPS exist in a wide range of overseas jurisdictions);
- regulated as a pension scheme in the country in which it is established; and
- recognised for tax in that country (although the tax may be low depending on the jurisdiction); and
- some QROPS require the individual to be a resident of that territory.
As a guide, a minimum UK pension pot of £0.5m is required to ensure a transfer to a QROPS is efficient and worthwhile.
Please contact our Personal Tax Manager Paula Jeffs for further details and to discuss whether a QROPS may be suitable for you.