p_8.gif 0800 70 22 11


Qualifying Recognised Overseas Pension Scheme

5_April_Tax_Year_End.jpgWhat is a Qualifying Recognised Overseas Pension Scheme, QROPS?

Since 6 April 2006, Her Majesty’s Revenue and Customs (HMRC) has allowed individuals to transfer their UK pension funds to Qualifying Recognised Overseas Pensions Schemes (QROPS).

A Qualifying Recognised Overseas Pension Scheme (QROPS) is a pension scheme, outside of the UK, that has been registered by the HMRC to accept transfers in from a UK pension scheme.

Basically, these regulations are designed to ensure that people who no longer live in the UK can only transfer their UK pension funds to overseas pension schemes that have comparable rules to UK pension schemes.

Without that registration with HMRC, an overseas pension scheme would not be allowed to accept a transfer from a UK pension scheme, however, the responsibilities of the QROPS does not end with just registering.
On the 6 April 2012, the HMRC amended and also introduced some new QROPS rules. The new QROPS legislation has introduced limits on the amount of the lump sum that can be withdrawn from a QROPS to a maximum of 30% of the scheme fund value. Also the QROPS reporting responsibility period has been increased from 5 years to 10 years from the date the UK pension funds were transferred to a QROPS.
In addition, the  QROPS rules provide that at least 70% of a member’s UK tax-relieved scheme funds will be designated by the QROPS scheme manager for the purpose of providing the member with an income for life. The pension benefits payable to the member (and any associated lump sum) must be payable no earlier than they would be if pension rule 1 in section 165 Finance Act 2004 applied, this being age 55.
This reporting is in place to ensure that any payments made to an overseas pension member, whose pension funds have been transferred from a UK pension scheme, were receiving benefits broadly in line with what the UK scheme could pay.

Be aware of the QROPS Rules and Potential Tax Penalties:

  • A UK pension member would face a tax charge of up to 55%, on the excess of any UK pension funds transferred to a New Zealand QROPS, above the UK Lifetime Allowance;
  • An unauthorised payments tax charge will apply if the member accesses the pension benefits before the age of 55;
  • An unauthorised payments charge will apply if the member is aged 55 and receives greater than 30% of the transfer funds in the form of a lump sum, from the New Zealand QROPS, within ten years of the UK tax-relieved scheme funds being transferred to a New Zealand QROPS;
  • The QROPS has to report on any transfer made to another scheme within the reporting period. In this event, the receiving scheme has to be another QROPS.
  • The unauthorised payment charge would be 40% of the fund value, plus an additional surcharge of 15% equalling a total tax charge of 55%, and would be payable by the pension member.
About our company
Enter a succinct description of your company here
Contact Us
Enter your company contact details here