QROPS providers surprised by tax change
New Zealand QROPS providers say they can work with a surprise change to the regime, revealed in Britain’s latest Budget.
Friday, March 10th 2017, 6:00AM
by Susan Edmunds
It was revealed that people looking to move a UK pension offshore will now face a 25% tax charge.
The charge will not apply if, at the point of transfer, the person and the QROPS scheme are in the same country, both are within the European Economic Area or the QROPS is provided by an employer.
Payments out of funds transferred to a QROPS after next month will be subject to UK tax rules for five years after the transfer, regardless of where the person was resident.
Gavin Dixon, chief executive of pension transfer firm Britannia, said the move was unexpected and would complicate some areas.
"It is really aimed at stopping people shopping their pensions around different global jurisdictions to avoid paying tax," he said.
"Money going into a UK pension is tax exempt as is the investment returns made by the pension so the UK has increasingly and in varied ways look to reduce people avoiding tax where they take the money out."
He said the exemption that allowed a QROPS transfer in the country in which a person was resident would help New Zealand schemes.
"People living in New Zealand can still transfer to a New Zealand QROPS without being affected by the 25% charge. Most of Britannia's clients still live in New Zealand– a few have moved back to the UK or Australia mainly. This shows that pension transfers into Britannia are from people who have committed to New Zealand."
He said, for the type of person his firm dealt with, the pros and cons of transferring remained much the same as they were before.
"What the changes do reinforce is that QROPS is complicated in an area that is really important that people engage in and get the best answer for them. It critical to engage with advisers who understand the market in depth and providers line Britannia who are well versed in the market."
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