HMRC Propose Changes to QROPS Legislation
In the world of finance, it seems that nothing ever stays still for long – the latest proposed changes could have a big effect on expats who wish to transfer their UK pensions into a QROPS, or Qualifying Recognised Overseas Pension Scheme.
HMRC has published a detailed proposal outlining the changes that they wish to make in regards to QROPS, including a big change in reporting responsibilities. Since their introduction, some QROPS have been subject to investigation by HMRC due to poor conduct; the latest proposals are an attempt to revise the various conditions that each QROPS has to meet in order to be approved, and to seek a higher level of compliance to try to ensure that schemes are not abused. The objectives of the proposed legislative changes to QROPS are also an attempt to ensure fair taxation of transfers.
What Would Changes in QROPS Legislation Mean?
The changes as proposed on 7th December 2011, have been issued under the Finance Act 2012 draft legislation and while some new proposals were certainly not unexpected by the finance and pensions industry, the immediate reaction to these proposals seems to present concerns as to the impact of these changes if they are to go ahead. The main changes proposed include:
- Reporting – it used to be that when transferring your UK pension into a QROPS, you were required to report to HMRC for a period of five years after leaving the UK. If the proposed changes to legislation are approved, this reporting period will be extended to 10 years.
- Tax charges – every QROPS must be recognised by their own source country in regards to tax.
- Acknowledgement – the proposed changes to QROPS legislation would mean that anybody wishing to transfer their pension into a QROPS must first make an official acknowledgement of the potential tax implications regarding the transfer.
Following the announcement of these proposed changes to QROPS legislation, there will now be an eight week consultation period, which is due to end on 31st January 2012. If passed, it may cause significant changes in regards to the tax benefits that QROPS can currently offer to expats and could result in any tax exemption offered by the QROPS only being able to continue if the same rules apply to both non-residents and residents of the scheme’s jurisdiction.
Whether or not the consultation brings about any amendments to the proposed legislative changes, the final results will come into effect as of 6th April 2012.
Leading Advice on QROPS Transfers
Guardian Wealth Management is one of the world’s leading experts on QROPS. Our financial advisors can answer any questions you may have regarding QROPS transfers and the potential benefits a QROPS may offer, or any concerns that you may have about the proposed changes, as outlined above.
If you’d like more information about QROPS , follow the link to our QROPS page. Alternatively, you can download our FREE QROPS guide in order to understand a little more about this expat alternative to UK pensions.