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We are now repeatedly asked by our clients "What are QROPS?". They're a UK HMRC accepted scheme used for individuals who hold a British pension plan and are preparing for moving abroad. The QROPS, or Qualifying Registered Overseas Pension Scheme, is really a system whereby an individual moves their pension overseas in a scheme that includes a range of financial benefits and provides better control to the individual.
The principal benefits of QROPS involve;
- Ability to control your pension plan in a more tax efficient way
- Lower running fees
- Greater Investment Options
- Currency movements is removed
The principal potential problems of QROPS;
A current HMRC authorized QROPS scheme can be removed off the accredited list without warning if the HMRC believes that it does not meet the requirements laid down in UK regulation. When it comes to Guernsey, 310 out from a total of 313 schemes ended up taken out in April.There's the potential that HMRC could very well behave retroactively towards QROPS schemes which it has de-registered and the pension holder could possibly be held liable for taxes avoided. Having said that this as of yet has not happened.
HOW QROPS WORK?
QROPS are registered with HMRC for you if you hold a British pension fund and are looking to move abroad and become exempt from UK taxes and laws.
The agency that operates the QROPS scheme must be authorized by HMRC and should be experienced and taxed inside the country which it is operated from.
After you have been a UK non-resident in almost 10 years after setting up of your QROPS, which you must be able to prove. Your QROPS Scheme can stop notifying HMRC of your withdrawals from your scheme and will no longer be subject to UK pension laws.
Once the Ten year transition period have been completed you will then only be prone to the financial authorities where you are domiciled and where your QROPS Scheme is located.
How to transfer your QROPS?
As a rule of thumb it should take around 2-3 months to transfer your pension into a QROPS. The operation is speeded up if you can in-cash your type of pension into cash. This is not essential to do. There are over almost 1000 HMRC approved QROPS Schemes, so there must be a scheme which can satisfy your requirements.
Schemes are based from New zealand and australia to Malta and Gibraltar. It's important to note that your QROPS does not need be held in the same country that you are domiciled. However there can be taxation difficulties you could possibly need to take into consideration with holding it in another country.
When I die what takes place with my QROPS?
All funds that are left in your QROPS when you die will be passed onto your beneficiary's and fortunately are not subject to British inheritance taxes.
Critical when establishing a QROPS is that you take specialist advice. There are many occasions when a QROPS isn't suitable, and lots of times when they are. Please contact us here at http://myqrops.net for more info.