Gary Smithson - Expat Pensions Adviser - UK changes to QROPS released

The draft regulations I wrote about last week have been confirmed by Wednesday's UK Budget, with the actual rules and guidance notes being published immediately on HMRC's website.

The action required for QROPS holders depends largely on where the QROPS is based. For many, nothing needs to be done. For example, if you have a QROPS in Guernsey, you will have to do nothing because the lawmakers in Guernsey are effecting changes in their tax system to ensure they fully meet the new rules.

Here is a very brief list of the changes: -

HMRC right to information - extension to ten year reporting

From 6th April 2012, QROPS schemes must notify HMRC of any lump sum and/or pension income paid to a member if it is paid within ten years of the transfer in of a UK scheme.

Of course, QROPS have only been available to most since 2006 and so this rule catches anyone who is, or will soon, be paid from their pension scheme.

So by way of example - a client completed their transfers from the UK to a QROPS in 2010. If he receives any income before 2020, whether he is overseas or not, it will be reported to HMRC. After 2020, if he remains overseas, no reporting is required.

Note that if someone returns to the UK then all payments made will be reported to HMRC. This has always been the case.

New Zealand - Pensions Abuse

From 6th April, no transfers can be made to New Zealand QROPS, until they change their rules to comply. The main area they will need to change is how much income people can take. There are many cases of people in New Zealand schemes taking all of their pension scheme as a one-off lump sum, which goes very much against the spirit of UK law. As of 6th April, HMRC have made this impossible.

It is also worth pointing out that anyone who has done this could face difficulties with HMRC in the future. We will wait and see.


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