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HMRC Change To QROPS Conditions

HMRC Change To QROPS ConditionsRecently HM Revenue & Customs (HMRC) sent a ‘legal request letter’ (dated 17th April) to all global providers of Qualifying Recognised Qualifying Overseas Pension Scheme (QROPS). In the letter HMRC asked that a QROPS provider must satisfy itself that it meets the Recognised Overseas Pension Scheme (ROPS) rules. Specifically it asks three questions:

1. Does the scheme satisfy the ROPS conditions?
2. Does the scheme meet the minimum age test (age 55)?
3. Does the scheme wish to appear on the public list of ROPS?

The new rules were backdated to 6th April. This puts transfers to some schemes at risk of a 55% unauthorised payment charge.
This letter has been perceived as an attack by Australian and New Zealand QROPS schemes as although they meet local national rules often benefits can be accessed before the age 55 for reasons other than ill health.

This could cause considerable challenges for Australian and New Zealand schemes.

A separate issue is that HMRC confirmed in March that non-EU QROPS have to temporarily continue to apply the rule where 70% of the transfer value made to a QROPS has to provide an income for life. They therefore cannot currently offer the same flexibility as UK pensions.

EU QROPS schemes can offer the flexibility, and Malta became the first QROPS jurisdiction to change local legislation to allow full flexibility. Malta also meets the new conditions for ROPS.

It is important to seek professional and personalised advice before transferring your pension fund, whether it is to a QROPS or another scheme. Note that transfers from defined benefit (final salary) schemes can only take place if the member has received advice from a pension transfer specialist regulated by the Financial Conduct Authority. You also need to consider the tax implications, both the pitfalls and opportunities, here in Portugal.

Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.

Blevins FranksW : www.blevinsfranks.com
E: algarve@blevinsfranks.com
T: 289 350 150

 

 

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