Contact

News & Insights

Reclaiming the QROPS Transfer Charge – Clarification of Regulations

Why is there a charge on QROPS pension transfers

The 25 per cent QROPS pensions transfer charge was originally intended to dissuade retirement savers from utilising a grey taxation area that arose when transferring pensions outside of the UK.

The rules now mean that any person who made an expat pension transfer to the same country in which they are either physically resident or tax resident can claim back the charge. A retirement saver will also qualify for an exemption if they are a member of a sponsored occupational pension which qualifies as a QROPS.

The charge does not apply to transfers made in the European Economic Area; EEA-resident members are allowed to utilise a QROPS based in any other EEA country.

Any retirement saver wishing to reclaim the tax charge should use the correct form to contact HM Revenue & Customs and should provide the following information:

  1. Member’s name, date of birth and principal residential address
  2. The member’s National Insurance number or a statement that they do not have one (unless the member is under 16 or a citizen of a country outside the United Kingdom and is not resident in the United Kingdom)
  3. The date of the transfer and, if different, the date of the event triggering the liability to pay the charge on the transfer
  4. The transfer amount
  5. The date the charge was paid to HMRC
  6. The circumstances which render the member eligible for exclusion from the charge
  7. The date of the circumstances mentioned above (f) during the relevant transfer period
  8. The amount the member is claiming

Incomplete or inaccurate claims for repayment will not be processed by HMRC, so it is vital that members ensure they have organised all the necessary information before beginning the process.

Repayment is made either to the scheme member or to the manager of the scheme which paid the original charge. Although members have previously been able to reclaim the charge, the new regulations clarify and formalise the procedure for doing so. Some QROPS providers have questioned the rationale of having a charge in the first place. However, HMRC maintains it is essential to prevent the use of ‘third party’ QROPS transfers to Malta or Gibraltar by members living in countries that do not have their own QROPS.

A memorandum accompanying the draft legislation stated:

“These instruments provide the detail that individuals, pension scheme administrators, pension scheme managers and HMRC need for the process of claiming a repayment of overseas transfer charge in certain specified situations, including who should make that claim and how to make the claim and the repayment. The first instrument also covers the repayment of overseas transfer charge where it was deducted and paid in error. This will enable the right people to make the right claim for overseas transfer charge within the time limits. Without this instrument individuals, pension scheme administrators, pension scheme managers and HMRC would not know the process for claiming or making a repayment.” **

Pensions Transfer Advice from Blacktower FM

Blacktower FM works to help you achieve your financial and retirement goals. As part of this service our specialist wealth managers can help you decide whether transferring your pension overseas is the best fit for your circumstances including explaining the benefits and drawbacks of QROPS.

For more information, contact your local Blacktower office today.

 

*   http://www.legislation.gov.uk

** https://assets.publishing.service.gov.uk

Other News

The Spring Budget 2017 – some major changes

CalculatorOn March 8, Phillip Hammond delivered the Spring Budget 2017. Among those most affected by the changes – which included the self-employed – were those who wish to set up Qualifying Recognised Overseas Pension Schemes (QROPS). Here is a brief overview of how the Budget 2017 has affected QROPS and what it may mean for you.

Read More

Could the UK’s state pension fund run out in 14 years?

Pound coins stacked in pilesThe defined benefit scheme – whereby the employer promises the employee a specified payment upon retirement, the amount of which is calculated based on several factors including the years the contributor has been in the scheme, their age, and their salary at retirement – is no longer viable in today’s world.

Recently, the high-profile collapse of the construction firm Carillion has served as yet another example of why this is the case.

The collapse means that, just like in the heavily reported case of retail giant BHS, thousands of employees are likely to have their carefully laid out retirement plans affected. Now that the company has gone into liquidation, it cannot afford to pay employees their expected pension amount, leading to yet another sizeable pensions black hole with a deficit of around £580 million (although the BBC reports that the final figure could be as high as £900 million).

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information:

You are currently viewing the Blacktower Financial Management EU website.

You may be looking for the Blacktower United States website.

Blacktower United States > X Stay on this site

Or choose your country.