Finance - Pension Tax Savings

Pension Tax Savings

There are ways to save tax on your pension.

Introducing the “Qualified Recognised Overseas Pension Scheme” (QROPS)

If you have not been resident in the UK for five years or intend not to be resident for five years, transferring your pension out of the UK can result in large UK tax savings. In certain circumstances you may also have access to 100% of your funds when transferring to an appropriate tax friendly country.

This can be achieved through a vehicle called a Qualified Recognised Overseas Pension Scheme (QROPS). For the QROPS to be approved by the UK Government it also has to be approved and regulated by the tax authorities in the jurisdiction where it is located.

Once an approved scheme is set up, the UK Government allows transfers from certain UK pension schemes into a QROPS tax free. The benefits include the possibility of receiving a 100% tax free lump sum and retirement age that can be reduced to as low as 50 years old in some cases. The full amount of funds remaining in the scheme at the time of your death will be distributed to your nominated beneficiaries free of UK tax provided that you have not been resident in the UK for 5 years. What’s more, pension rights in QROPS are not subject to UK Inheritance Tax;

But this is just the beginning; if you plan to live abroad you can pay into a QROPS scheme prior to leaving the UK. After 5 full tax years of not being a resident in the UK your scheme is not subject to the UK pension rules, and there is more flexibility in how your pension funds are invested. Finally, Gibraltar is within the EU Jurisdiction.

Contact a qualified professional to provide you with advice on how to transfer your current UK scheme into a QROPS. A professional can provide you with a personal pension plan, pension trustees and administrators and may liaise directly with HM Revenue & Customs with regard to the transfer of your pension across to Gibraltar. 

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