We've been continually asked by our customers "What are QROPS?". They are a UK HMRC approved scheme used for individuals who hold a UK pension and are considering moving offshore. The QROPS, or Qualifying Registered Overseas Pension Scheme, is a system whereby any person moves their pension overseas in a scheme that includes a selection of financial gains and offers larger control to the individual.
The principal attributes of QROPS consist of;
- Ability to take control of your pension in a more tax effective way
- Reduced running costs
- Greater Investment Options
- Currency unpredictability is removed
The principal negative aspects of QROPS;
An existing HMRC approved QROPS scheme can be taken off off the certified list without warning if the HMRC believes that it does not meet the criteria laid down in UK regulations. In the example of Guernsey, 310 out of a total of 313 schemes ended up being taken out in April.
There is the prospective that HMRC might behave retroactively towards QROPS schemes which it has de-registered and the pension holder might be held responsible for taxes avoided. However this to date has not happened.
HOW QROPS WORK?
QROPS are registered with HMRC if you happen to hold a UK pension fund and are hoping to move overseas and become exempt from UK taxes and legislation.
The company that operates the QROPS scheme has to be authorised by HMRC and must be experienced and taxed inside the country which it is operated from.
After you have been a UK non-resident for over Ten years after establishing of your QROPS, which you should be able to prove. Your QROPS Scheme is able to stop notifying HMRC of your withdrawals from your scheme and will no longer be subject to UK pension laws.
The moment the 10 year transition period has become completed you will then only be prone to the financial regulators 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 plan into a QROPS. The procedure is speeded up if you can in-cash your pension into cash. This is not critical to do. You will find over almost 1000 HMRC recognized QROPS Schemes, so there should be a scheme which can meet your needs.
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 might be taxation matters that you have to take into consideration with holding it in another country.
After i die what takes place with my QROPS?
All funds that are left in your QROPS when you die will be handed down onto your beneficiary's and fortunately are not subject to British inheritance taxes.
Important when establishing a QROPS is that you take professional advice. There are many situations when a QROPS isn't suitable, and many times when they are. Please contact us here at http://myqrops.net for more information.