What is QROPS?
QROPS (Qualifying Recognised Overseas Pension Scheme) is an overseas pension scheme meeting certain requirements set by Her Majesty’s Revenue and Customs (HMRC). A QROPS pension can receive transfers from UK Pension Benefits without incurring an unauthorised payment and sanction scheme change.
There are over 3000 QROPS available with a variety of different pension structures on offer. QROPS is a popular scheme among British expats due to the flexibility in currency and investment. A QROPS fund can help you avoid UK taxation as long as the pensioner is a tax resident outside the UK.
- HMRC allow up to 30% to be drawn as a tax-free lump sum
- Avoid an inheritance tax of upto 55%
- Larger investment scope
- Annuity purchase is not required
- No Lifetime Allowance (LTA) charge
Frequently Asked Questions
The length of time you have been a resident outside of the UK for tax purposes. This is measured in tax years (and not calendar years). This rule determines when the QROPS benefits can be taken. During the first five years, retirement benefits are same as those available in the UK.
Once you have been a non-UK resident for 5 tax years the QROPS pension follows the rules of its jurisdiction.
If you are a USA resident, many QROPS are not compatible with USA laws. But the double taxation treaty between USA and Malta offers a solution. However, your financial advisor needs to be qualified to address this.
- Financial advisor sends a letter of authority – this allows the advisor to find out more details about your pension.
- Pension provider sends your financial advisor the details of your scheme and transfer costs
- Financial advisors help you choose the QROPS and jurisdiction that is best suited to you
- Discharge form sent to pension provider
- QROPS application form sent to QROPS provider
- Pension transferred to QROPS
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