Tax Efficient QROPS

From April 2015, marks the start of a new future for pensions, introducing changes that should impact expats living outside the UK who are considering the benefits of a Qualifying Recognised Overseas Pension Scheme (QROPS).  This tax efficient QROPS is a main feature for those who has left the UK.

The new rules will permit full access to UK pensions from age 55.  There will be no compulsion to buy an annuity, the insurance policy that converts your pension pot into a monthly income for life.  The Chancellor, George Osborne has also promised pensioners that they can use their retirement fund “like a bank account”, withdrawing payments as and when they like, taking their 25% tax-free lump sum as they go.

Also to come into effect from April 2015, is the abolition of the 55% ‘death tax’ on unused pension funds.  Thus allowing beneficiaries who have been named on pension documents to be able (when the owner dies) to access the pension funds themselves with less tax payable – or none at all in some cases.

How will these changes impact on the people making decisions about whether or not to transfer to a tax efficient QROPS?

Full access to UK pensions from age 55

People will be able to have full access to their UK pensions from April 2015 onwards.  The first 25% of the pension fund is tax free and the rest will be subject to your marginal rate of income tax, so 20%, 40% or even 45% for the highest earners.  Don’t forget, the tax on your pension income is added together with any other income you may have, for example state pensions.

Abolition of the 55% ‘death tax’

One of the most controversial taxes in recent times is to be abolished from this April, which means all unused pension pots will be able to be passed on to beneficiaries, like children and spouses, free of the 55% death tax, as long as they keep the funds invested in a pension.  If your beneficiaries subsequently make any withdrawals from the pension fund, they will pay income tax at their highest marginal rate if you die after 75.  However, if you die before 75, drawdown funds can be paid to beneficiaries tax free – whether paid as pension or as lump sum.

These new changes will give pensioners greater flexibility on how they plan their finances in retirement, especially with many considering transferring their UK pensions to a tax efficient QROPS.  Pension transfers under QROPS are a tax efficient way for expats to greatly enhance their pension flexibility.

Other Benefits of a QROPS

Tax Efficient QROPS

• A QROPS gives you the option to pass on the pension fund to a spouse, children and/or grandchildren as a pension or a lump sum, free of tax.
• Most QROPS transfers can provide access to a greater investment choice.
• Tax free cash of potentially 30% for a QROPS compared to 25% for a UK pension scheme.

To read more about the benefits of QROPS HERE.

For more information about how a tax efficient QROPS can help you call GC QROPS on +34 698 243 745 or Contact Us Today.

GC QROPS has been successfully assisting UK expats in Spain with UK pension transfers for 9 years since 2006.

We are completely independent, and can advise on a wide variety of QROPS pension schemes – we are not tied to any single provider, which means that we will recommend the scheme which meets your exact requirements and needs.