Effective from 9 March 2017, transfers to offshore schemes (such as NZ, Malta, Gibraltar, Guernsey etc) will now be subject to a 25% HMRC tax charge unless both the individual and the QROPS reside in the same country.
As predicted (click here for our previous warnings on this issue), the HMRC directive (stating UK pension transfers should only be made to the country in which the member resides) will now be enforced by legislation introduced in the Finance Bill 2017, effective to all transfers requested on or after 9 March 2017.
Who will be impacted by the changes:
Individuals with UK pensions intending to transfer those pensions (outside the EEA and not into an occupational scheme or overseas public service pension) into a pension scheme in a country other than their country of residence will be affected. All transfers from 9 March 2017 will be subject to the new tax. In addition, transfers received by a QROPS after 5 April 2017 will now be subject to the extended taxing provisions whereby any payments out of the QROPS for 5 UK tax years from the date of transfer will now be subject to this tax.
If you reside in the same country as your QROPS transfer, you will not be impacted by this new tax, however, if you have already made a QROPS transfer and your scheme is currently on the HMRC ROPS list, then in order to remain on that list, the scheme manager will need to make a declaration to HMRC by 13 April 2017 as follows:
All schemes currently on the HMRC ROPS list will need to sign a declaration (APSS240 form) confirming that they will comply with any requirement to pay tax charges to HMRC. This form must arrive with HMRC by 13 April 2017, otherwise they will be removed from the HMRC ROPS list and be subject to a tax of at least 40% for unauthorised payment.
All Sterling Planners’ clients with transfers made prior to 8 March 2017 will receive a letter by Friday 10th March requesting signed APSS240 forms to be returned to us by Friday 17th March. We will then express post and track these forms to HMRC to ensure proper and timely receipt in the UK (HMRC require original signed copies – they will not accept scanned email copies).
The HMRC ROPS list will be suspended from 13 April to 17 April as they process all the APSS240 forms for existing QROPS schemes.
The new HMRC ROPS list will be published on 18 April 2017. If your scheme gets removed from the list, you will be subject to an HMRC tax charge of at least 40% on your total transfer value.
Link to HMRC Policy Paper -Qualifying recognised overseas pension schemes: charge on transfers.
For Specialist QROPS advice on your UK pension situation – click here for details on how to engage our services.