HM Revenue & Customs (HMRC) has announced that qualifying recognised overseas pension schemes (Qrops) transfers for individuals not in the European Economic Area (EAA) will be hit with a 25% tax charge. This policy will hand the Treasury Â£60 million a year by 2021/22, the government said.
It makes you wonder if perhaps you have been missing something all these years â€“ a gaping loophole in pension regulation has now been closed.
For transfers requested on or after 9 March, transfers to Qrops will be subjected to a 25% tax charge unless certain conditions apply. This charge will be made before the transfer is made.
These conditions allowable include
Payments out of funds transferred to a Qrops on or after 6 April 2017 will be subject to UK tax rules for five tax years after the date of transfer, regardless of where the individual is resident,â€™ HMRC added.
There are generally between 10,000 and 20,000 transfers to Qrops each year. It is expected that only a minority of these transfers will be subject to this policy,â€™ HMRC said.
See our Document Library for suitability report templates.