- Home » Expat News » UK expat retirees advised to beware of QROPS scams
UK expat retirees advised to beware of QROPS scams
| Published: | 2 Jan at 6 PM |
Want to get involved?
Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Become a Local Expert and contribute articles.
Get in touch today!
Newly-arrived expat investors and those still in the planning stages of their move to overseas shores are warned to beware of so-called wealth managers pushing the QROPS product.
With the value of annuities still dropping and tax burdens on pension pots increasing, many older Britons are considering a move abroad. The attraction isn’t just the better weather and lower cost of living, it’s the chance to enjoy a pension on a tax-free basis.
Qualifying Recognised Overseas Pensions Schemes (QROPS) are a perfectly legitimate way to avoid tax on your pension, with the product itself designed with expats in mind. UK tax is not charged if the retiree and his/her pension pot remain outside the UK for a full five year period – perfect for those who intend their move to be permanent.
However, reports suggest that the product is now a favourite for ‘offshore pension sharks’ operating in many popular expat destinations and targeting wealthy recent arrivals by offering to move their existing pensions via QROPS. The presentation sounds attractive to the less than well-informed, with the pension moved, cashed in and the full amount given to the retiree.
Of course, the ‘wealth manager’ will take a heavy charge for his services, but HM Revenue and Customs are constantly reviewing the separate schemes and rating them as either eligible for QROPS or ineligible. If it’s obvious the scheme is being used as a tax mitigation strategy, it’s closed down forthwith.
In addition, the recent UK budget stated that all schemes must report on a regular basis to HRMC, proving they are QROPS compliant. Briefly, advice on unlocking a pension lump sum early could lead to increased risk, high charges and potential legal action, especially if a recommended product is not listed as approved on the HRMC QROPS list.
With the value of annuities still dropping and tax burdens on pension pots increasing, many older Britons are considering a move abroad. The attraction isn’t just the better weather and lower cost of living, it’s the chance to enjoy a pension on a tax-free basis.
Qualifying Recognised Overseas Pensions Schemes (QROPS) are a perfectly legitimate way to avoid tax on your pension, with the product itself designed with expats in mind. UK tax is not charged if the retiree and his/her pension pot remain outside the UK for a full five year period – perfect for those who intend their move to be permanent.
However, reports suggest that the product is now a favourite for ‘offshore pension sharks’ operating in many popular expat destinations and targeting wealthy recent arrivals by offering to move their existing pensions via QROPS. The presentation sounds attractive to the less than well-informed, with the pension moved, cashed in and the full amount given to the retiree.
Of course, the ‘wealth manager’ will take a heavy charge for his services, but HM Revenue and Customs are constantly reviewing the separate schemes and rating them as either eligible for QROPS or ineligible. If it’s obvious the scheme is being used as a tax mitigation strategy, it’s closed down forthwith.
In addition, the recent UK budget stated that all schemes must report on a regular basis to HRMC, proving they are QROPS compliant. Briefly, advice on unlocking a pension lump sum early could lead to increased risk, high charges and potential legal action, especially if a recommended product is not listed as approved on the HRMC QROPS list.
Comments » No published comments just yet for this article...
Feel free to have your say on this item. Go on... be the first!
