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QROPS overhaul to clarify overseas transfer charge repayments
| Published: | 21 Nov at 6 PM |
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QROPS procedures are undergoing yet another overhaul as the British government publishes a draft of new regulations.
The government’s document lists two new regulations, referring to them as technical consultations, the first of which proposes adjustments to the manner in which UK expats with QROPS offshore pensions can claw back the controversial overseas transfer charge should they prove it was either paid in error or should not have been levied due to changing personal circumstances. The second ‘technical consultation’ proposes a new set of rules intended to align and simplify both the S12006/2008 rule and the regulations for the repayment of overseas transfer charges.
Introduced early last year, the transfer charge is now widely accepted as decimating the market for QROPS, and mostly applies to QROPS pension-holding British expat retirement savers already living outside Europe. Initial rulings stated QROPS members must reside in the same financial jurisdiction as their QROPS pensions or pay an HMRC penalty charge of 25 per cent of the full value of their transferred fund. A few exceptions apply, but the sudden decline of QROPS’ popularity amongst established expat pensioners wasn’t exactly unexpected.
The new regulations aim at clarifying the means by which expat retirement savers are able to reclaim the hated overseas transfer charge. According to the draft papers, the exact details needed by pension scheme administrators and managers, HMRC and the individuals themselves are now provided, hopefully making the process of claiming repayment under certain circumstances far less onerous. The papers focus on who should claim, how to claim and the repayment itself.
At the present time, HMRC has certain systems in place covering repayment, but the details are intended as guidance rather than being regulations set in law. Current rules hit hard on would-be expats planning to retire overseas who’ve already transferred their pensions to a QROPS but either haven’t yet or cannot for visa change reasons take up residence in that specific country. The new rules will also take into account problems such as delayed claims or cancellation of a proposed move overseas.
The government’s document lists two new regulations, referring to them as technical consultations, the first of which proposes adjustments to the manner in which UK expats with QROPS offshore pensions can claw back the controversial overseas transfer charge should they prove it was either paid in error or should not have been levied due to changing personal circumstances. The second ‘technical consultation’ proposes a new set of rules intended to align and simplify both the S12006/2008 rule and the regulations for the repayment of overseas transfer charges.
Introduced early last year, the transfer charge is now widely accepted as decimating the market for QROPS, and mostly applies to QROPS pension-holding British expat retirement savers already living outside Europe. Initial rulings stated QROPS members must reside in the same financial jurisdiction as their QROPS pensions or pay an HMRC penalty charge of 25 per cent of the full value of their transferred fund. A few exceptions apply, but the sudden decline of QROPS’ popularity amongst established expat pensioners wasn’t exactly unexpected.
The new regulations aim at clarifying the means by which expat retirement savers are able to reclaim the hated overseas transfer charge. According to the draft papers, the exact details needed by pension scheme administrators and managers, HMRC and the individuals themselves are now provided, hopefully making the process of claiming repayment under certain circumstances far less onerous. The papers focus on who should claim, how to claim and the repayment itself.
At the present time, HMRC has certain systems in place covering repayment, but the details are intended as guidance rather than being regulations set in law. Current rules hit hard on would-be expats planning to retire overseas who’ve already transferred their pensions to a QROPS but either haven’t yet or cannot for visa change reasons take up residence in that specific country. The new rules will also take into account problems such as delayed claims or cancellation of a proposed move overseas.
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