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QROPS rules for British expats to tighten next year
| Published: | 24 Nov at 6 PM |
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New UK Chancellor Philip Hammond’s budget speech yesterday indicated the eligibility rules for the Qualified Recognised Overseas Pension Schemes are about to become tougher.
British expats are being warned that Hammond’s budget includes a plan to tighten up on eligibility rules for QROPS, starting April 6 next year. The devil, apparently, is in the details of an add-on clause in Treasury documents presented yesterday to the British parliament by Hammond.
Unsurprisingly, policy advice set up in Para 4.21 Page 38 of the chancellor’s 2016 Autumn Statement on the changes is unclear as to which rules will change as well as the nature of the changes. Clarification is expected via an HM Revenue and Customs consultation document due to be released in the coming weeks.
At present, no timescale was noted on the consultation, nor on proposed dates for the changes. However, in his budget speech, Hammond quoted the Treasury document, saying tax treatments of foreign pensions will need to become more aligned with the UK’s pension tax rules, bringing overseas pensions and lump sums into tax for UK residents.
In addition, specialist pension schemes offered to British citizens working overseas will be closed to new savings, and taxing rights over new emigrants’ foreign lump sum payments eligible for tax relief will be extended from five to 10 years. Eligibility criteria applied to allow foreign schemes to qualify for tax purposes as overseas pension schemes will be updated.
Several other points made during the speech are expected to affect expat pensioners living overseas, as the Chancellor believes a high number of investors are using tax-free cash to recycle the money and get double tax relief. For example, the maximum amount a saver can pay into a pension after drawdown has started will drop to £4,000 from the present limit of £10,000. The measure is intended to curb tax avoidance.
British expats are being warned that Hammond’s budget includes a plan to tighten up on eligibility rules for QROPS, starting April 6 next year. The devil, apparently, is in the details of an add-on clause in Treasury documents presented yesterday to the British parliament by Hammond.
Unsurprisingly, policy advice set up in Para 4.21 Page 38 of the chancellor’s 2016 Autumn Statement on the changes is unclear as to which rules will change as well as the nature of the changes. Clarification is expected via an HM Revenue and Customs consultation document due to be released in the coming weeks.
At present, no timescale was noted on the consultation, nor on proposed dates for the changes. However, in his budget speech, Hammond quoted the Treasury document, saying tax treatments of foreign pensions will need to become more aligned with the UK’s pension tax rules, bringing overseas pensions and lump sums into tax for UK residents.
In addition, specialist pension schemes offered to British citizens working overseas will be closed to new savings, and taxing rights over new emigrants’ foreign lump sum payments eligible for tax relief will be extended from five to 10 years. Eligibility criteria applied to allow foreign schemes to qualify for tax purposes as overseas pension schemes will be updated.
Several other points made during the speech are expected to affect expat pensioners living overseas, as the Chancellor believes a high number of investors are using tax-free cash to recycle the money and get double tax relief. For example, the maximum amount a saver can pay into a pension after drawdown has started will drop to £4,000 from the present limit of £10,000. The measure is intended to curb tax avoidance.
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