Ten industry views on the Qrops hammer blow
By Mark Battersby, 10 Mar 17
As the week comes to an end in which the Spring Budget slapped a surprise 25% overseas pension transfer charge in particular circumstances, here are the views on what it means from a cross section of the industry.
Penny Cogher, Pensions Partner at Irwin Mitchell says:
“There will be a severe clamp down on Qrops.
“Strict measures have been put in place to ensure compliance as both the scheme administrator of the registered pension scheme making the transfer and the scheme manager of the Qrops are jointly and severally liable to the new 25% tax charge. Where there is a tax charge, they are required to deduct the tax charge and pay it to HMRC.
“Advisers must now take this new tax charge into account if they have clients who want to make an overseas pension transfer.
“Qrops providers need to submit a revised undertaking to HMRC by 13 April 2017, if not, the scheme will stop being a Qrops from 14 April, giving them little time to take the necessary action.
“The changes also widen the scope of UK taxing provisions. Following a transfer to a Qrops on or after 6 April 2017, the extended taxing provisions on payments out of Qrops apply on and after 6 April 2017 to payments out of those transferred funds in the five tax years following the transfer.
“These changes are not meant to impact on overseas transfers from pension schemes that have had UK tax relief that are made when people leave the UK and take their pension savings with them and settle in their new country of residence.
“However it can be difficult in practice to achieve this because of restrictions which other countries have on pension transfers. Equally the changes do not apply to transfer of pension savings that have already been made to Qrops.
“Legislation will be introduced in the Finance Bill 2017 to reflect this and also HMRC will provide guidance setting out how the new tax charge will work and the new obligations.”
