A QROPS (Qualifying Recognised Overseas Pension Scheme) is a scheme established outside the UK that is broadly similar to a UK registered pension scheme.
It is an overseas pension scheme that has met the requirements of the HMRC, that can receive the transfer of UK Pension Benefits without penalities for unauthorised payments.
In our guide you can discover the key benefits for expats and understand the criteria for purchasing one of these schemes.
These benefits include:
1. No UK tax payable on pension income
Transferring your pension out of the UK to a QROPS means that you will no longer be paying UK tax of up to 45% on your pension income. With a QROPS it may be possible to pay no tax depending on your country of residence.
2. No tax on death
Although UK rules have changed, your beneficiaries will still have to pay tax at their marginal rate if you die over the age of 75. QROPS have no tax on death at any age.
3. No lifetime allowance
Currently in the UK the lifetime allowance is 1 million GBP and this was recently reduced from 1.25 million GBP. This has been reducing incrementally for several years now from 1.7 million GBP. QROPS have no lifetime allowance so your pension can grow to any size without a tax charge.
4. Higher lump sum
A 30% lump sum can be taken from a QROPS, whilst only 25% can be taken tax free in the UK. This will be applicable for anyone who has been non-UK resident for more than five years.
5. Currency and investment options
QROPS can give the ability to hold and invest the funds in any currency, whereas a United Kingdom scheme may be restricted to GBP sterling. Some investment options may be available that would not be available in a United Kingdom scheme.
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