QROPS

A QROPS is an overseas pension scheme meeting certain qualifying criteria set out by the UK’s HM Revenue & Customs (HMRC). The full meaning is Qualifying Recognised Overseas Pension Scheme.

There are a number of conditions to be met to become a QROPS:

1) the scheme must be outside the UK

2) at least 70% of the funds transferred must be used to provide the individual member with an income for life

3) the scheme agrees to inform HMRC of any payment within five years of the member ceasing to be considered UK tax resident.

Taxation
Income taken from a UK pension is subject to income tax at 20%, but transfers to a QROPS may be able to avoid this charge. HMRC is planning to extend the inheritance tax protection given to registered pension schemes to QROPS. The proposed regulations will have retrospective effect from on or after 6 April 2006.

UK reporting
When the member receives benefits, a QROPS does not need to report the payment to HMRC if the member has not been UK tax resident in that or any of the previous five tax years.

To find out the latest news & update, visit this site relating to QROPS advice and details of what experts should be used.

Summary
As with any financial planning, QROPS will not be for everyone. Individual circumstances such as age, current residency and future plans will all need to be considered. This is an area requiring sound professional advice, therefore regulated advisory firms should be sought.

Visit the HMRC main site for details on Qrops and a full list of all approved Qrops Providers.

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