QROPS shake up for UK expats
Qualifying Recognised Overseas Pension Schemes (QROPS) for UK citizens living in New Zealand were given a savage shake up in April 2012. More than 40 schemes were axed from the HM Revenue and Customs list. However, Chancellor George Osborne appears to be sanctioning a U-turn in his 2014 Budget.
The initial problem for HMRC was that retirees were able to take a lump sum from their pension pots without paying tax and the rest in cash later. Now Mr Osborne appears to be saying that expats over the age of 55 will be allowed to do exactly what they were told they could not by his office two years ago.
The new regulations will allow pensioners to withdraw 25 per cent of their savings as a tax free lump sum and the rest at a marginal tax rate. Although there are other rules pertaining to QROPS it looks likely that the British government may also do away with the 55 per cent tax charge on pension funds that remain unspent.
Avoiding the inheritance tax often spurs people to move their QROPS offshore. The complications surrounding overseas pensions in the past mean Mr Osborne will have to be precise in the details of his Finance Bill.
Any changes to the rules are unlikely to have an impact on larger pension funds, but could be beneficial to those with smaller pots.
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