Pension transfers to New Zealand face heavy tax charge
Retirees moving a pension from the UK to New Zealand when they emigrate could face a whopping 55 per cent tax bill because of pension freedoms. Under new rules pension schemes must prevent access to savings before a pension holder is 55 if they want to take the pension pot as cash. However, most schemes in New Zealand do not have such a clause written into the rules.
In some cases, such as financial hardship, the schemes will allow the pension holder to access cash early. HM Revenue and Customs is notifying such pension schemes that if they do not meet the new requirements, transfers from the UK will be subject to tax penalties.
QROPS, or qualifying recognised overseas pension schemes, are being told they must prove to HMRC by 17 June that they have adopted the new rules. However, this is unlikely to happen with many schemes in New Zealand as adopting the regulations is likely to disadvantage the local members who make up the majority.
Although New Zealand could apply for an exemption, the process is likely to take a long time.
The new rules came into play on 6 April, and pension advisors are advising anyone who transferred money after that date to halt the transaction and contact their pension provider.
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