QROPS – Paying too much on your pension income in the UK?

Fiduciary Wealth Team

Qualifying Recognised Overseas Pension Schemes commonly known as QROPS were introduced in the UK Finance Act of April 2006 also known as “A” day. This means you are now able to transfer many types of UK Pension benefits into an HMRC approved overseas pension arrangement irrespective of whether benefits have been deferred or you are already in drawdown.

Benjamin Franklin said that the only two certainties in life are death and taxes. Well we can't do anything about the first but if you have moved away from the UK or are planning to do so then we can certainly do something about the second and make sure your beneficiaries don't suffer a punitive 55% tax charge which applies on the lump sum available from your UK pension fund. This tax charge is levied if you were to die having already drawn down your tax free lump sum from your UK pension arrangement.

Would you like your beneficiaries to lose over half of your remaining pension fund when there is a simple alternative? Want to find out how with proper financial planning a QROPS arrangement can preserve your wealth and ensure it is transferred to your heirs in a tax efficient manner?

This is not the only benefit. If you are one of the many British nationals spending more than 183 days in Spain but keeping under the radar of the local tax authorities pretending to still be a UK resident you should consider establishing your residency in Spain. You might be drawing down income on your UK pension at your highest marginal rate which could be 40% or possibly 50% when in fact you could be benefiting from very generous taxation rules in Spain which would reduce the income tax you pay on your pension to less than 3%. Are you aware you could make a significant tax savings on your income and enjoy a better standard of living with significantly greater disposable income?

Key Benefits
• Your pension assets can grow within a “tax free” environment.
• Your assets can be passed on to your heirs without the need for probate.
• Your heirs would avoid UK Inheritance tax after 5 complete and consecutive tax years of non-UK residency.
• Your beneficiaries would avoid a death tax charge of 55% on lump sums.
• You could access 30% of your fund as a lump sum if none had previously been taken.
• Depending on your country of residence opportunity to pay considerably less tax on your pension income, in Spain, for example, this might be less than 3%.
• You can avoid adverse exchange rate movements from reducing the value of your pension.
• You can drawdown your pension in the same currency as your country of residence.

Find out how QROPS can work for you. Give us a call us on Tel: +956 796 911 or email