Are QROPS dead in Switzerland?
Once again another UK budget has changed the landscape for expatriates looking to protect their UK pension assets.
Unfortunately QROPS are no longer an attractive proposition for expatriates looking to consolidate their UK pension assets and protect their wealth from the LTA (Life Time Allowance) Tax charge. As of today if you decide to QROPS your UK pensions while a resident in Switzerland you will have to pay a 25% tax charge to the HMRC.
However, if you are working in Switzerland but are a resident in a neighbouring EU/EEA country such as France you will still be able to QROPS your UK pension assets. It looks as if the HMRC are trying to retain UK pension assets in the UK while at the same time trying to build bridges with the EU before filing article 50.
The Overseas Transfer Charge will not apply where at least one of the following five exemptions applies:-
- Both the member and the QROPS are in the same country after the transfer
- The QROPS is based in the EEA (an EU Member State, Norway, Iceland or Liechtenstein) and the member is resident in another EEA country after the transfer (Gibraltar and Malta are both in the EEA)
- The QROPS is an occupational pension scheme sponsored by the member’s employer
- The QROPS is an overseas public service pension scheme and the member is employed by one of the employers participating in the scheme
- The QROPS is a pension scheme established by an international organisation to provide benefits in respect of past service and the member is employed by that international organisation.
The proposals also state that:-
- The tax charge will apply to a tax-free transfer if, within five tax years, an individual becomes resident in another country so that the exemptions would not have applied to the transfer.
- If already paid, the overseas transfer charge will be refunded if the individual made a taxable transfer and within five tax years one of the exemptions applies to the transfer.
- Payments out of funds transferred to a QROPS on or after 6 April 2017 will be within the scope of the new tax charge for five tax years after the date of transfer, regardless of where the individual is resident.
Are you effected by the new 25% tax charge?
If you are unsure about your current position and would like some advice please do not hesitate to contact us. There are still some options available to you so we would recommend that you book your complimentary pension review as soon as possible.