Taking Your Tax Pot Abroad
Wellden Turnbull Accountants are reminding that anyone looking to retire abroad may wish to consider transferring their UK pension overseas as well, in order to benefit from a low or tax-free pension income.
Crucially, by using a Qualified Recognised Overseas Pension Scheme (QROPS), it is not necessary for the pension to be registered in the holder's country of residence so they could, for example, retire to a popular retirement destination such as France of Spain, but move the pension to a light-tax jurisdiction like Monaco or the Channel Islands.
Robin John form Wellden Turnbull said "This has the potential to significantly reduce tax paid on pension income - for example in Spain, annuity income is taxed at a rate of up to 2.66%, whereas in countries which do not have a tax treaty with the UK, tax on pension income would be deducted at source. However, once a pension is transferred to a QROPS, the lack of a tax treaty become irrelevant, and the only tax charged (if any), will be that levied at the country in which the QROPS is held".
Apart frrom tax havens, many other countries have lower top rates of tax than the UK - for example, the top rate in Singapore is 20%, while in Hong Kong it is 16%, although in the latter country, foreign pensions (including QROPS) are not taxed at all.
It is also possible to transfer to a QROPS in a country where there is no requirement to purchase an annuity on retirement, which may be of interest in some circumstances, although if a pension is taken as a lump sum, care needs to be taken not to breach HM Revenue and Customs (HMRC) regulations.
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If you would like to find out more please call us on 01932 584 787
Wellden Turnbull LLP is a member of the UK200 Group and is at www.wtca.co.uk