- Business
- Childbirth & Education
- Legal Formalities
- Motoring
- Other
- Pensions & Benefits
- Property & Accommodation
- Taxes
- Airports and Airlines Spain
- Paramount Theme Park Murcia Spain
- Corvera International Airport Murcia Spain
- Join us for Tea on the Terrace
- When Expat Eyes Are Smiling
- Meet Wincham at The Homes, Gardens & Lifestyle Show, Calpe
- QROPS 2014
- Spain Increases IHT in Valencia & Murcia
- Removals to Spain v Exports from Spain
- The Charm of Seville
- Gibraltar Relations
- Retiro Park : Madrid
- Community Insurance in Spain
- Calendar Girls
- Considerations when Insuring your Boat in Spain
- QROPS – HMRC Introduces changes that create havoc in the market place
- QROPS – All Change From April 2012
- Liva & Laia : 15th November
The greater flexibility offered to UK expats following a transfer to a QROPS are reasonably well understood. Namely:
• Less taxation - as low as 1.5% on income for Spanish resident expats
• Higher lump sums - up to 100 % can be possible
• More investment flexibility
• No requirement to buy an annuity
• A fund which can be passed on to the next generation.
Whilst the coalition government are certainly wasting no time in looking at greater flexibility for those who keep their UK pension fund under UK rules for the expat QROPS still win out every time.
Taking each of the points listed above in turn:
Taxation
Many expats choose out of inertia to pay tax on their pension in the UK - often up to 40%. Structured correctly, the taxation basis of income in Spain from a QROPS will typically be between 1.5% and 2.5%.
Lump sums
It will be soon be possible to take much higher lump sums from a UK pension fund. However, to do so it will be necessary to have a secure income (State pension and annuity) of at least £20,000 p.a. and the higher lump sum will be taxed as income. The UK government are also considering accessibility to lump sums before the age of 55. One example given is through distributions on the grounds of hardship.
Compare this to a QROPS where the long term expat is already able to access a lump sum of up to 100% of the fund, free from UK tax.
Investment flexibility
There are no proposals to change the existing UK restrictions. However, for long term expats the flexibility to transfer through a QROPS to a structure with pretty much complete investment freedom is available. Our favoured vehicle to achieve the greatest investment flexibility for those who need it is a New Zealand Foreign Trust.
Annuitisation
The UK is about to (allegedly) abolish the effective compulsion to buy an annuity. However, it will remain the case that the remaining fund following death will be subject to taxation at 55%. Transferring to a QROPS means that following death the remaining fund can be distributed completely free from tax.
Passing the fund on after death
UK pension laws allow the remaining fund on death to be passed down the line for each £100 of fund. However, unless death occurs before benefit has been taken, the beneficiaries will only receive £45 for each £100 of fund. (The exception to this is if the remaining funds have been left to charity.) Within a QROPS then the entire fund is available to be passed on - no UK tax is deducted.
So the UK is looking at introducing more flexibility which of course is a welcome development. All the same the expat can achieve a much greater degree of flexibility and tax efficiency through a transfer to a QROPS. It really is a no brainer in nearly every case we are asked to advise on.
If you have any questions or comments regarding your pension please feel free to either post them (below) or contact us directly by clicking on the link to our page (above).
- QROPS – HMRC Introduces changes that create havoc in the market place
- The Economy : What can we look forward to in 2012 ?
- Beyond the tipping point - where next ?
- New Zealand QROPS - good news for all concerned
- Pensions and Politicians
- Changes re New Zealand QROPS - Things are becoming clearer
- QROPS Jurisdictions in Focus : A Round-Up
- QROPS Jurisdiction in Focus : Isle of Man
- QROPS for the UK Expat in Spain
- Could this happen to your UK pension fund?
- What exactly is 'QROPS' ?
- Claiming Child Benefits
- Claiming Unemployment Benefits in Spain
- Voting by post in Spanish elections
- Claiming UK Benefits in Spain
- Applying for an EHIC Card as a Spanish Resident
- Applying for your Spanish prescription charge reimbursement
- Common-Law Partnerships In Spain - 'Pareja de Hecho'
- Should I Take Out Life Insurance ?
- Working for a UK Employer in Spain
- NIE Number
- Can I claim a UK Disability allowance in Spain ?
- QROPS – All Change From April 2012
- QROPS : Stop press - major changes on their way!
- Do you have a UK pension fund? How secure is it?
- Quantitative Easing - good or bad (or both) for your UK Pension Fund?
- Did Your Pension Fund Fall By 15 Percent in August ?
- New Zealand QROPS : Only Available For A Further 12 Months ?
- QROPS Jurisdictions in Focus : New Zealand
- QROPS Jurisdiction in Focus : Guernsey
- QROPS - the realities of giving and receiving advice
- QROPs - Choice of adviser and choice of jurisdiction
- Why not spring clean your pension ?
- New Zealand QROPS - some of our FAQ's
- Access Your UK Pension Fund Before It Falls In Value !