Following the changes to the UK Qualifying Recognized Overseas Pension Scheme (QROPS) regime in the UK Finance Act 2017, I have summarised some of the key issues concerning the administration of transferring a UK Pension Fund to the Republic of Ireland:
Overseas Transfer Charge
HMRC introduced a 25% overseas transfer charge in the UK Finance Act 2017. As a result UK pension providers must deduct a tax of 25% of the Fund for transfers to QROPS requested on or after 9th March 2017 where one of the following conditions are not met.
- You are resident in the same country in which the QROPS receiving the transfer is established, or
- You are resident in a country within the European Economic Area (EEA) and the QROPS is established in a country within the EEA
Furthermore if within 5 years of the transfer, the circumstances change so that neither of the above are satisfied then the QROPS provider must deduct 25% of the Funds value and pay it to HMRC. As a result application forms requires that the policy owner declares that they intend to remain tax resident in the Republic of Ireland for a period of at least 5 years from the date their UK pension fund is transferred to Ireland, have no intention to become tax resident in any other jurisdiction outside the European Economic Area and that in the event that they do become tax resident in the UK or in any other jurisdiction outside the European Economic Area, that they will notify the product provider within 60 days of that event occurring and in any event before the product provider make any payment out of the QROPS approved pension contract.
If you have been resident in the UK in the current UK Tax Year (6 April – 5 April) or in any of the previous 10 UK Tax Years, then a transfer from a UK pension scheme to a QROPS and a subsequent maturity of same QROPS could be deemed an unauthorised payment by HMRC with a potential tax liability for the client. For this reason, the Life Companies will not accept QROPS business going forward unless you have not been UK tax resident in any of the last 10 UK tax Years. You will be required to complete a declaration to that effect on the proposal form and confirm the
- Pension Access Age
Minimum Retirement Age remains at 55 (except on the grounds of ill-health). This complies with the HMRC Age Test.
- Reporting to HMRC
Reporting to HMRC remains unchanged. If a payment is made within ten years of the start date of the QROPS, the QROPS product provider we will be required to report that transaction to HMRC within 90 Days. UK Revenue (HMRC) will determine whether the individual is liable for a UK “unauthorised payment” charge of 40% and a potential unauthorised surcharge of 15%.
If the transfer value is greater than £30,000 and coming from a Defined Benefit Scheme, then it is a UK mandatory requirement that the member receive independent financial advice from an advisor in the UK that is authorised by the UK Financial Conduct Authority (FCA) to provide a transfer value analysis.
Benefits Partially-Crystallised in the UK
Where the member has accessed any parts of their UK pension benefits under the scheme
under flexi-access drawdown or other arrangements then we will not be in a position to accept
a transfer of the residual fund.
Contact Frank Ryan Financial Services
He can advise you on the best possible outcome for your pension. He can assist with the move of your pension to Ireland and secure it for the future.
Take action now before it is too late.!
Call Frank on 087 2557 448 or email Info@Frankryanfinancialservices and you can also Contact him through our website here.