Kreston Pensions (Isle of Man) believes the benefits of QROPS for expats of the UK and those retiring abroad will continue to increase.

Uncertainty created by major changes to pensions along with plans to make expats pay tax on UK-earned income are helping to secure and enhance the role for Qualifying Recognised Overseas Pension Schemes (QROPS) as an attractive option of the ever more mobile work force and retirees’ within their retirement planning.

Kreston IOM CEO David Pope says: ‘QROPS were established in 2006 by HMRC with an aim to ensure the freedom of movement of capital for taxpayers with greater tax efficiency, investment flexibility prior to and on retirement and a choice of currency in which the pension is paid out.

‘HMRC has started to introduce sweeping pensions reform. The first changes were announced in the 2014 Budget, including the ability to access the full fund whilst paying the higher rate of tax and an increase on the small lump sums limit from ?2,000 to ?10,000. There are further changes afoot in 2015.’

In an attempt to gain further revenue during these times of austerity the UK Chancellor George Osborne wants expats to pay tax on UK-earned income. Under existing rules, expats can offset UK source income against their personal allowance, currently ?10,000. It is intended to remove that allowance for non-residents.

David Pope says: ‘Responding to this proposal many Independent Financial Advisors are of the opinion there would be no real advantage for expats or those that intend to retire abroad to contribute to or maintain their UK pension schemes as any payments received by them would be subject to tax at source. Many are predicting a significant rise in demand for QROPS.

‘It is only eight years since the UK last made significant reforms to pensions and many current generations seek a stable jurisdiction for their pension plan, not one with the threat of constant change. QROPS can offer peace of mind. Expats and those retiring abroad can transfer their pension pot to an offshore jurisdiction that offers legislative stability, a secure and tax neutral jurisdiction and the opportunity to maximise growth whilst mitigating any potential tax burden.

‘The tax benefits of a QROPS and QNUPS for High Net Worth Individuals may greatly outweigh those of a UK scheme. Kreston Pensions (Isle of Man) has HMRC approval for QROPS in the Isle of Man and Gibraltar, and via its selected advisors and Kreston International (www.kreston.com) can provide you and your clients with advice in jurisdictions throughout the world on tax and pension transfers.’