INTERNATIONAL - PENSIONS: In the Qrops zone

The complexity of the Qrops rules set by HMRC and the interaction of these rules with the local pension legislation of the jurisdiction in which the Qrops is established has prompted advisers to seek out information to ensure they put the best solution in place for the client. There is a growing awareness of Qrops and the benefits that this type of scheme offers those who are retiring outside the UK and research shows that advisers predict that sales of Qrops will increase, with 74 per cent of advisers expecting to write more Qrops business over the next 12 months. By transferring to a Qrops, it is possible to avoid any UK income tax charge and pay income tax in the country of residence, possibly at a lower rate. HMRC has clarified that Qrops are not subject to UK inheritance tax charges which applies from the introduction of Qrops (April 6, 2006). Local inheritance tax or wealth taxes may apply and local advice should be sought. After the five-year reporting period, the UK payment rules no longer apply but the Qrops provider must ensure that their Qrops status is maintained. Therefore, in for some Qrops jurisdictions the provider will need to ensure that at least 70 per cent of the transferred amount is used to provide an income. This potentially leaves the remainder available as a lump sum but may be restricted by the local pension rules in the Qrops jurisdiction.