For many the term Qualifying Recognised Overseas Pension Scheme (QROPS) may sound complicated, but in actual fact, the basics are really quite simple. QROPS, as they are commonly known, are a sort of pension fund which has been especially designed for UK citizens who would like to retire overseas. Many investors find this particularly attractive as they are not subject to strict UK Tax laws and regulations and at the end of the day they will also have more control over their pension.
- You will have more flexibility to regulate payments, withdrawals, and changes to your pension fund.
- You will pay lower taxes on your payments and withdrawals as well as changes to your pension fund.
- You will get payouts from your pension fund local currency.
- Should you die, your beneficiaries will get the remaining funds without being taxed in the UK.
- You can choose to self-manage your account or you could hire an adviser.
The one thing you would need to look out for is that the benefits will only kick in once your QROPS has been set up for five years and you have been registered as a non-UK resident for five years. This means that you will need to set it up as soon as possible to reap all of the benefits.
How can you avoid UK taxes with QROPS?
Because HM Revenue & Customs have allowed companies to set up QROPS outside of the UK it means that QROPS are then bound by the regulations and taxes of the country they choose to register in, instead of the UK. For those who wish to invest in QRPOS it means that you can select a country to invest in which has lower taxes than the UK.
You investment will however still be regulated by the HM Revenue & Customs for five years following your initial investment. See full details here. After the five years you will only be liable to the local regulations and taxes for the country you have invested in.
Possible problems with QROPS
While a QROPS allows you to free your pension fund from the hands of the UK taxman there is a need for caution. In a similar way that QROPS can be approved by the HM Revenue & Customs, they can also have their approval withdrawn. If this should be the case you can risk an end to your benefits for the scheme.
One of the best ways to ensure this does not happen to you and your investment is to enlist the services of a trusted financial adviser. A financial advisor will be able to make sure that you are only dealing with reputable QROPS. In short, if you are planning to retire abroad then transferring your pension fund into QROPS is a wonderful way to make sure that you get the most out of your hard-earned money.
In addition you will have more control over your funds and you not be subjected to high UK tax regulations. Overall, investing in a Reputable QROPS can be a great idea if you are looking for an abroad retirement haven.