If you are an Indian national returning home after acquiring a pension in the UK, you can now transfer all of your fund into one tax-efficient structure.
QROPS pensions – or Qualifying Recognised Overseas Pension Schemes – are the schemes recognised by HMRC to accept a UK pension. They are popular with the UK’s expats and Indian nationals who have worked in the UK because of their superior tax and investment benefits.
Benefits of a QROPS
QROPS mean you are able to settle wherever you want and receive your UK pension income as tax efficiently as possible.
This includes the option of being paid in any major currency – including Indian rupees.
For those living in India this does not only mean you avoid losing money on currency conversion – but receive better benefits as emerging markets like India often offer better returns than developed markets.
Another key benefit of a QROPS is, upon death, any money remaining your fund is transferred to your loved ones – with no UK tax to pay (which can be up to 45%).
What happens if I want to return to the UK?
Your QROPS provider has to provide HMRC with annual reports on any payments or income made from your QROPS for ten years from its set-up date.
However, if you return to the UK at a later date, your QROPS will suffer are no major disadvantages. In fact in some cases a QROPS is an advantage – one example being that your fund will only be subject to UK income tax on 90% of the income.
Which jurisdiction works best?
For people livening in India there are two main jurisdictions to consider: Malta and Gibraltar.
The choice between the two depends on how large your pension pot is – as a Malta QROPS will see you pay one larger tax, and a Gibraltar two smaller taxes.
Paying these two low tax rates means it is often more efficient to use a Gibraltar QROPS. For those with a larger pension however, a Maltese QROPS offers other benefits which need to be considered.
This is why it is extremely important that you consult with one of our advisers at the outset. We constantly assess the QROPS market to remain at the forefront of the industry – all to provide you with the scheme that best meets your needs.