QROPS, death and taxes

If you are considering a QROPS, you probably already know that your pension will be out of reach of the UK taxman once you have transferred it to an overseas scheme.

As long as you remain a non-resident for at least five years after the pension has been transferred, you can continue your expat life without looking back at the United Kingdom’s Treasury.

But have you considered what may happen to your loved ones when you die? When you are making the decision about which QROPS to choose, your adviser should take inheritance tax issues into account as part of your retirement planning.

Making the move abroad should involve a thorough audit of all of your personal finances (not just your pension), and structuring them in such a way that your worldwide inheritance tax liabilities are reduced (and hopefully eliminated).

Given that there are over a thousand QROPS on the approved HMRC list, the countries that host them have different treatment of inheritance and succession issues. Some QROPS countries do tax pensions, but others may permit your pension assets to be passed directly to your beneficiaries without any tax being paid.

While you have prepared yourself to face this slightly morbid issue, you should also consider making a will, or updating your existing will if you have already made one. Your relocation itself might trigger the need for changes, to accommodate foreign property or to take into account any new grandchildren you may have acquired since the last will you drafted!

It is particularly important for expats to have valid wills because your assets may be held internationally. By consolidating details of your wealth into a single document (or series of documents), you can make your executors’ job easier, and of course make sure that your assets are distributed in the manner that you intend.

QROPS.net takes a variety of issues into account when we assist you with your retirement planning. We can advise on the inheritance and other tax implications of QROPS and your other investments.