QROPS Isle of Man

The Isle of Man has long provided offshore banking and financial services to British expats.

Sited in the rough Irish Sea, the IOM provides political stability and low taxes for individuals and business, and QROPS pensions are a natural extension of the others services offered.

IOM QROPS compare favourably to those offered in Guernsey, but have some subtle differences.

The IOM has long taken the view that non-residents can take advantage of low income tax, but at a price.

Non-residents have 18% income tax deducted at source on QROPS pension benefits for the privilege oif having their scheme hosted on the island. If the QROPS scheme member lives in a country with a double taxation treaty with the IOM, then often it’s just a case of setting off tax paid against tax due.

Then, the resident authority deducts the balance of tax due so the taxpayer does not have any double tax liability on the same income.

IOM QROPS benefits for some investors

The IOM has advantageous double taxation treaties with Norway, Sweden, Finland, Denmark and Iceland, so anyone living or moving to one of these countries with UK pension rights should be advised to look at a Manx QROPS.

Some Manx QROPS also allow an enhanced 30% tax free cash draw down after the five year QROPS reporting restriction has expired, subject to the discretion of the QROPS trustees.

Another tax to take in to account with an IOM QROPS is a 7.5% inheritance tax charge on pension assets. Many countries allow trust based pension assets to sit outside of inheritance tax rules, like Guernsey, which has a 0% rate.

Estate planning for an Isle of Man QROPS should also look in to what happens to the QROPS fund when the scheme member dies. Different rules apply should the death occur before or after the 75th birthday that can affect the amount repaid to family or loved ones.

Advice on Isle of Man QROPS

Isle of Man QROPS have pros and cons that need weighing against each other when compared to Guernsey and other QROPS pension schemes.

It is vital that qualified, independent financial advice is considered before entering in to any Isle of Man offshore pension. The advantages may well outweigh the costs for some QROPS transfers.

QROPS Net is aware of a number of leading regulated financial firm that has completed QROPS transfers to the Isle of Man and Guernsey, and as such, the firm is well placed to give unbiased advice. Contact QROPS Net for further details.