Proposed laws aimed at stamping out QROPS pension tax avoidance have been announced because retirement savers and advisers are manipulating current rules “in ways they are not intended to work,” says HMRC.

The draft legislation is open for consultation until January 31, 2012, with a view to starting a tougher QROPS regime with less loopholes from April 6, 2012.

This guide looks at the new rules step-by-step and how they may affect QROPS investors.

Tax recognition

The country where a QROPS is based must recognise the scheme for tax purposes.

CHANGE: This should not present any major change to any QROPS as this is already an HMRC requirement.

Extended reporting period

QROPS providers must report any payment to investors for 10 years after funds are transferred out of a UK pension scheme.

If the QROPS investor is UK resident or has been UK resident at any time during the 10 full tax years before a payment is made out of the funds transferred to the QROPS, they could be subject to UK tax rules that apply to similar payments made by UK registered pension schemes.

CHANGE: This doubles the current five year reporting period and effectively means any payment of lump sums, benefits on onward transfers to another QROPS must be reported to HMRC.

Importantly, QROPS payments are reported annually, but from April 2012, providers will have to report each payment within 60 days. Under current rules, the report could take up to 21 months to filter through to HMRC.

Acceptance of terms

A new rule that requires every QROPS investor to sign a form acknowledging they understand the tax implications of transferring a UK pension fund in to a QROPS. The form must be filed with HMRC within 30 days of the transfer.

Limit on tax-free payments

QROPS tax-free payments are limited to 70% of the fund, but some providers try to bust these limits by offering up to 100% drawdowns.

CHANGE: HMRC will impose a strict 30% cap on tax-free drawdowns – the draft legislation is not clear whether this means 30% of the fund transferred in or 30% of the fund after additional contributions and investment growth.

The inference is this means the latter – which puts some New Zealand QROPS outside the pension rules but is likely to keep Isle of Man 50c schemes in.

Tighter QROPS registration

QROPS means qualifying recognised overseas pension scheme. ‘Qualifying’ applies to the scheme meeting certain pension rules laid down by the UK government.

Providers must certify that their pension meets these rules for acceptance on the HMRC list of QROPS schemes. If a scheme is not listed, UK pension funds cannot sanction any funds transfer.

CHANGE: Providers must comply with tighter registration requirements before their QROPS is accepted by HMRC

Tax residence

QROPS were introduced to simplify pension arrangements for UK tax residents or international workers with UK pension rights who had left the UK to permanently live overseas.

In some cases, taxpayers who are still in the UK but intend to leave within six months can also set up a QROPS.

CHANGE: Tougher compliance for taxpayers who have left the UK, start a QROPS scheme and subsequently return to the UK.

Special income tax treatment for QROPS investors

A new pension tax rule that is the most controversial clause of the draft QROPS legislation.

HMRC want QROPS investors to face the same income tax rules as other taxpayers in the country where the scheme is based.

HMRC insists these countries may no longer offer pension concessions to QROPS investors. The UK government is not imposing tax rules on these countries, but ensuring QROPS investors pay the same income tax on pension benefits as any other taxpayer in that country.

Most QROPS providers pay benefits gross – without withholding income tax – on the assumption that the saver receiving the benefit will settle any tax liability in the country where they live.

One important point about a QROPS is the scheme and the investor can live in different tax jurisdictions.

The likely result is the jurisdiction hosting the QROPS will issue a certificate of tax paid to the investor, who then declares this to the tax authority in the country where they live. Tax paid is set off against tax owed so the taxpayer does not have double liability on the same income.

The problem comes for taxpayers living in a country charging income tax at 0% or a lower rate than income tax is charged in the QROPS host country, because they will have no set off tax to balance the withholding tax.

For example, Guernsey is a popular host country for QROPS providers. Pension payments to QROPS investors living outside Guernsey are paid gross, but those paid to Guernsey residents are taxed at 20%.

This puts all Guernsey QROPS outside the new rule.

Tax authorities and QROPS providers in Guernsey and other offshore centres facing a similar problem have three likely solutions:

Lobby – Try to persuade the UK government to revise or withdraw this rule

Legislate – The tax authority can amend pension rules to meet the new HMRC requirement

Withhold tax – An unfavourable option for QROPS providers because pension benefits paid gross encourages investors to shift their funds to ‘safe’ offshore jurisdictions that trade on their reliability as financial centres. The new rules give a leg up to low tax jurisdictions.

This proposal also seeks to close the door on shifting funds to other overseas pension schemes to avoid withholding tax, like a QNUPS (qualifying non-recognised UK pension) or ROPS (recognised overseas pension).

With the rapid changing of rules you need to speak to the leaders in QROPS transfers. Contact QROPS.net now for further information and we can show you how we can help you.

Issues like qualifying to transfer funds to a QROPS offshore pension rely on residence status.

In the wake of multimillionaire Robert Gaines-Cooper losing his non-residency fight with HM Revenue and Customs, who should pay tax in the UK is a little clearer.

The government intends to try and make the defining residency easier from next April with a statutory test, but meanwhile, thousands of Brits living abroad need to know their tax status.

The basic rule arising from the Gaines-Cooper appeal rejected by the Supreme Court is not only does someone have to leave the UK permanently, but they have to break all ties with the country to become a non-resident.

These ties, highlighted in the Gaines-Cooper case, include not owning residential property in the UK. This means selling any former home. Other official ties that need undoing are cancelling listing on the electoral roll, handing back driving licences and severing connections like keeping personal belongings in the UK.

Just moving overseas is not enough – plenty of offshore workers leave the UK for years at a time but still keep a home in the country, probably have a wife and children living there and have other ties, like paying tax and voting.

The prize is financial freedom. A non-resident pays tax in the country where they live, not in the UK.

As a non-resident, they can make financial decisions that are not available to UK residents, like switching pension funds in to a QROPS.

UK residents working overseas should consider a SiPP pension based in the UK rather than an offshore pension.

Getting residency status wrong is expensive. In some cases, years of tax affairs are unravelled with steep fines and interest undermining financial decisions and security.

A survey of those with over £250,000 of savings and investments highlighted 17 per cent would like to move overseas in the next two years, compared to 14 per cent six months ago, according to the research by Lloyds TSB.

Rioting and lawlessness are blamed by most as their reasons for thinking about moving overseas – with 61 per cent of those asked citing crime and antisocial behaviour as their main fear compared with 43 per cent six months ago.

Only one per cent are less worried about crime now than then.

High taxes and the cost of living are major worries for many. Tax is the main reason for considering a move by 42 per cent – up from 35 per cent six months ago. Rising living costs are a concern for 31 per cent – up to 52 per cent in six months.

Since April 2010, the government has introduced the 50 per cent tax rate and changed 40 per cent tax thresholds to make high earners pay more income tax. Inflation has risen to more than 4 per cent at the same time – double the Bank of England’s inflation target.

“Sadly it seems August’s riots, tax increases and a rising cost of living have cast a pall over life in the UK for some wealthy people,” said Nicholas Boys Smith, managing director of Lloyds TSB International Wealth. “It may re-ignite fears of a ‘wealth drain’ from our economy as rich people seek pastures new.”

HM Revenue & Customs reckons the top one per cent of earners will contribute more than 25 per cent of the nation’s income tax take.

“High earners are important to the UK’s fragile economy, given the big slice of income tax revenues they deliver, as well as the contribution they make to the economy through spending and job creation,” said Boys Smith.

France is the most popular country for wealthy people who’d like to move abroad – 21 per cent selected the country as their most likely destination, with Spain in second (15 per cent) and the USA third (11 per cent).

In recent weeks, some well-heeled taxpayers in the US, France and Germany have volunteered to pay extra to help their countries through tough financial times.

For British ex pats trying to decide where to put down their roots and how the move will affect the tax they pay and other financial factors – like where to locate a QROPS offshore pension and other investments.

To help international accountants and tax advisers BKR have joined with the Financial Times to produce an interactive map of the world to show the countries with the largest and smallest tax takes.

The graphic not only reveals what high net worth earners pocket around the world, but how much income tax payers contribute to some government revenue flows.

The map highlights huge tax discrepancies between countries.

For example, no income tax is paid in Saudi Arabia and comparatively little tax is taken from income in Russia, where earners can keep around 75 per cent of what they are paid.

At the other end of the scale, workers in Brazil keep just 22 per cent of their incomes.

Countries with the lowest levels of income tax as a percentage of GDP are Japan, spain and the USA, while the country with the highest is Denmark, followed by Ireland.

More detailed corporate tax information about 54 countries is available from the BKR web site, where tax data from any number of the countries can be lined up for comparison.

Three out of four high net worth individuals – classed as someone with more than US$1 million after settling all their debts – rely on IFAs while other advisers lag far behind.

In comparison, only 20% of millionaires put faith in stockbrokers and just 14% confide in wealth managers.

Surprisingly, after second place accountants, who attracted just over a third of the votes, journalists and financial web sites were considered as a reliable source of financial advice by 31% of ex pats polled by financial firm Skandia for their Millionaire Monitor Report.

Just 10% of millionaires took opinions from tied advisers linked to a life or insurance company.

By gender, 55% of wealthy men are keener to look for independent financial advice compared with 44% of women. Men are also more avid followers of the financial press and web sites.

The survey also looked at attitudes to risk, finding controlling risk is a key factor for high net worth individuals.

Around two-thirds are concerned about managing risk, while six out of 10 consider investment risk more than ever.

Nevertheless, many are happy to live with investment risk, with four out of 10 assessing their risk tolerance at high levels.

Of course, the converse is six out of 10 prefer low risk investments. “The pain of loss outweighs the pleasure of gain, and the fact that millionaires have a lot to lose means controlling risk is one of the most important elements they will seek advice about,” said Graham Bentley, head of investment strategy at Skandia. “Having said that, the majority of millionaires are still looking to grow their capital rather than just preserve it, and many are prepared to accept a relatively high level of risk to achieve that.”

The Swiss government has revealed the country’s tax authority is in the ‘final phase’ of negotiating a tax settlement on undeclared assets hidden from the prying eyes of HM Revenue and Customs in the country’s bank vaults.

An agreement was reached with German authorities last week and a deal with HMRC is due within a few weeks.

The Swiss are trying to save face by avoiding ditching the country’s strict financial secrecy laws by paying a fixed rate tax based on the value of assets in banks that belong to British taxpayers.

“It’s a complex subject, we did not want to negotiate with too many countries at the same time,” said a spokesman.

Reaction to the proposed deal varies between countries.

• France has had no contact with the Swiss for almost a year. French tax sources say the Swiss plan contravenes French tax rules but is a starting place for talks.
• Italy scoffed at the idea and wants full disclosure
• Greece seems willing to take whatever cash is offered

Under the terms of the German deal, Swiss banks will pay £1.53 billion to tax authorities in Berlin.

In future tax years, the banks will pay tax on the value of all German taxpayer holdings at a rate of 26.375%. Swiss banks will also pass on details of any new German-based account holders to Berlin to prevent cheats from avoiding tax by concealing assets.

The Berlin authorities reckon German taxpayers have between £112 billion and £156 billion that could raise around £46 billion in tax secreted in Swiss banks.

British and German tax authorities have pressured Swiss banks to divulge information about hidden accounts for around two years with the help of whistleblowers who have sold lists of bank customers.

The three offshore financial centres were listed in Senator Carl Levin’s Stop Tax Haven Abuse Act as three of 34 places that were likely locations encouraging tax evasion by US companies and taxpayers.

Delegates from each island have spent the last decade on and off trying to persuade levin and the US government to exclude them from the blacklist.

Guernsey has always been against appearing on the list. In recent meetings Chief Minister Lyndon Trott persuaded the US that Guernsey is a well-regulated financial sector, with no bank secrecy laws and a co-operative attitude to sharing tax information.

“The decision to no longer blacklist Guernsey is a major achievement that underscores the importance of having started and continuing the dialogue with politicians and government officials in Washington. We are delighted that our relationship with the United States is not only recognised as important but that it continues to be judged by both governments as a success,” he said.

Ministers in Jersey have also welcomed the news that the island is no longer blacklisted.

Assistant Chief Minister, Senator Freddie Cohen said: “Jersey welcomes removal from the list of secrecy jurisdictions.”

“Jersey has made strong representations to the US Treasury and Senate officials that Jersey’s inclusion in the list of jurisdictions in the previous version of the act was subjective and took no account of the island’s tax information exchange agreement with the US and our good record of responding to requests for tax information, for which we have been congratulated by the US tax authorities.”

The Isle of Man has yet to comment on the move.

Inclusion on the list would have resulted in sanctions from the US if the bill is voted through Senate.

Headline’s in the financial pages have trumpeted out warnings about the tax legality of some QROPS schemes in recent weeks following action by HM Revenue and Customs and the Treasury.

Tax loopholes

The overriding point is the UK tax authorities are tightening up QROPS rules to make sure investors do not benefit from tax loopholes.

The point is that QROPS are robust pension plans for ex pats that are here to stay – the problem is a few advisers and providers are working to undermine the rules to make tax gains for a few ‘grey area’ customers.

For QROPS investors who are unsure about the status of their offshore pension scheme, now is a good time to ask a second, impartial adviser to review the scheme.

Reliable advice

For QROPS investors who have schemes dating back a few years, new solutions are cheaper to run as the offer lower charges and improved investment options.

As the leaders in QROPS advice, QROPS.net can find you the perfect solution for your pension, wherever you are in the world.

Contact QROPS.net today

A survey of the top 19 economies ranked Britain seventh in the premier league of most taxed countries.

High earners lose 39.1% of their income to the HM Revenue and Customs, while many other countries are happy to take a much smaller slice – for example, the Russian tax man’s cut is 13%.

Italy snatches the biggest tax take with 45.9% of earnings.

High net worth

The survey also looks at low earners and found British workers lose around 16.8% of their wages in tax – compared with zero in Dubai, 4.3% in Eire and around 10% in the USA and Japan.

Germany topped the league, snatching 27.4% of income in taxes.

Other surprises above Britain in the table were Mexico, India and Estonia, according to the findings of accountants UHY hacker Young. They joined European Union partners France and Italy.

Meanwhile high net worth individuals looking to hold on to as much of the income as possible should cast an eye over Jersey’s new tax proposals.

The Channel Island’s Treasury Minister Phillip Ozouf wants US dollar millionaires to come to the offshore financial centre – and is willing to dangle an attractive carrot.

Tax inducement

He is asking the island’s parliament to slash taxes to 20% on the first £625,000 of earnings – roughly $1 million – and just 1% on any further income.

That means a dollar millionaire will pay a minimum £125,000 on £625,000 and a marginal £10 a £1,000 on subsequent income – much less than the 39.1% tax take in the UK.

A UK taxpayer would have to hand over £244,375 to HMRC instead of £125,000 to the Jersey tax authority – a saving of a cool £119,375.

Ozouf explained the tax cut as a simple financial inducement to entice high net worth individuals to go and live in Jersey.

The issue is not really the rule – it’s quite straightforward – but the way some advisers and providers are selling products to unwitting retirement savers as tax solutions.

To understand the five year rule, an understanding of why a QROPS is available at all is required.

QROPS offshore pensions cam in to being on April 6, 2006 as a method of porting pension savings between financial jurisdictions for ease of access by ex pats.

The five year rule comes in here – for the first five years an ex pat is abroad, the QROPS provider has to report any unauthorised withdrawal to HMRC.

An unauthorised withdrawal is taking funds or benefits from a pension before the age of 55 years old at the earliest.

The reason for this is an ex pat is not considered a non-UK national until stacking up an absence of at least five clear tax years from Britain. During that time, any QROPS pension follows UK pension rules – but after the five years, the ex pat is deemed to have left the UK permanently and any pension income is considered taxed in his or her new country of residence.

Because HMRC no longer has a tax interest in the QROPS and the pension investor has no call on state benefits if they spend their fund, what happens next is of no concern of HMRC.

The big problem for QROPS investors is drawing down funds in the five year period. All HMRC action against QROPS providers and jurisdictions to date has related to breaching drawdown regulations governed by the five year rule.

The providers and jurisdictions at risk of losing QROPS status are those that let pension investors access funds in contravention of the five year rule. If the five year rule is broken, both the provider and the investor face fines of at least 55% of the transfer fund value in to the QROPS scheme.

The lesson for QROPS pension investors is really sit tight for five years and become an official ex pat before tempting fate and making an unauthorised withdrawal.

The test is aimed at removing uncertainty over residence for tax so individuals have clearer opportunities for tax and pension planning.

Publishing the test is an important milestone in tax law because traditionally, HM Revenue and Customs has favoured not to issue statutory definitions but preferred to examine each case on its own merits.

This practice has lead to confusion with several cases going through the courts at the moment – notably an outstanding appeal by millionaire businessman Robert Gaines-Cooper who left the UK in 1985 to live abroad but was judged a UK resident for tax in 2010.

One of the major financial planning issues for ex pats is defining residence for tax – and getting the calculation wrong means unravelling investment and pension planning in the face of massive fines and penalties demanded by HMRC.

For instance, ex pats who believe they are non-UK residents who transfer UK pension funds offshore to a QROPS face a fine of at least 55% of the transfer value of their fund if they are later ruled as UK tax resident.

The new test looks at the ‘quality’ or residence rather than time spent in the UK, which reflects the findings of courts in the latest residence tax cases.

Full details of the proposed three-part statutory residence test are laid out in a consultation document published by HM Treasury called ‘Statutory definition of tax residence: a consultation’.

A copy is available for download here http://www.hm-treasury.gov.uk/d/consult_condoc_statutory_residence.pdf

“By introducing an SRT, the Government aims to make the rules simpler and clearer but the tax residence status of the vast majority of people will be unaffected,” said a Treasury spokesman.

The consultation also covers new proposals for taxation in the UK of foreign nationals.

Both consultations close on September 9, 2011. A summary of responses twill be published in the autumn.

Draft legislation will be published for comment later in 2011 with a view to including final legislation in Finance Bill 2012.

Equity Trust, the group behind the ill-fated Panthera ROSIIP (recognised overseas self invested international pension) took the case to court in a bid to overturn HM Revenue and Customs withdrawing QROPS status from Singapore three years ago.

Now, with their defence in tatters, Panthera’s QROPS customers face tax penalties of 55% of the value of their transfer funds for breaching QROPS transfer rules. UK pension providers who transferred client funds to Panthera may also face similar tax penalties.

The judge kicked out Equity Trust’s claims that HMRC was wrong to withdraw QROPS status from their pension scheme – but granted leave to appeal due to the financial ramifications the decision has for all QROPS schemes.

QROPS transfers broke pension tax rules

HMRC booted Singapore and the Panthera scheme off the list of HMRC QROPS providers in 2008 after suspecting some investors were withdrawing cash from their schemes against pension tax rules.

In explaining the decision, the judge agreed with HMRC that the Panthera scheme should have been open to Singapore residents to meet QROPS qualification rules, but regulators in Singapore considered it was a foreign trust and would not register the scheme as a pension, effectively closing the pension to investors living there.

Subsequently, Panthera promoted the scheme on the tax benefits offered by the trust status.

Equity Trust could show only six ‘possible’ Singapore residents invested in the QROPS and failed to persuade the judge that their problems registering with regulators arose from the Panthera rosiip being a personal pension rather than an occupational scheme.

On the web, Equity Trust bills itself as ‘the world’s leading independent provider of trust and fiduciary services with 1,200 employees operating across a global network of more than 30 jurisdictions.’

Building a financial strategy on ill-advised tax interpretations can end up costing QROPS investors thousands in unauthorised payment penalties because legally they remained UK resident and their pension switch was unlawful.

Chancellor George Osborne confirmed a statutory test for residence to ease how someone can work out where they live for tax purposes is underway.

The trouble is the law is murky in this area – and HM Revenue and Customs keep stirring the muddy waters with ‘interpretations’ that differ from statute and case law.

The latest example is the much-hyped recent announcement of a 10-day residency test.

Many are arguing HMRC will deem someone resident for UK tax if they work in the country for 10 days or more.

HMRC has stated that if someone stays in the UK for 10 days or less and has a full-time contract of employment overseas, residency status will not be challenged.

If that person stays in the UK for more than 10 days, HMRC may then want to check their overseas employment contract to show they are not resident in the UK.

The problem is this is an HMRC internal guideline that is not supported in law.

Taxpayers and advisers then interpret the statement as a rule and base their tax and financial affairs on whether they meet the qualification or not.

Best advice is for taxpayers considering a QROPS or QNUPS offshore pension to go through a tax status review as proof of residence.

This will establish where a QROPS investor is resident for tax and whether an offshore pension is a suitable retirement savings package for them.

This review can affect the choice of an independent financial adviser. A small financial firm is unlikely to have access to an international tax professional who can conduct a tax status review.

Always check residence before transferring cash because the penalty for making a mistake is severe – a fine of up to 55% of the value of the funds transferred.

QROPS.net is the world’s leading QROPS pension advice firms and has tax status specialists on call. If you want to move UK pension funds offshore, then contact us today to take advantage of the best tax and financial advice.

British ex pats tend to look for a place in the sun not too far from home – with France and Spain topping the list.

But France has never really been tax-friendly and financial crisis in Spain has seen significant tax increases.

Surprisingly to many, the UK is placed 22 in the table of 34 countries listed by tax take.

A report that can help with decision of where to put down new roots is the annual Taxing Wages study from the Organisation for Economic Co-operation and Development (OECD).

The research picks the bones from taxation rules in the 34 OECD countries, which covers many of the world’s major economies. The results are not encouraging for someone looking to save tax.

• France, Belgium and Italy were the highest-tax countries for one-earner married couples with two children while New Zealand took the least. Chile, Switzerland and Luxembourg were also clustered at the bottom.

• Belgium, France and Germany had the highest tax takes for single workers without children on average wages. Chile, Mexico, Korea and New Zealand also scored low.

• Tax went down slightly in Hungary, Denmark and Germany

• Tax went up in the Netherlands and Spain

• Ireland increased income tax and decreased child benefits.

Average tax burdens fell across all OECD countries at all income levels, mainly in favour of families with children rather than singles or higher earners.

Despite the slight changes, tax still rose in 22 OECD countries, with many of the changes introduced by governments just shifting payment responsibilities from employees to employers or away from governments.

Don’t forget the figures relate to OECD countries – that leaves around 120 or so other places, including the Gulf States and the Far East.

For ex pats or UK taxpayers looking to move overseas, detailed country-by-country tax and financial data is available at http://www.oecd.org/document/59/0,3746,en_21571361_44315115_45092219_1_1_1_1,00.html

A league table of OECD countries by tax take is at http://www.oecd.org/document/6/0,3746,en_21571361_44315115_44993478_1_1_1_1,00.html

Derek Hankinson, who lost the largest single tax case worth £30 million in income tax, interest and penalties, is restating his case before the Court of Appeal in London.

His legal team are arguing that HM Revenue and Customs stress test their inquiries with a stronger burden of proof – and if that’s the case, evidence that was used to against Hankinson should be inadmissible.

The case depends on the court’s interpretation of the taxman’s powers of discovery.

Generally, HMRC has to prove either that a tax inspector could not have reasonably been aware of discovery information when an inquiry is launched , or negligence or fraud was involved in submitting the original tax return.

Hankinson claims that as HMRC has tightened the rights of taxpayers, they should have a stricter burden of proof as well and instead of applying the power on the basis of ‘either…or’ it should be ‘and’.

Then, it follows the Hankinson argument is correct, any evidence wrongfully discovered after the power was wrongly applied should be set aside.

The original case, which Hankinson lost last year related to Hankinson claiming he lived overseas when earning a significant income in the UK. The court disagreed he had left the UK and found for HMRC.

Hankinson appealed based on the fact HMRC made a discovery assessment about his residency status six years after the tax year in question ended. The court did not grant leave to appeal, so he appealled that decision as well.

Many legal and tax experts have commented on the case and few believe Hankinson will win in the Court of Appeal as two experienced tax judges have already found against him.

The problem many advisors face when trying to set a client’s residence status for tax is that UK law does not define a test in statute and many of the rules are made up on the hoof by agreeing interpretations with HMRC.

The government has suggested that residence will be defined in statute, but no date or format has been released.

Advice about your present arrangements

It may sound odd but the first thing you need to get a new pension is get out the documents relating to your old scheme. This is because there are two issues that need to be discussed.

• Will your current scheme allow a transfer to a new pension scheme?
• Is the transfer a good idea?

Some private pensions will not allow a transfer if the scheme is already in payment (although some might). For most investors, a QROPS is a good idea but for a small minority with a high final salary scheme the numbers may not add up.

Advice about your wider finances

Moving abroad may be a good time to stop and think about your wider financial situation. Your pension is obviously about long term financial planning, but could your short term finances benefit from an overhaul? If you are about to move to a foreign country, you may appreciate advice about the current accounts on offer, and whether there are any short term savings products that may suit you.

Advice about your tax bills

When your UK pension has been transferred to your QROPS, there will be no more UK tax to pay, as long as you stay outside of the UK for more than 5 tax years. However, your pension may fall into the QROPS country’s regime, and you may also have a tax bill for your country of residence.

Given that the tax situation may change if there is a new Budget of either of those jurisdictions, your QROPS adviser will need to be on the ball at all times.

QROPS in offshore destinations are popular, as they are often “tax neutral”. Your QROPS adviser will be able to give you an idea of what your tax bill might be.

Advice about the new schemes

You will also need advice about what you can and cannot do with your new scheme. When can you withdraw money? What assets can the pension hold? These are questions that you need to understand before signing on the dotted line.

The idea of a QROPS is to let ex pats transfer their retirement savings to a similar scheme in another country to simplify tax and ease access to the cash.

QROPS offshore pensions are beginning to come of age. It’s easy to forget that the first schemes were set up on A-Day (April 6, 2006) and have gone through a lot of teething problems as pension investors tried to push the envelope to see if they could find way to take their pension money early.

Over the years, the numbers of transfers have swelled to around 6,000 a year.

Some transfers have had their problems – mainly because they bucked the rules.

As long as a QROPS investor keeps three main points in mind, not much can go wrong with a transfer:

• Avoid the tax treaty trick – the loophole is closed. Work on the principle that any pension payment coming in to the UK is taxed in the same way as if the payment originated onshore.
• Don’t try and stay in the UK to take advantage of QROPS tax breaks – the plan won’t work
• Don’t set out to cheat the taxman by deliberately setting up a QROPS in such a way to break the rules

The underlying message is it’s not the QROPS infrastructure that’s wrong, it’s the way some pension savers try to tinker to gain benefits to which they are not entitled that causes the problem.

Play the game by the rules and a QROPS pension will work out just fine.

When looking in to a QROPS transfer, bear these points in mind:

• Compare QROPS from different tax jurisdictions
• Investigate the how tax interacts between the UK, the jurisdiction where a QROPS is based and where you intend to live
• Always have a Plan B – what happens to the cash in your QROPS if you have to return to the UK?

QROPS.net advisers can help you to plan for your future abroad and if/when you return to the UK. Contact QROPS.net today to find out more

Both will also scrap retention taxes on savings that have let Channel Islands and the Isle of Man tax authorities deduct tax on interest rather than the saver’s national tax authority for European Union residents since 2005.

Now tax offices in European Union member states will be told how much interest was earned gross; names, addresses of savers and if the financial institution has one, their tax identification number or date and place of birth.

The change results from both offshore centres adopting the European Union Savings Tax Directive (ESD) from July 1.

The directive requires member states to exchange financial information about individuals receiving an income from savings or investments in one European state when they live in another.

Although the Channel Islands and Isle of Man are not EU member states and are not subject to the directive, as UK crown dependencies, both have opted to join the ESD.

HM Revenue and Customs is known to cross check account information supplied under international agreements against self-assessment tax returns to make sure the figures tally.

Savers resident in the UK are strongly urged to contact their tax office to fully disclose any past interest they may have received, as HMRC is currently running a tax amnesty before implementing more severe non-disclosure penalties later this year.

Any savers living in the European Union receiving interest from accounts in the Channel Islands or the Isle of Man are affected. Nationality is not relevant – it is where an individual is resident for tax that is important.

For instance, a UK ex pat living in France receiving interest from an Isle of Man savings account will have the payment details passed to their tax office in France, not the UK.

ESD information has freely passed between European member states since the directive was introduced in 2005.

The government is adding a new clause to the Finance Bill currently before Parliament to “prevent tax avoidance through the interaction of relief for pension savings and the provisions of certain double taxation arrangement.”

This corrects a new double taxation agreement that would let UK taxpayers with Hong Kong domiciled QROPS receive benefits from the pensions taxed at a top rate of 15% and to receive lump sum payments tax-free.

The basis of the scheme is that QROPS are only based in countries that have double taxation relief treaties with the UK.

These treaties remove double jeopardy on paying tax both in the UK and the tax jurisdiction where the QROPS is based, but the arrangements with Hong Kong let some QROPS investors pay tax at a lower rate than HM Treasury envisaged.

The new rules take effect from today (April 6, 2011).

Exchequer Secretary to the Treasury, David Gauke MP said: “The government has set out a clear strategy on preventing tax avoidance. We will not hesitate to take action to stop those who seek to take unfair advantage of unintended tax loopholes. Today’s measure demonstrates our commitment to act quickly to close these.”

The government often announces law changes to take immediate effect to avoid giving any warning to taxpayers who could benefit from the loophole.

Any new clause in the Finance Act is expected to detail how pension payments will be taxed between the UK and overseas jurisdictions.

QROPS investors will not lose the benefit of double taxation schemes.

“In the event that tax is paid in the other jurisdiction, appropriate credit will be available against the UK tax chargeable,” said HMRC.

Contact QROPS.net for more information

In a long-running tax case, Grace has claimed non-residency since 1997 when he considers he moved his main home to South Africa.

HM Revenue and Customs have long argued that although he has a home in South Africa, he is still UK resident for tax purposes.

The argument balances on the definition of residency for tax.

The First Tier Tax Tribunal, which decided his case, felt Grace could not prove he had broken all his ties with the UK because he still regularly flew in and out of Gatwick as a pilot and stayed in a house near the airport that he owned.

In the eye of the taxman, this means he still has significant personal and financial ties with the UK that makes him a resident.

The fact that he spends at least as much time in South Africa as the UK was considered irrelevant.

The tribunal gave more weight to the evidence that showed the amount of time he spent in the UK, that he was employed by a British airline and that he stayed at his home rather than a hotel when in the UK.

Patricia Mock, a director in the private clients practice at Deloitte, who represented Grace at the tribunal, said: “The Grace case is the latest in a string of claims for non-UK residence which have been decided in favour of HMRC. The cases, which include Shepherd v Revenue and Customs Commissioners, and Robert Gaines-Cooper v HMRC (although this case is still under appeal), all demonstrate the increasing scrutiny paid by HMRC when considering the tax affairs of those who claim to have ceased to be UK resident.

“The fact pattern is all important, and this case underlines the need for those wishing to be treated as non-UK resident to be able to demonstrate that contact with the UK has been severed in favour of new ties with another country.”

Tax is the first thing that springs to mind, as reducing one’s tax bill is what triggers most people to look offshore. However, it is not as simple as finding a jurisdiction that is generous to non-residents and moving your money or assets there.

Firstly, since the legal judgment was handed down in the Gaines-Cooper case earlier last year, it is essential to get the issue of your residence sorted if you are a UK citizen. Her Majesty’s Revenue and Customs used to abide loosely by the rule that anyone who spent less than 90 days in Britain was not resident for tax purposes. However, the Gaines-Cooper case seems to have moved the goal posts, and instead of being able to determine your residence by looking at your diary, the taxman wants to ascertain which country is your “centre of gravity”.

This concept may be difficult to apply without professional advice, and as the consequences of getting it wrong could be expensive. You need to determine your residence before either you or your money moves anywhere.

Aside from the tax advantages of investing offshore, if you are open minded about where your money or assets are held you will benefit from an array of choice when selecting a product. If you are planning to invest money abroad for the long term, you will be looking for a destination that is well established, stable and well regulated. This explains the popularity of Crown Dependencies like Jersey, Guernsey and the Isle of Man. Notwithstanding the small geographical area that these islands cover, financial institutions of all kinds operate out of them, offering virtually any product you should care to name.

Finally, in addition to the choice and tax advantages of investing offshore, you may also benefit from the privacy that offshore investing can afford. Whilst interest from some savings products may have to be reported to your resident tax authority, other products can be kept confidential.

Nearly EUR 5.6 billion has been raised in taxes and (reduced) penalties, as the duration of the amnesty was extended from mid December 2009 to the end of April 2010.

But the figure that is more interesting from the point of view of future tax revenue is the percentages of assets that were repatriated to Italy. Only 2% of the assets that were subject to declarations were regularised (i.e. the asset stayed put but the taxpayer paid the appropriate amount of tax), compared to the other 98% of assets that were brought back into Italy. That 98% is estimated to be worth around EUR 104.5.

When the amnesty was first muted in Italy the concept was a controversial one. After all, doesn’t it reward tax evaders by offering them lower penalties than they would have to pay had they been hunted down in the usual way? And what about the crime of false accounting that was necessary to hide the assets? The amnesty gives immunity to this.

The Italian government decided to overlook these questions in the light of the large scale of tax evasion it is a victim of. The amnesty that has just passed was the third in eight years, which shows how concerned the government is about the issue – and how successful amnesties are thought to be.

So where had Italian (non)taxpayers put their assets? Most of the funds and assets that were declared were in Switzerland or Luxembourg.

Thanks to the OECD’s campaign to reduce tax evasion, Tax Information Exchange Agreements are springing up between countries day by day. The agreements permit one tax authorities to disclose information about individuals and companies to another – but only if the one seeking the information has particular suspicions. So-called “fishing expeditions” are not permitted, which means that amnesties may continue to be necessary.

The government is making a play to become the home of 15 tax exiles every year by offering attractive low rates on worldwide annual income of more than £625,000 (US$1 million).

Treasury Minister Philip Ozouf intends to drop income tax rates to 20% on the first £625,000 of worldwide earnings and just 1% on the rest – down from 20% on the first £1 million and 1% on any other income.

These super rich ex pats will have to pay a minimum £125,000 income tax per year and a 20% rate on any income earned in Jersey.

Currently, they pay £200,000 income tax on the first £1 million, 10% on the next £500,000 and 1% on any other worldwide earnings plus 20% on any Jersey earnings.

The new tax regime will save the ex pats at least £75,000 a year in income tax.

New rules will affect tax on QROPS benefits for some

The Jersey government wants to increase cash coming in to the Channel Island – but find they have to change controversial zero-10 tax rules in line with neighbouring Guernsey.

The European Union are at odds with Jersey, Guernsey and the Isle of Man over corporation tax laws that mean local firms pay 10% tax while firms from overseas relocating on the islands pay zero.

Guernsey has already agreed to revise company tax to remove the anomaly, while Jersey and the Isle of Man are trying to hang on to the laws that other countries complain give companies an unfair trading advantage.

These tax changes will not affect the benefits of a Jersey QROPS for ex pats – but will change the income tax on any payment of benefits from a QROPS for ex pats resident in Jersey who are caught by the proposed changes.

This impacts on payments from QROPS based in any jurisdiction, as the tax is dependent on the residency status of the pension scheme member, not the residency of the QROPS pension.

International financial advisory body, the Organisation for Economic Co-operation and Development (OECD) has looked at of tax amnesties organised by member countries to encourage tax cheats to declare their hidden finances or face prosecution.

The OECD – which includes the UK, US, Japan and most European countries among members worldwide – has concluded the amnesties  are a great success.

The UK has organised three major tax disclosure schemes – for UK residents with offshore assets, doctors and other medical practitioners who work across borders and for UK residents with cash or assets in Liechtenstein.

HM Revenue and Customs says the first amnesty raised £450 million in ‘lost’ tax and is still reviewing tax recovered under the other schemes.

The OECD has put together an ‘amnesty toolkit’ for member states as a template for designing further disclosure schemes.

More than 2,000 tax evasion schemes detected

The OECD report says disclosure schemes have several benefits over other inquiry methods -

• They produce better and quicker results
• Let tax authorities target investigators
• Let governments enact tax changes to close loopholes quickly

The disclosure comes from an OECD report in to aggressive tax planning schemes that has uncovered more than 2,000 tax evasion ploys by companies and wealthy individuals since 2004.

Despite HMRC announcing new enhanced tax evasion penalties of up to 200% of the tax owed, the OECD says penalties have had limited success and little impact on uncovering hidden assets .

The report reveals countries have little success with tax investigations that audit corporate or individual financial affairs, particularly if the inquiry spans several countries or has operated for several years.

The OECD review also noted that sharing banking and other financial information between countries was becoming a major tool in detecting tax cheats.

The new penalties start from April 6 for UK residents evading income tax and capital gains tax.

The severity of the penalty – based on the amount of taxed owed – depends on the tax status of the offshore financial centre with those not sharing tax information with the UK  attracting the highest penalties.

The Treasury says the penalties are geared to make hiding cash offshore less attractive to savers and investors.

The new penalty regime is the latest stage in the The Offshore Disclosure Facility (ODF).

In 2007, the first ODF generated over £450 million  in tax, interest and penalties – with more from follow-up investigations.

The second ran last year and results are still under evaluation by HMRC.

The Liechtenstein Disclosure Facility (LDF) opened on 1 September 2009 and will run until 31 March 2015.

Four countries shamed over ‘inadequate’ tax laws

Any UK resident individuals and companies  have to disclose their taxable assets to HMRC or face having their accounts closed.

The LDF is expected to generate well over £1 billion by the time it closes.

HMRC head Dave Hartnett, Permanent Secretary for Tax,  confirmed the government is serious about tackling tax evasion offshore.

He said the new penalties will increase the deterrent against offshore non-compliance and make evading tax more difficult for most UK residents with offshore financial interests.

Meanwhile, Barbados, the Seychelles, San Marino and Trinidad and Tobago are named and shamed as countries with inadequate tax laws.

The Global Forum on Transparency and Exchange of Information for Tax purposes, hosted by the Organisation for Economic Co-operation and Development (OECD), they fall short of the international standards.

These countries would probably attract the highest tax penalties under the new HMRC rules.

The HMRC penalty shake-up affects UK resident taxpayers – including those that may have lived offshore for many years but have not severed all their financial and lifestyle ties.

HMRC has declined to comment on the inquiry and no charges have yet been made.

The arrests are thought to be the first coming from ongoing inquiries by HM Revenue and Customs in to Swiss bank account details of 3,000 British taxpayers sold to HMRC last year involving undisclosed earnings from money stashed in accounts at a Swiss branch of HSBC.

Wikileaks to name 2,000 involved in tax evasion

Wikileaks is about to blow the cover on 2,000 more wealthy individuals and corporations allegedly evading tax and laundering money running in to billions.

The organisation has already blown the whistle on thousands of leaked diplomatic cables between US embassies and Washington.

Wikileaks founder Julian Assange is embroiled in legal wrangles over sex allegations in his native Sweden and calls for prosecuting him for treason in the US.

The banking secrets come from information handed to Wikileaks by disgraced banker Rudolf Elmer faces charges of breaking Swiss bank secrecy laws, forging documents and sending threatening messages in Switzerland.

The details allegedly include the names of 40 politicians involved in tax evasion, plus high net worth individuals, corporations, and financial institutions.

Elmer alleges they were involved in systematic tax evasion by hiding behind veils of secrecy in offshore financial centres to shield their activities.

“What I am objecting to is not one particular bank, but a system of structures,” Elmer told the Observer newspaper.

“I have worked for major banks and the one thing on which I am absolutely clear is that the banks know, and the big boys know, that money is being secreted away for tax-evasion purposes, and other things such as money-laundering – although these cases involve tax evasion.

“I agree with privacy in banking for the person in the street, and legitimate activity, but in these instances privacy is being abused so that big people can get big banking organisations to service them. The normal, hard-working taxpayer is being abused also.”

Guernsey slammed for ‘lax’ attitude to money laundering

Financial regulators in Guernsey are accused of overseeing money-laundering regulations that are too lax and have been charged with cleaning up their act by the International Monetary Federation (IMF).

In 600 pages of reports, IMF inspectors backed most of the regulatory framework imposed on the Channel Island state but criticised prosecutors for not taking firms who breached laws to task.

Many of these taxpayers are retired expats and international workers picking up payments from a UK pension scheme.

Expats seem to be unaware they can place themselves outside the HMRC tax system by switching their pension fund to a qualifying recognised overseas pension scheme (QROPS).

Having pension benefits paid gross directly from the provider is one of the many tax-effective features of a QROPS offshore pension that makes switching retirement savings out of the UK so attractive.

As the providers are based outside of the UK in an offshore financial centre, the payments are outside of the UK PAYE system and the inept HMRC.

HMRC is currently examining tax payments for 2009 and 2010, so many more taxpayers are likely to receive unwelcome letters demanding they pay more from the taxman.

Avoid HMRC bungling with a QROPS pension transfer

Generally, many QROPS schemes will not accept a transfer once the scheme has started paying benefits, but some will consider a change.

If you are an expat or expect to leave the UK to live overseas permanently within six months, you can speak to a QROPS.net financial adviser about your options of consolidating one or moiré UK pensions in to an offshore package.

Pension rules let any QROPS provider pay gross benefits to the pension scheme member regardless of where they live outside the UK.

Switching to a QROPS to avoid HMRC errors is just a by-product of the benefits offered by offshore pensions, but should not be the primary reason for a transfer of funds.

The main reasons why expats favours a QROPS over a UK pension include benefit payments made in major currencies to minimise the effects of exchange rate fluctuations, investment flexibility and placing the fund outside of inheritance tax.

A report from the influential Institute for Public Policy Research (IPPR) argues that inheritance tax (IHT) is ineffective and unfair and should be scrapped for UK expats and taxpayers.

Instead, anyone gifting cash or assets valued at more than £150,000 should pay a gift tax.

Currently IHT is levied at 40% on all estates worth more than £325,000.

Assets left in trust like pension funds in a QROPS pension scheme, generally remain outside a person’s estate for IHT purposes with the result no tax charged against them.

Under this new proposal, any cash or gift with a value between individuals worth more than £150,000 would be subject to a gift tax.

The IPPR suggests this would stop the rich avoiding tax and give a fairer result for all taxpayers.

The suggestion is that the new gift tax is banded, so higher rates of tax are applied to larger gifts.

Gift tax should replace 40% inheritance tax

Gifts under £150,000 should be exempt from the new tax, says the IPPR, and then the banding should be applied as follows:

• 20% tax on gifts between £150,001 – £300,000
• 30% tax on gifts between £300,001 – £450,000
• 40% tax on gifts worth £450,001 or more

The think tank argues that scrapping IHT in favour of the new tax would increase the tax take from £2.2 billion a year to £3.2 billion by charging tax at a fairer rate across more estates.

Many expats are liable to pay IHT on their estates because it is one of few taxes that is charged in relation to an individual’s domicile rather than residence.

Domicile is largely decided by where a person is born or where his or her father was born.

If the proposal was adopted, it’s likely that the gift tax would fall in line with other capital taxes – like capital gains tax.

This would result in a huge estate planning shake up as expats and other non-residents are exempt from capital gains tax on disposal of their assets providing the disposal is made while they are living permanently outside the UK.

It is now possible to be retired from the point of view of receiving a pension – and yet continue to work (and receive a wage), since the rules were changed as part of the government’s Pension Simplification initiative in 2006. This was the same initiative that brought about Qualifying Recognised Overseas Pension Schemes and loosened the tight restrictions on SIPPs.

In many of the recent surveys of workers’ expectations about their retirement income, a so-called “part-tirement” involving part time work has been billed as a necessity as they cannot make ends meet on the state pension alone. Even the new government’s promise to restore the link to earnings has not affected the fear that many feel about impending old age poverty.

However, reports of the 10,000 or so public sector workers who have also officially retired on comfortable civil service pensions is bound to inflame the growing private sector fury at the perceived cushiness of public sector pensions.

The Sunday Times revealed that of the 85,000 staff employed by Her Majesty’s Revenue & Customs, over 2,000 were also receiving their pension. HMRC had the highest proportion of double dippers on its payroll of all the public sector bodies the paper surveyed.

Given that the practice is perfectly legal there is no suggestion of impropriety, but it is amusing that the public body with the greatest percentage of employees taking advantage of this technicality are those whose day jobs involve the closing of loopholes.

The survey also shows that the typical retirement ages among the public sector bodies the paper examined are somewhat lower than the state retirement age, which is soon to be 65. Many public bodies had average ages of retirement of 60 or under, although of course if retirees became double dippers they would still be in work after that age.

With more doom and gloom about the coming austerity measures needed to reduce the UK’s deficit, the coalition’s conclusions on public sector pensions are awaited with interest.

The report assumes that a typical pensioner household receives an income of £17,727, of which £5,315 is then paid out in tax. This figure may at first seem surprising, but it includes both direct and indirect taxes.

Traditional income tax is the biggest cost, coming in at approximately £1,500. However, VAT is not far behind at £1,229 a year. Council tax and duty on booze, cigarettes and fuel make up the rest.

The income tax figure may not seem so bad if you are still living in the UK, making use of the health service and other public provisions. But if you have moved abroad, paying so much tax much surely grate on your nerves.

If you have moved abroad but still draw a UK private pension, have you considered a QROPS? Qualifying Recognised Overseas Pension Schemes allow you to transfer your pension pot into a foreign scheme without paying UK income tax.

As long as you stay outside of the UK for five years or more, the taxman will cease to have an interest in your affairs. During those five years however he will be keeping his beady eyes on your pension pot, and getting reports of any activities that are linked to it.

You can visit the UK from time to time without being sucked back into UK residence for tax purposes, but it is best to get professional advice about the consequences of your activities to make sure that you do not inadvertently end up with a high tax bill.

Other than the income tax issues, there are other advantages to QROPS. They may typically offer more flexibility about when you can access your pension fund, and sometimes offer more choice in what you can choose as underlying assets.

QROPS.net can help you move your pension out of the reach of the UK taxman in a completely lawful way. Taking into account your plans, hopes and aspirations for a comfortable retirement, we can look for a solution to your investment needs.

Following a meeting of EU finance ministers, Guernsey has already announced changes to a similar scheme are in the pipeline for early 2011.

The Isle of Man and Jersey argue that the EU has no jurisdiction because the tax structure is personal tax and not business tax, which comes under EU influence.

The latest attack on the system comes from UK Justice Minister Lord McNally, who has urged both island governments to settle the dispute as soon as possible.

Lord McNally, who oversees the crown dependencies, said: ‘I think what we want to do is to try and get this settled as soon as possible. Discussions are going on.

‘We’ve not made any secret, and certainly Her Majesty’s Treasury has not made any secret that they do not think that the tax regimes pursued by Jersey and the Isle of Man are incompatible.

‘But, as I say, negotiations are going on and they know what our view is and they know where we want them to end up.”

Behind closed doors, the UK Treasury is making clear that the Isle of Man or Jersey do not have a ‘normal, internationally acceptable business tax regime’ and changes must be made.

Guernsey’s acceptance of the argument seems to undermine the IoM and jersey, plus Guernsey trustees are reportedly refusing to do business with directors who are using the zero-10 rules to avoid paying tax.

The zero-10 rule means some firms pay business taxes at 0%, while others – a minority – pay at 10%, which the EU argues is unfair to tax regimes of member states.

The fear of the three offshore financial centres is that changing tax rules may impact on financial services operations

By then, the 50% higher rate of income tax will begin to really bite, raising an extra £80,000 from a millionaire’s pay packet.

The rest comes from pension contribution caps, cutting child benefit and other taxes.

The figures were revealed by Bloomberg News and were drafted by accountants specially commissioned by the firm.

Many financial firms claim London is now one of the least-preferred places to live and work by wealthy top earners due to tax erosion of their income.

Those that want to stay are looking towards tax avoidance exercises like converting income in to assets where capital gains tax will be paid rather than income tax.

Huge differential between top rates of taxes

Many City workers choose to divert their income in to share option plans for this reason.

The current differential between the top rates of capital gains tax (28%) and income tax (50%) is a massive 22%. The government has indicated that capital gains tax rates are unlikely to change for the life of the Parliament.

British expats or workers with UK pension rights who are leaving the UK permanently to live and work can opt for more tax effective pension arrangements via a QROPS offshore scheme.

Contributions in to a QROPS are not capped and pension savers have a far wider range of flexible investment options.

British residents who move overseas and consider a QROPS pension investment should follow the non-residency advice as laid out in the recent HM Revenue and Customs v Robert Gains-Cooper case. These guidelines say anyone leaving the UK should break all residency ties with the country.

The Bloomberg figures relate to a married couple with two children. The husband earns £1 million a year and the wife does not have any earnings.

Many overseas workers are in a win-win position because they can build up a pension pot onshore while gaining tax relief top-ups from the government and benefit from a tax-effective QROPS scheme if they leave the UK.

A QROPS is a special offshore pension scheme that allows anyone with UK pension rights who moves overseas better access and more control over their pension funds.

High-earning expats have offshore pension options

QROPS – which stands for qualifying recognised overseas pension scheme – is a pension aimed at UK expats or overseas workers with UK pension rights who have moved permanently to another country.

This double-whammy investment is of particular interest to high-earning expats in the UK who plan to live and work here for several years and then opt for retirement back to their home country.

Higher rate taxpayers can invest in a UK pension and pick up 40% tax relief on their contributions – then instead of accepting the meagre annuity returns and restricted benefits, they can switch the fund to a QROPS up to six months before leaving Britain or once they have moved overseas.

Tax benefits of a QROPS pension

The QROPS rules than come in to play that let them drawdown a tax-free lump sum and pension benefits paid gross – plus the any remaining funds in a QROPS are generally exempt from inheritance tax when the pension investor dies.

Crucially, the QROPS can live in a neutral tax jurisdiction like the Isle of Man or Guernsey while the saver can set up home wherever they like.

Moving a pension fund offshore is a serious and complex investment decision, and QROPS providers insist investors take advice from an independent financial adviser before switching a penny offshore.

Some pension experts claim continuing low interest rates will have an unexpected impact on pensions – which has led finance professionals to point clients towards offshore pensions like qualifying recognised offshore pension schemes (QROPS) for better returns on investment.

Low interest rates undermine pensions in several ways:

• Long-term growth is harmed
• Inflation – running at 3.2% a year according to latest government figures – erodes savings
• Annuity rates are pushed down
• Quantative easing shores up assets and investments reflect artificial values

One pension expert, Dr Ros Altmann, director-general of the over-50’s financial provider Saga Group, is even predicting a further financial crash unless rates rise.

She claims low long-term interest rates are damaging pensions and has spoken out about the dangers of the current economic environment.

Her main concern is free market asset prices are often priced according to government bonds, and that as quantative easing (QE) is promoting artificial values of these bonds, the real asset values underlying those seen through QE tinted glasses are not clear to investors.

Dr Altmann addresses problems in the UK pension market but does not promote any offshore solution, but one way to steer clear of the crisis is for investors to take control of their pension funds.

UK pension holders who plan to move abroad  or are already live abroad can move their cash in to a QROPS.

A QROPS shields investments from the vagaries of UK pension rules by moving money to an offshore financial centre like the Isle of Man or Guernsey – to name just two of the most popular.

QROPS investors have more choice over how they invest – like choosing the currency and spreading risk across a wider selection of assets.

Although QROPS are not exempt from the effects of a global financial crash, they can remove risk from a narrow investment base imposed by a UK onshore pension.

Here are six tips for anyone considering leaving the UK -

1. Don’t just look for low tax – It’s your life and you need to enjoy your time overseas whether you are a professional looking to put down expat roots or winding down in retirement. Low tax is good – but you also need to consider lifestyle, cost of living, culture and increasingly, security.
2. Breaking all ties is not as easy as you think – Just upping sticks and moving to a home in a tax haven does not give you a ‘get out of jail free’ card for UK taxes. You have to show you have no tie3s with the UK – that means no bolt-hole home, no children in school here, no financial ties and lots more
3. There’s no hiding place – If you are moving to evade tax then forget it because most countries you would want to move to have double taxation treaties and agreements to exchange tax information with the UK. The end result is a lot of time and effort to achieve no savings – in fact you’ll probably end up paying more in fines and penalties.
4. Take professional financial and tax advice – Specialist firms like QROPS.net can help you make the most of your income and investments. We have consultants in most countries and a specialist head office team who keep up to date with international financial and tax matters.

   Think of QROPS.net as the mechanic who services your car and keeps you safely on the road – except we look under the hood at your financial affairs and make sure you pay the least tax the rules say you can.

5. Review your finances before you go – A financial strategy that’s good in the UK is probably no good anywhere else and you don’t want to transfer your assets only to find you are in a tax trap once you have set up your new home
6. Protect your tax-free pension lump sum – Many countries tax pension benefits, even though the rate of tax may be lower than standard income tax. You can talk to your <our firm> adviser about a QROPS. A QROPS is a special offshore home for UK pension funds that puts the fund and benefits outside normal tax rules for expats.

If you are considering moving overseas to retire or work, then consider your tax status before you go – not when you have made the move. To find out more about saving tax and making more of your income and investments, contact QROPS.net

In a bid to be ultra helpful, the government has even published a complete list of the reliefs – available to download from HM Treasury website

John Whiting, the accountant heading up the Office of Tax Simplification (OTS), wants anyone currently saving money from all or any of these tax reliefs to drop him a line with their views about their usefulness.

Now the government finally has a list of all tax reliefs, Chancellor George Osbourne and his team are expected to be busily plugging the holes.

The OTS is running a cost-benefit analysis on each relief to look at how much tax is lost or saved – depending on your viewpoint as a tax inspector or taxpayer – and if the costs of claiming the reliefs is worthwhile.

The OTS claims they are not looking to close the gaps in legislation but to modify or streamline the legislation.

The tax reliefs include more than 90 inheritance tax and 40 capital gains tax reliefs.

No hints are available to indicate which reliefs face the axe and which will stay.

Mr Whiting explained he was surprised at the sheer number of reliefs available in the tax system – but added some were too complex or difficult to comply with to be properly effective.

The OTS is also looking at which reliefs are widely used – like principle residence relief for homeowners under capital gains tax and those that are more obscure that may have slipped out of favour due to changing financial climate.

Also on the timetable is establishing a consultative committee of tax professionals and business experts to give opinions about whether a relief should be retained.

Expats may be affected by any change to the dozens of pension and inheritance tax reliefs that are listed on the OTS download.

• you need to find out whether your current scheme will permit a transfer (as some will only allow it before the member has started to take benefits);
• to remind yourself of the benefits to which you are entitled; and
• to review the fees and charges that your current scheme bears.

Next, you have to give some firm thought to what your plans really are. Unless you genuinely intend to be out of the country for five whole tax years following the pension transfer, a QROPS transfer will not be for you. The danger of a large tax bill greeting you on the doormat if you come back early should be a significant deterrent.

Many QROPS do not accept investments direct from private individuals who are not represented by an adviser. Accordingly, even if you felt able to choose an appropriate scheme for yourself, you may find that the QROPS administrators may not be prepared to deal with you direct.

In any event, many QROPS advisers operate on a commission only basis, which means that you may not even need to pay directly for the advice that you receive.

When selecting an adviser, bear in mind that only someone independent with access to the whole of the market has the potential to sift through every single scheme out there on your behalf. A tied agent may not be able to offer the most competitively priced deal.

Your adviser should listen to what you have to say about your plans and ambitions for your retirement so that they can help you choose a QROPS to suit. For example, if you need access to lump sums early on, this will affect the types of scheme that you can choose. Alternatively, if you want your pension to hold a particular asset, you may be directed to another type of arrangement.

Once the scheme has been chosen, your QROPS adviser should deal with the transfer.

However, in reality, anyone with a UK pension who is living abroad or thinking of moving abroad should consider getting one. QROPS investors are a diverse range of people who might include:

People who are going to be away from the UK for at least 5 years

This requirement is driven by a HMRC rule that QROPS investors must be non-resident for at least 5 years to enjoy the benefits of tax exemption. The rule is strictly policed and narrowly interpreted. Being non-resident may be more difficult than it sounds, as instead of totting up how many days you spend inside and outside of the country, HMRC looks at where the investor has their “centre of gravity”. This test involves a number of aspects, including looking at where the saver owns property and where their children are being educated.

The consequences of not staying outside the UK for 5 years could include a back dated tax bill and even a penalty, so it is a rule that needs to be carefully heeded.

…but not necessarily Brits

QROPS are available to members of UK pension schemes, but this does not necessarily mean that the savers who have them need to be British. In fact, QROPS are available to a wide range of nationalities. Perhaps you have been on a long work placement in London and accrued pension benefits as part of your package. In this case, it is still worth looking at a QROPS to see what tax, if any, you could save.

Qualifying Recognised Overseas Pension Schemes were part of the last UK government’s Pension Simplification initiative. As its name suggests, this series of new regulations were meant to usher in a new age of straightforward, rules on retirement saving. As you might expect, the result was anything but.

However, whilst the HMRC manual on QROPS may not be the light reading it was meant to be, the introduction of QROPS has been a significant advantage to members of United Kingdom pension schemes who have moved abroad.

Her Majesty’s Revenue & Customs will approve an overseas scheme as a QROPS if it is regulated and taxed as a pension in the jurisdiction where it is incorporated. At first glance it may seem that this may not get you anywhere. If the QROPS is still subject to a tax regime, why bother?

But the advantage of the scheme is that you do have to choose a QROPS where you live. So you can choose a QROPS in a jurisdiction like Guernsey or Jersey, which may not even tax non-residents on investment gains in the type of product that you choose.

When talking about tax, savers may understandably be most concerned about income tax, because it affects the here and now. But you may also wish to take the opportunity of getting a QROPS to do some IHT planning.  Some QROPS locations let you pass assets directly to beneficiaries on your death without any inheritance tax being payable anywhere in the world.

QROPS.net can help you organise your pension overseas to maximise the opportunities for IHT and income tax planning. And as significant as the tax advantages of QROPS may be, there are also other benefits over keeping your pension in the UK. For example, you may find that there is more flexibility about investment choices and underlying assets available in QROPS.

Anyone who opts instead for an overseas scheme in a foreign country that has not be specifically authorised runs the risk of a large tax bill (backdated to the date of the transfer) and a penalty on top of that. Add those sums together, and an unwitting investor could end up having to pay 55% of the value of their pension.

HMRC approves schemes if they are taxed and regulated as pensions in their own jurisdiction. So whilst the pension does not have to meet UK regulatory standards, it has to be recognised as a bona fide pension in its own country.

This is where investors in a scheme called The Beazley Consulting Pension Scheme in Hong Kong had a nasty shock. The scheme was given HMRC’s approval in 2007, and added to the list of overseas pension arrangements which could legitimately receive UK pension assets without attracting a charge to UK tax.

However, it later transpired that the scheme had not been set up properly as required by Hong Kong regulations. Accordingly, the scheme’s investors were told that, as participants in an unauthorised scheme, they may have to pay a hefty fine.

In previous cases, HMRC have proved to be unrelenting in their pursuit of this surcharge. However, there is a chink of hope for Beazley investors to cling to. Some commentators have reported that the scheme’s trustees have secured a concession from HMRC. It seems that Her Majesty’s inspectors may be prepared to waive the penalty, if, having looked at the transfers on a case by case basis it seems that they were made for bona fide reasons.

In real terms, it seems that HMRC will impose the penalty if the transfers were for tax avoidance purposes, and may consider waiving it if investors genuinely thought that they were providing for their retirement in a legitimate way which happened to have various tax benefits.

It remains to be seen what lenience, if any, will actually be shown.

Fortunately, if you are looking to transfer your UK pension into an overseas scheme, there are hundreds of QROPS to choose from. Qualifying Recognised Overseas Pension Schemes were introduced in 2006 and offer members of UK pension schemes the chance to transfer their pensions abroad without paying UK income tax. Of course, as with every other concession the taxman gives away there are terms and conditions. The expat must be tax resident outside of the UK for at least 5 years following the transfer, and the scheme that receives the funds must have been approved by HMRC.

So how can you find a QROPS that would suit every one of our hypothetical expats?

Firstly, it is important to clarify that a QROPS does not need to be based in the same country as its investors, so expats can choose a scheme based in a location that is as far flung from their new home as they like. When choosing a QROPS destination, tax efficiency will be high on the list of every investor’s priorities, and your QROPS adviser will be able to give you the lowdown on the tax efficiency of a number of popular locations.

After tax, most investors are interested in the flexibility that a pension scheme will allow them. Our 50 hypothetical investors will each have a different preference for the underlying assets that will underpin their pension scheme, and will each have a different appetite for risk. Having over a thousand approved QROPS to choose from, a good QROPS adviser who has scoured the whole of the market should be able to find a suitable scheme for each one.

Finally, investors who are approaching retirement are particularly interested in when they can get their hands on their money. Some investors may be willing to sign up to purchase an annuity at a particular age, but others may want the freedom to spend their money when they want to. If you want to escape an annuity requirement, your QROPS adviser will be able to find a scheme that does not have this feature.

It is also possible to set up a QROPS pension in a country other than the one in which you are living. Bear in mind, however, that you will have to pay tax in the country in which you are resident and may also have to pay tax in the country where the QROPS was established. The reason people usually set up QROPS in an alternative country is because the taxes there are particularly low, so they still gain overall.

To avoid double taxation it is important to marry the QROPS juridcistion with the country of residence.

QROPS stands for Qualifying Recognised Overseas Pensions Scheme. This means that the scheme should be recognised by the relevant tax authorities of the country in which it is established. It should also be approved by Her Majesty’s Revenue and Customs (HMRC) in the UK. HMRC publish a list of approved QROPS schemes, which you can view at the HMRC website. The QROPS list is updated regularly as more QROPS providers are added, and some are removed. If a QROPS pension provider is not on the QROPS HMRC list or has been removed, you could risk incurring large tax penalties from the UK government.

QROPS pensions are most suited to people who intend living abroad for at least five years, because prior to five years the QROPS providers have to report any pension withdrawals to HMRC. After five years this reporting is no longer required and you benefit from the full QROPS rules.

As well as benefitting from reduced taxation on your pension, QROPS have a number of other benefits. Amongst these is the fact that you don’t have to worry about fluctuating interest rates and are not subject to exchange rate charges if you are drawing your pension in the same currency as that used by the country where you are resident. Additionally, your dependants may not have to pay inheritance tax on any sums that you leave to them.

There are many other advantages of taking out a QROPS pension, which is why they are now becoming so popular. However, QROPS schemes are not suitable for everybody. QROPS pensions are a specialist field and it is essential to consult a qualified QROPS adviser who can give advice on schemes to suit you.

QROPS stands for Qualifying Recognised Overseas Pension Scheme, and they were introduced in 2006 in a wave of legislation as part of the then government’s Pension Simplification initiative. Given that the initiative was meant to make pension regulations easier to understand and follow, the market had high hopes for the product.

Hundreds of thousands of former members of UK pension schemes seem to be pleased with the results. After all, they have lawfully transferred their pension assets to overseas schemes out of the reach of the UK taxman.

Easy to understand

As long as you have a good QROPS adviser on your side, deciphering the QROPS regulations can be relatively straightforward. From an investor’s perspective, there are two main certainties to take into account. Firstly, you need to be sure that you are going to stay outside of the UK for at least 5 years after the pension has been transferred. If you are only planning to leave the country for a short time, a QROPS may not be suitable as there may be a “claw back” from the point of view of tax that needs to be paid.

The other “golden rule” is that the scheme you choose must have been individually approved by HMRC. It is important to remember here that this approval does not confer any sort of official recommendation. HMRC merely check that the QROPS meets with their regulatory standards. It is then your QROPS adviser’s job to assess the scheme on its merits and suitability for your own individual needs.

Easy to transfer

Once you have decided on a scheme – or decided that you want to set up a bespoke scheme around your own requirements, your QROPS adviser should do all of the rest of the work involved in effecting the transfer for you.

Pros

Tax is probably the first positive that springs to mind about QROPS. With exemption from UK inheritance tax and income tax, QROPS offer a distinct advantage to British expats over keeping your pension in the UK. Given that your QROPS can be based anywhere, you can effectively choose which jurisdiction you want to keep your pension in.

In fact, the very breadth of choice available among QROPS is an advantage that they may have over domestic pension products. As an overseas investor, you may have the chance to make lucrative offshore investments that may not be available to UK based savers.

Given that there is so much choice available to QROPS investors, you might also be able to find a pension solution that is more flexible than your current arrangements. Depending on which country you choose to base your QROPS in, the scheme may give you access to your money sooner than you think.

Cons

What could possibly be a point to consider against QROPS? You may wish to make sure that the size of your pension pot justifies the fees involved. But the main thing is that you do need to make sure that you abide by any rules and regulations that HMRC hand down about foreign pensions. The rules may change from time to time, so make sure you have an adviser who is keeping you in the loop.

For example, the most important rule about QROPS is that investors must stay resident outside of the United Kingdom for at least 5 complete tax years after the transfer. Failure to stick to this would mean a large tax bill, and what could be a worse “con” than that?

Before 2006, expat pension savers using UK schemes could not access their pensions from outside the UK without paying at least 25% UK tax on the money. Imagine the relief they felt then when the government introduced the concept of Qualifying Recognised Overseas Pension Schemes in 2006.

QROPS providers exploited this relief and set their charges relatively high, knowing that people that transferred their pensions across were so grateful to escape the British taxman that they would pay the fees with little complaint.

Fortunately, the situation has changed. New QROPS destinations are being opened up all the time – the first Maltese QROPS was added to the HMRC’s list a few days ago. Accordingly, the growing competition in the QROPS marketplace means that QROPS savers can benefit from charges that are comparable with domestic UK schemes. Some QROPS are being offered at £500 per year, although these are likely to be off the peg schemes rather than bespoke arrangements for an individual’s specific circumstances.

Annual fees are only one aspect to take into account when you are considering what a QROPS will cost. Start up fees and charges that may be payable for transferring money in and out of the schemes should also be weighed up when an investor is trying to decide what constitutes a “good value” QROPS.

As part of a large group of advisers who place hundreds of thousands of pounds’ worth of pension investments every year, QROPS.net can often negotiate significant discounts in QROPS providers’ fees and may be privy to exclusive offers from QROPS providers. Speak to one of our advisers to see if there is a good value QROPS out there for you.

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.

Look at the whole of the market

If you were shopping for a car, you would not limit yourself to one garage. Likewise, if you were looking for a piece furniture, you would not limit yourself to one furniture store. So why do hundreds of people limit themselves to tied agents when they are looking for a financial product?

Tied agents are no doubt competent and professional. But by definition, they are unable to provide advice on every single QROPS out there in the marketplace. Accordingly, by choosing to go to one for your foreign pension, you are choosing to exclude yourself from an opportunity to scour the marketplace to look for the best deal.

Some investors may be surprised to discover that their pension does not have to move to the same country as them. A QROPS can be in any country that has been approved by HMRC, so there is nothing from stopping you moving to New Zealand but sending your pension assets to Guernsey.

Think short, medium and long term

Thankfully, life expectancy is on the up. Whilst there is no shortage of people who will whinge about the cost that this presents to an ever burdened system that can barely support the people who are already retired, this should actually be a cause for celebration.

It does however mean that you need to plan for a number of phases of your retirement. Some retirees may need to take large lump sums to purchase a property in their new country. Even if you do not need to, some investors may want this option because they may wish to help out grandchildren or children financially.

Despite the furore that surrounds annuities in the media (where it is claimed that they are bad value for money), many investors will choose to purchase one because of the certainty of income that they offer. Accordingly, you and your team of advisers may wish to bear this in mind when you are choosing a QROPS.

Only private pensions can be transferred into QROPS. Your state pension entitlement is not capable of being carried across into the scheme. There are many different types of private pension scheme.

If yours is a final salary arrangement, you may need to give careful thought to whether a QROPS can offer the same level of income that your existing scheme will promise. A reputable QROPS adviser will point out if you would be better off sticking with your current deal.

If you have already started to take benefits from the scheme, you may find that the rules of your UK pension may prevent a transfer. However, this is something that your QROPS adviser can also tell you about in detail.

What if you have lots of UK pensions?

If you have changed jobs a few times, you may find that you have a number of different pension schemes on the go at once. The UK government runs a Pension Tracing service that helps reunite savers with their long lost schemes, so it may be worth getting in contact with that service to find any that you have lost the details of.

Some investors may even find that getting a QROPS is a useful opportunity to consolidate their existing schemes into one place. It may be more efficient from the point of view of fees that are due on the schemes.

How long will the process take?

It would be wise to leave around two months for the whole process to take place, although hopefully it should take less time than that.

The speed of the transfer depends on how organised your UK schemes are in making the assets or money available, and how quickly your QROPS is set up. Your QROPS adviser should be the one to contact both of these parties, with a view to hurrying them along if the transfer is not effected quickly.

The UK side of things

Qualifying Recognised Overseas Pension Schemes offer an exemption from UK income tax, but on certain conditions that have to be kept strictly.

First is the condition that you have to choose a scheme that has been individually approved by HMRC. It is not simply enough to choose a pension scheme in a country that has been approved to accept QROPS – the scheme itself must have been vetted to check that it has been set up, is regulated and taxed as a pension in its own jurisdiction.

HMRC keep a list on their website which gives the names of most of the approved QROPS. However, there may also be some that are not on the list due to confidentiality reasons. Your QROPS adviser should check the list before giving any advice about the schemes. Investors should note that being on the list does not mean that the scheme has been “recommended” by HMRC. It merely means that the scheme has met the regulatory criteria.

The penalty for going “off list” with your choice can be severe. HMRC have the power to impose a penalty of up to 55% of the value of your pension, which they can do even if there is no evidence that you transferred the pension fraudulently.

The second condition that investors have to meet is a residence requirement. To benefit from the UK tax exemption, investors must be non-resident for at least 5 years.

QROPS investors will be pleased to note that QROPS are also exempt from UK inheritance tax.

Overseas perspectives

What about the tax authorities in the country where the QROPS is based? The answer to this question will probably inform your decision about where to buy a QROPS. After all, tax is often a significant motivation behind an investor’s decision to get a QROPS.

If your QROPS is going to be based in a country that is different from the place where you will live, then there will be a third jurisdiction to consider.

People who have UK private pensions

There are two important things to note about this point. Firstly, take note that only private pension entitlements can be transferred. Your state pension cannot be carried across into a QROPS. The second thing is that the pension you want to transfer must be a UK one. So there is no requirement that the scheme member must be a UK citizen. US citizens may have difficulty using a QROPS due to their own country’s rules on tax avoidance, but apart from that qualification, QROPS are open to most people who are UK pension scheme members.

People who have not yet taken benefits

The relevance of this depends on the rules of your individual pension scheme. Some schemes will not permit a transfer when their member has drawn an income or taken a lump sum from their pension pot. However, it is always checking the fine print on this issue, so get your QROPS adviser to check the documents just in case it is an option.

People who are leaving the UK for at least 5 years

To qualify for the UK tax exemption, members of QROPS must be non resident for at least 5 years. If you do not plan to be away for this long, you should seriously consider whether to get a QROPS. if you come back in that 5 year period, you may have to pay the tax that was due, and perhaps even a penalty too.

A recent legal case has made the rules on residence very strict, so if you do get a QROPS, it’s worth taking advice on whether you fit the criteria.

People who want to save tax

Given that QROPS are exempt from UK income tax, they are not only effective retirement planning solutions but also useful tax planning vehicles in their own right. If your QROPS adviser looks at a variety of options all over the world, they should be able to find a scheme that is tax favourable to your requirements.

QROPS are available to anyone with a UK pension scheme who lives abroad. Their purpose is to allow such people to transfer their pension assets into a foreign scheme without attracting a charge to tax. The qualifications a overseas scheme has to meet to become a QROPS include:

• regulation as a pension in its own jurisdiction; and
• taxation as a pension in its own jurisdiction.

At first glance, it may seem alarming that the scheme should be taxed as a pension in its own country. However, given that your pension can be based anywhere in the world, it is worth remembering that you can choose a country that does not tax pensions, or at least does not tax them very much, when you select where to base your QROPS.

For the first five years following the transfer, the QROPS trustees must “report back” to HMRC about the activities of your scheme. This way HMRC keeps tabs on its former customers, and makes sure that the regulations are being adhered to.

After those five years are up, the QROPS no longer has to tell HMRC anything about the scheme’s activities.

QROPS are investment controlled, which means that there are certain assets that cannot be held by the schemes. However, the choice and variety of the thousand or so approved QROPS on the HMRC list means that there will be something for everyone.

QROPS can come in any shape or size. If your requirements are unusual, you could get a QROPS built around your own individual circumstances. Alternatively, if your needs are those of a typical expat, you may qualify for a cheaper “off the peg” scheme.

Leaving your pension behind in the UK means that the taxman takes his chunk out of it whenever you take a payment. It may also mean that you have to pay local taxes on the payments where you are.

A QROPS on the other hand, offers an alternative to this set up. The acronym stands for Qualifying Recognised Overseas Pension Scheme, and means a pension scheme that can receive UK pension assets without attracting UK tax.

There are a couple of conditions attached, of course. Firstly, the taxpayer has to stay resident for tax purposes outside of the UK for at least 5 years following the transfer. Breaking this rule may mean having to hand a large cheque over to the taxman.

The second rule is that the QROPS must be an overseas scheme that has been approved by HMRC. Failure to abide by this one may also mean giving a large cheque to the taxman.

As long as the QROPS is on the list of schemes that HMRC has approved, it can be in a number of countries. So you are open to choose one that treats pensions favourably. You may end up paying tax on your pension payments in your country of residence, but from this perspective the tax may be no higher than what you would have paid had you been receiving them from the UK.

Perhaps the most significant tax benefit to be taken from a QROPS is the fact that they are all exempt from UK inheritance tax. Whilst you may have assumed that leaving the UK means that you leave the inheritance tax net, this is sadly not true, and many a British expat (or more accurately the loved ones they have left behind) have a come a cropper believing this.

QROPS can theoretically be chosen in countries that may allow the lawful and direct transfer of pension assets to beneficiaries without incurring any local taxes either.

But when something happens in your life that makes you review your finances, what should you look for in a pension?

If you are taking a work placement abroad or moving to another country for a different reason, you may wish to consider a QROPS. Qualifying Recognised Overseas Pension Schemes are foreign pension arrangements that allow UK pension assets to be transferred into them without incurring UK income tax.

Aside from the condition that you have to remain outside of the UK for at least 5 years after the pension has been transferred, the rules and regulations surrounding them are not restrictive. So what are the criteria you should apply when choosing one?

Tax efficiency

Just because QROPS are not liable to UK tax, it does not mean that they are exempt from local taxes accordingly, you need to check what the tax implications of holding a QROPS would be from the point of view of the place you are moving to. QROPS can be held anywhere that HMRC has authorised to run them, so you may find it advantageous to live and have your QROPS in different places.

Freedom

Having been dictated to by HMRC and the UK government for so many years about how much and when you can make withdrawals from your UK pension, you may be surprised that at how flexible QROPS can be on the issue. Some QROPS can let you take larger lump sums sooner than UK schemes will allow.

Currency

QROPS can be held in most of the major currencies, so even if your pension is not in the same country that you live in, you may be able to hold your pension (and receive payments) in the same currency that you spend. This can cut down on the exchange rate costs, which will save you money in itself.

The trouble with pensions is that they are often left on the proverbial back burner until it is too late. If you are moving abroad, you may understandably have other things on your mind, but failure to pay attention to what will happen to your pension may cost you dearly.

If you have a private UK pension, have you considered whether to leave it in the United Kingdom or move it abroad too?

The advantages of moving your pension abroad may include:

• freedom from the UK income tax system. As long as you are away for 5 years or more, you may be able to leave UK income tax behind for good;
• freedom from UK inheritance tax;
• greater investment freedom. Some foreign schemes may be able to hold a wider range of asset classes than you are used to investing in; and
• freedom to take your money when you want it. You may find that overseas schemes may be more flexible about when you can take a lump sum, and even about how much you can take.

To get the best out of moving your pension abroad, look into getting a QROPS. The acronym stands for Qualifying Recognised Overseas Pension Scheme and applies to schemes that have individually checked by HMRC.

QROPS are approved if they are taxed and regulated as pensions. But that does not mean that their structure and tax background need to mirror a UK style scheme. Accordingly, you have the choice of over a thousand diverse arrangements which can be found on a list on HMRC’s website.

If you use an independent QROPS adviser to help you, you can get advice on the whole of the QROPS marketplace. So what are you waiting for?

However, a thorough appraisal should also involve a discussion of what getting a QROPS might set you back. So how much does a QROPS cost?

Providers’ fees

When QROPS were first introduced, QROPS providers basked in their investors’ delight at the ability to get their money legitimately away from the taxman. Accordingly, QROPS providers felt able to charge high fees.

Now that there are over one thousand schemes that have been approved for QROPS transfers, however, the tables have turned. QROPS investors have so much choice that the providers have had to make their prices much more competitive. You may even find that some providers offer a QROPS for around £500 per annum.

The price you pay in fees may depend on how individual the scheme is. On one hand, it may be that you want a bespoke scheme where you are the only member. In this case, you may have to bear the brunt of disproportionately higher administrative costs than you would for an off the peg scheme with hundreds of members.

Tax

One of the main points of QROPS is the ability to pay less UK income and inheritance tax. However, your QROPS may be taxable in its own country, and the payments you receive may be liable to local income taxes where you live. On the positive side, your country of residence and your QROPS country are both places that you will choose. Accordingly, you may be able to choose locations which do not place a high tax burden on your finances.

Advisers’ fees

Some QROPS advisers do not make any charge for their services – instead they get a commission from the providers themselves. However, a good QROPS adviser should be able to save you money by negotiating a discount on what the providers charge. This is particularly true when you are dealing with a large firm of advisers who place several hundreds of thousands of pounds’ worth of business every year.

For members of UK pension schemes who move abroad, a Qualifying Recognised Overseas Pension Scheme may be the answer to their problems. QROPS, as they are known for short, are overseas schemes that were introduced in 2006 which enable UK pension scheme members to transfer their pension assets free from UK tax.

A further advantage of QROPS is that they are exempt from UK inheritance tax.

There may be tax due on payments from a QROPS in the country in which you live. However given that the choice of where to put your QROPS is completely up to you, you are free to choose one in a country that treats pension payments favourably from a tax perspective.

Many people focus on the tax benefits of QROPS when they are thinking about getting one. And why not, when you have been paying tax for the whole of your life!

But there may also be other benefits involved in getting a QROPS.

Part of the criteria that an overseas scheme has to meet to get QROPS status involves being regulated as a pension in its own jurisdiction. However, this requirement does not necessarily mean that the pension needs to be identical to a UK pension. Accordingly, by choosing a QROPS from the 1,000 or so approved schemes on HMRC’s list, you may be able to find a scheme that offers what UK arrangements cannot.

For example, an advantage that a foreign scheme may offer over a UK one may be earlier access to larger lump sums – which may be useful if you want to get your hands on some money to put down a deposit on your new home abroad. There may also be a wider range of underlying assets that could be held by your scheme.

As always, getting any kind of financial product requires professional advice from someone that you can trust. Accordingly, you should seek the help of someone who is well versed in tax and overseas pension issues when you come to choose a QROPS.

What is a QROPS?

First and foremost, what is a QROPS? QROPS stands for Qualifying Recognised Overseas Pension Scheme. They were introduced by HMRC so that members of UK pension schemes who were no longer resident in the United Kingdom for tax purposes could take their UK pensions overseas without incurring a tax charge.

Is there much choice?

There are over a thousand QROPS to choose from. The schemes are offered by a number of recognised financial services providers.

QROPS do not have to be based in the same country as the expat who is looking for one, which means that an investor can choose from a variety of jurisdictions that offer them. Accordingly, your QROPS could be on the other side of the world from you, if one is available in a jurisdiction you like the look of.

Is there a catch?

There is no catch, but there are rules that have to be adhered to strictly – otherwise you may risk a large tax bill and possibly a penalty if HMRC suspect that there was any skulduggery involved.

The first rule is that the QROPS must be one that HMRC have vetted. Whilst they do not recommend schemes, they do check over the details of individual arrangements to make sure that they are taxed and regulated as pensions in their own countries.

The second but no less important rule is that the expat concerned must reside outside of the United Kingdom for at least five years after their pension has been transferred. If you do not plan to be away from Britain for as long as that, you may wish to consider an alternative investment vehicle. However, if your plans to emigrate are long term, a QROPS may be ideal.

Given that the UK system forces members of private pension schemes to purchase an annuity at (or before) the age of 75, many investors find that their hands are forced into opting for a deal that may not be the best for them.

Not only is this unfair from the point of view of your own retirement planning, but also from the point of view of your beneficiaries. Put simply, if you die after the age of 75, the taxman gets most of the residue left in your income bearing product. If you die before the age of 75 (assuming that you haven’t yet purchased an annuity), the taxman will still get a hefty sum if your estate is worth more than the IHT threshold. Given that the UK IHT threshold, though changed every year is around the value of a family home, more and more pensioners are going to find their estates qualify.

If you have moved abroad for your retirement or are planning to do so, there is another alterative. If you have a private UK pension scheme, why not consider a QROPS? By transferring your pension into a Qualifying Recognised Overseas Pension Scheme you can take the opportunity to try to outmanoeuvre the taxman and let your beneficiaries enjoy the benefits of your hard earned cash.

QROPS are spread among around a hundred countries across the globe, and some of those will permit the direct transfer of your pension assets to your beneficiaries without the crystallisation of any IHT liability at all. Such direct transfers are completely lawful, and may offer a considerable saving on the UK pension option.

Taking a moment to consider the IHT aspects of a QROPS may also focus your mind on your estate planning, and provide the opportunity to update your will, if appropriate. Administering an estate is a difficult enough task if the deceased held assets in one country, but if your affairs are not in order your executors may have considerable difficulties in completing this task if your assets are spread in different countries.

The default position for people who leave the United Kingdom but continue to draw a pension that is based here is that they must pay UK income tax on their withdrawals. That tax rate depends on the individual’s personal circumstances.

If you are no longer living in the United Kingdom and therefore no longer benefitting from the services that these taxes are meant to be providing, then no doubt continuing to pay UK income tax must be immensely frustrating.

QROPS are available to people who leave the United Kingdom for at least 5 years. The exemption is dependent on the scheme member being non-resident for tax purposes during that time. The occasional visit back to the United Kingdom is permitted to visit relatives, but QROPS investors need to be careful not to get clawed back into UK residence accidentally. If you are in any doubt about this, it may be best to consult a professional financial adviser on the issue.

From a practical perspective, if you go back to live in the United Kingdom during that time period, you may be faced with a penalty and a large tax bill on your return.

During that initial five year period, QROPS administrators must make reports to HMRC about the QROPS’ activity – e.g. what, if any, withdrawals have been made. However, after that period, HMRC has no right to know about these things and the reporting requirements fall away.

It should not be forgotten that whilst your pension may have escaped UK income tax, you may be liable for taxes in your new country of residence. However, your QROPS adviser should be able to take steps to mitigate your tax bill.

Since 2006, there has been no excuse for this. Qualifying Recognised Overseas Pension Schemes were introduced that year as part of the Pension Simplification initiative. Not only does it mean that the pension regulations were meant to become more straightforward, but the scheme was also meant to ensure that the tax consequences of moving abroad were fairer for British expats.

How do QROPS work?

The exact mechanisms of a QROPS will depend on their individual rules. Generally speaking, a QROPS is available to someone who is going to leave the country for at least 5 years for tax residence purposes. So if you plan to come back within that time, you may like to consider other tax planning opportunities.

The QROPS rules only apply to those schemes that are on the HMRC’s list, so you cannot simply pick any foreign scheme and relax in the knowledge that you will never pay UK tax on your pension ever again.

What other considerations are there?

A QROPS may offer other benefits too. For example, QROPS are exempt from UK inheritance tax, and depending on how efficiently you plan the transfer could also be structured so that no death duties are attracted in any country. Accordingly a QROPS could offer you the opportunity to transfer your assets in their entirety to your beneficiaries on your death.

There are other advantages too. If you consider that your QROPS can be located in a number of countries, you have the choice of several hundred pension schemes to choose from. QROPS may offer you more flexibility in how to manage your pension than you have been used to in your UK arrangements. If you want earlier access to lump sums, a wider choice about the underlying assets your scheme can hold, and an opportunity to build an overseas pension scheme around your individual needs, then a QROPS may be well worth a look.

However, getting a QROPS does not mean that you escape HMRC’s notice completely. After all, for the first 5 years following the transfer, your QROPS administrators will have to report back on what goes on with the scheme. When those 5 years have elapsed, HMRC has no right to be notified of any gains or losses your pension scheme makes.  

A Qualifying Recognised Overseas Pension Scheme is only capable of attracting the tax exemption if it has been approved by HMRC themselves. This means that HMRC will have examined the plans and proposals of the QROPS provider and deemed that it is taxed and regulated as a pension in its own country.

This “approval” does not mean that HMRC recommend any particular product, or indeed that they endorse that it would be a good idea to transfer your UK pension to it. QROPS are typically mentioned on a list that is kept on the HMRC website. Some confidential ones are available, but these are typically not open to members of the general public.

If your QROPS should for some reason fall foul of the QROPS rules (e.g. by misinterpreting them in some way), the QROPS may lose its HMRC approval. In this case, the UK tax exemption may be at risk, and advice from a specialist QROPS adviser needs to be sought as soon as possible.

When you get your QROPS, your QROPS adviser should tell you all about the potential tax liabilities is brings. Accordingly, you may have to fill in returns in the country in which the QROPS is based and the country in which you live, if different.

Fees

Like any pension product, QROPS providers charge fees. But you might be so caught up in the tax advantages that the scheme offers to work out how much the arrangement may cost you.

Pension schemes may charge fees for setting up costs, transferring assets in and out and annual management fees, so what constitutes a cheap deal for someone who puts their assets in and leaves them there may not be such a great deal for an investor who is always shifting their pension around.

When QROPS were first introduced, providers took advantage of their clients’ joy at being able to avoid paying UK tax legally and imposed high fees. However, now that there are more than 1,000 QROPS available, providers have upped their game and lowered their fees.

Choice

Sometimes when you are choosing a financial product it feels that there is actually very little choice between providers. Everyone seems to offer the same thing, but on marketing materials in different colours with different logos.

With QROPS on the other hand you can actually choose the pensions regime you want to invest in. Wide variation of underlying assets and tax neutral system? Try Guernsey. Early access to lump sums? Try New Zealand. But in addition to the choice of regulatory systems that is available, you may also have access to a range of providers that you would not otherwise have considered in offshore investment destinations.

Access

If you are retiring abroad, you may have everything planned in great detail. Does this include details of when you want to get hold of your money?  When you decide on which QROPS to get, check that it will permit you to access your money when you want it.

QNUPS

The expression QNUPS means Qualifying Non UK Pension Schemes. The expression was born in the summer of 2010, when government regulations clarified that certain types of overseas pension scheme would be exempt from inheritance tax.

Since April 2006 (known as “A” day), thousands of British expats have transferred their pension assets into Qualifying Recognised Overseas Pension Schemes, known as QROPS. These enjoy freedom from UK tax, but until the QNUPS regulations were published there was some uncertainty about whether they all enjoyed freedom from IHT as a matter of course.

Prior to A Day, certain overseas schemes benefited from exemption from IHT. However, the “simplification” measures managed to convey the impression that their IHT exemption was lost.

It is not often that HMRC or the Treasury admits a mistake. But it is even rarer that they admit that a mistake has been made which has had an adverse effect on taxpayers and needs to be rectified. But this is what happened – hence the clarification and explanation of QNUPS.

A QNUPS is not a product in itself. Rather, it is a label that may be conferred to a pension scheme if it meets HMRC’s criteria for exemption from IHT. Given that QROPS meet the definition of QNUPS, they are “safe” from UK IHT, even if you got yours a while ago as the provisions operate retrospectively back to A day.

What about ROPS and OPS?

ROPS (Recognised Overseas Pension Schemes) and OPS (Overseas Pension Schemes) are capable of falling into the QNUPS definition, but it cannot always be assumed that they are exempt from inheritance tax in the same way that you can be sure that a QROPS will be.

From this, it is safe to draw the conclusion that professional advice on overseas pension matters is always essential, to make sure that you fully understand the tax consequences involved.

Some decades ago, it used to be the case that only the very rich paid inheritance tax. However, if you have paid off the mortgage on a modest family home, the chances are that the increase in value of the building you have worked hard to pay for all of your life has pushed your estate above the IHT threshold.

There are a number of steps that you can take to reduce your IHT bill. Depending on your circumstances, you may have considered making gifts or setting up trusts to redistribute your assets.

If you have moved abroad or are thinking of doing so, then a QNUPS may be well worth considering.

A QNUPS is a Qualifying Non UK Pension Scheme. These were introduced in 2010, and are exempt from UK inheritance tax, as long as the scheme meets certain terms and conditions.

How do QNUPS differ from their older relation, the QROPS? If you have been researching the possibility of getting one, you may have come across QROPS on the internet or in marketing material.

QROPS are all QNUPS, which means that they are all foreign pension schemes that are taxed and regulated as pensions in their own countries. Individually assessed by HMRC, they must continue to meet these criteria to retain their UK tax free status.

However, unlike QROPS, QNUPS do not need to be in countries with double taxation agreements with the United Kingdom.  This means that QNUPS do not have the same reporting requirements as QROPS (where the activities of your pension are reported back to HMRC).

From an IHT perspective, QNUPS benefit from IHT exemption for pension assets that have been transferred from a UK pension (and as such have been tax relieved when they were contributed), and those that have been contributed by someone who used to reside in the United Kingdom.

Before QROPS were “invented” in 2006, a British expat had to keep their pension in the UK and hand over at least 25% per year of their withdrawals in tax. So when Qualifying Recognised Overseas Pension Schemes were introduced in that year, there was some excitement among the British expat community.

It’s true that people do not generally get excited about financial products and retirement planning. However, being able to transfer your pension to a foreign scheme and legally deprive the Treasury of a cut of your hard earned pension was, and still it, something to get excited about.

There are of course a few terms and conditions to abide by. For instance, the QROPS investor has to leave the country for at least 5 years following the transfer for the tax exemption to hold. Otherwise, they may have to meet a very large tax bill.

Of course, visits back to the United Kingdom during that time are allowed, but an expat needs to be careful not to get sucked into UK residency again. If you are at all in doubt, it is best to take professional advice on your residency.

Once you have a QROPS, your actual tax bill depends on where the scheme is based, and on where you live. So if, for example, you choose a QROPS in France or Spain, you may find that your tax bill is higher than if you choose a scheme based in Guernsey or the Isle of Man.

You may also find that the inheritance tax treatment of your pension may depend on where the scheme is based. So a QROPS in an older, traditional European country may be caught within its IHT rules.

However, all of these things are issues that a QROPS adviser should take into account, and discuss with you when you make your final decision.

As long as your current UK scheme is a private one and is not yet in payment, transferring it to a QROPS is probably allowed by its rules, although of course a QROPS adviser should look over the details before any transfer is actually made.

However, assuming that your current scheme will permit a transfer, a QROPS may have the following 4 advantages leaving the assets behind in the United Kingdom.

Tax

 The first thing that draws investors’ attention to QROPS is their tax advantages. Given that no UK income tax is payable on QROPS (as long as you remain outside of the United Kingdom for at least 5 years following the transfer), you can see why thousands of people have been tempted by them.

Whilst you will fall into the tax regime of the place that administers your QROPS and also where you live, you have the luxury of choosing both of these places, and as such you may choose jurisdictions that may give favourable tax treatment.

IHT

People do not like to think about inheritance tax, but it could take a large chunk out of the amount available to be passed on to your dependants. Accordingly, if you choose a QROPS in a jurisdiction that treats your pension assets as exempt from IHT, you may be able to mitigate your potential IHT bill significantly.

Choice

Do you have a particular underlying asset in mind to underpin your pension? If so, you may wish to escape the restrictions of the UK pension regulatory regime and strike out into the world of QROPS, where you may find that pension rules offer you more choice.

Flexible access to your money

There is nothing more frustrating than working hard all your life to provide a comfortable retirement and then being told how to spend your own money. With QROPS, if you shop around for the right product you may find that you can access bigger lump sums than the UK system would permit you to take.

With the Organization for Economic and Co-operation Development’s drive for a cleaner, safer and fairer world economy, the small group of islands realised which way the wind was blowing – and changed its behaviour accordingly. The British Virgin Islands quickly realised being whiter than white, and being seen to be whiter than white, were essential characteristics for any modern international financial centre.

The British Virgin Islands now have 17 TIEAs in place, and are at least in talks with every OECD member country about bringing new agreements into force.

A TIEA involves giving the tax authorities of another country the authority to access information about an individual or corporation, if they have reasonable grounds to suspect foul play. However, rather than authorising general “fishing trips” to see whether any information about criminals can be unearthed, the foreign tax authorities must have genuine grounds about specific individuals in order to gain access to their information. Such checks and balances go some way towards preserving individuals’ privacy.

Now that the TIEA programme is well under way, the OECD has rolled out a Peer Review system, in which the British Virgin Islands is now participating, which means that it passes comments and judgements about the effectiveness of other states’ tax exchange measures.

From the point of view of the individual investor, very little will change on a day to day basis. Given that banks and insurance companies are already au fait with money laundering “know your customer” requirements, anyone whose investments are above board should not notice any different in how their bank or investment house will treat them.

If you are planning to retire abroad but keep your UK pension back home, you may wish to consider what restrictions your UK pension may impose on your retirement. Fortunately, compulsory annuitisation is being scrapped so older people will not find themselves shoe horned into purchasing an income bearing product as their 75^th birthday looms on the horizon.

However, the UK pension regulatory regime may still have a hold over your retirement plans. Were you planning to release a lump sum to buy a property in your new homeland? Perhaps you had designs on your investments to provide the funding for a once in a lifetime holiday or to help out with your grandchildren’s school fees, or even to help them onto the property ladder. Given that the restrictive nature of UK pensions may not allow lump sums to be withdrawn that are large enough to be any help, what can you do about it?

The answer to that question may depend on whether you have started taking benefits from the pension yet. If you have, your options for transferring it to another destination may be limited. However, if you have not, you may be able to get a QROPS.

A QROPS is a Qualifying Recognised Overseas Pension Scheme, which means that it is a foreign pension scheme that has been authorised to accept transfers of UK pension assets. Not only might you be able to find a scheme in a jurisdiction that may authorise larger withdrawals than the UK does, but your pension will also be free from UK tax!

Such a huge decision means that getting professional advice is a must, because making the wrong decision could cost you dearly, both in terms of lost potential returns and the time you may have wasted. Also, a financial adviser who deals in this kind of thing all the time may be able to suggest issues solutions that you may never even have considered before.  They may also have access to more financial products that those available on the open market, as some IFAs are sent “special offers” by top investment houses.

That said, there is nothing wrong with swotting up on the basics so that you have an informed starting point when you consult your independent financial adviser for help.

So what might you be looking for in an offshore investment opportunity?

The main draw for moving money offshore is usually tax. Whether offshore investments mean that your tax bill can be deferred, reduced or even eliminated, your financial adviser may be able to find a tax advantage for you in offshore investments.

Some offshore investment destinations are “tax neutral”, which means that instead of charging tax on their own soil they pay interest and/or income gross and leave the taxing part to your own country of residence. Even if an offshore destination is not, strictly speaking, tax neutral, there may still be an advantage in investing there if its relationship with your own country of residence means that you will have a low tax bill.

It is sometimes easy to get caught up in the whole tax mitigation issue and neglect the other things that you may wish to consider when choosing an offshore investment. These are namely the political and economic stability of the country where the investments are being made (which may have a bearing on the security of your investment), and of course how well regulated financial services are in that place.

QROPS investors may transfer their pension assets to foreign pensions that have been approved by HMRC for the purpose. They will not face a bill from the taxman unless they return to the United Kingdom within 5 years of the pension transfer. They will, however, fall into the tax regimes of the countries where they live and invest. If they have chosen low tax destinations, this will not be a hardship.

There are of course terms and conditions to abide by. Aside from the 5 year rule, you must only choose a pension scheme that HMRC has individually approved. But if you are concerned about whether that requirement may limit your choice, it may be a comfort to know that there are over one thousand such schemes to choose from.

The tax advantages are not the only thing that draws thousands of members of UK pension schemes per year into foreign ones. Investors may also find that QROPS are more flexible than UK schemes, perhaps allowing larger lump sums to be withdrawn or a wider range of underlying assets to be chosen.

There may also be an advantage from an inheritance tax point of view, as some QROPS may offer structures which mean that an investor’s estate’s potential IHT bill can be next to nothing.

Finally, whilst this may not be the only reason why you consider a QROPS, expat investors who have been used to drawing their pensions in sterling may find that they are able to get a QROPS in the currency that they spend. Accordingly, there would be no exchange fees, and no more uncertainty about exchange rates.

But much, much fewer people turned out for the protests at the end of June. Commentators estimated that only 20,000 were there which to British eyes may sound like a lot, but not in the context of a country with high union membership.

The protests were centred around government plans to raise the pension age to 65 (which may seem normal to people in other countries but retirement in your mid 50s was considered normal in Greece). Pay freezes for public sector workers, and pension payments are being cut.

Despite an international campaign to encourage tourists to come to Greece and spend some much needed money there for their holidays, visitor numbers have been down since ferry boat operators have called random strikes and blocked the harbours of the small islands that used to be so popular with holidaymakers.

Air traffic controllers have been a little more long sighted about the issue and have not joined in the strike, so that planes bringing tourists could land and take off. However, when island hoping is such a popular pastime of tourists to Greece, why risk it if you cannot go between the islands because the boats are on strike?

Aside from cutting pension payments and welfare benefits, the Greek government is considering other, more radical ways of raising money to fill its deficit.

It has been reported that parts of the island of Mykonos, which is partially state owned, may be up for sale or at least for long term rent. Selling some land would no doubt raise a significant amount of money, but at the expense of Greek pride.

One thing is for sure, if parts of the islands are sold to private investors, they will expect the ferry boatmen to stop their strike.

According to a joint poll conducted on behalf of accountancy giant KPMG and business leaders’ organisation the CBI, 53% of those polled felt positively about their future in London. Whilst a majority, this is hardly a resounding endorsement, although it is up from 47% who gave the same answer six months ago.

The CBI surveys 125 businesses every six months. The results of this survey were collected between 22 April and 12 May 2010. 58% of the firms asked plan to expand in the next six months, although rather tellingly only 32% plan to expand in London.

When asked what concerns them about doing business in England, 78% of firms said that the cost of doing business there was a significant weakness, followed by the inadequate transport system (46%). A significant 57% believed that the 50p rate of income tax would affect their choices about whether to do more business in London in the future – some were tempted to move business away for this very reason.

44% of those polled said that skills shortages posed a problem for them when running a business in London. At first glance it may be tempting to put that down to an exodus of high earning professionals who want to escape the higher rate taxes. However, this may not be the whole story, as in previous years the survey showed that even higher percentages of businesses felt that skills shortages were a problem (with 74% of businesses being of this opinion in 2007).

Finally, the survey asked what impact the Mayor of London Boris Johnson had on the capital. Often perceived as a comedy figure with appearances on topical satirical news programmes, it seems that Mayor Johnson has shown a serious side too and proved that he can help business in London succeed.

Given that Jersey QROPS have so far only been open to residents, anyone who has been tempted by the Channel Island’s pension investment opportunities so far has only been able to look upon them longingly from across the water. There are 125 Jersey QROPS on HMRC’s list – a high number given that there are only 91,000 people living on the island. This high number may be because many Jersey residents have invested in QROPS – but on the other hand it may not be much of a clue to their popularity, as a QROPS can have as few as one member.

One of the advantages of QROPS is that they can be bespoke. So if you are an individual with particular needs, you may find that you can get your advisers to set up a scheme just for you. It is possible that some of these 125 schemes result from such circumstances.

Jersey’s neighbour, Guernsey, may be particularly interested in the news that the island is striking out into the non-resident QROPS market. Details of the Jersey schemes have yet to be released, but commentators expect that the percentage of the pensions that can be taken as a tax free lump sum and the rate of tax applicable may be set in direct competition with those available in Guernsey.

Guernsey’s QROPS are traditionally tax neutral, which means that for non-residents no tax liability bites – instead the investor may have to pay tax in the place where they are now living.

From an investor’s point of view, an increase in the competition available can only be a good thing. Investors may expect Guernsey and other offshore investment destinations to up their already impressive game, and offer better and better schemes.

Qualifying Recognised Overseas Pension Schemes started out back in 2006. It may feel like there was never a world before the global financial crisis, but there was, and expats were still trying to pay less tax.

Without a QROPS, the default position for British expats who still kept their private pension in the United Kingdom was that they would pay UK income tax on their withdrawals.

The introduction of QROPS in 2006 meant that UK pension scheme members could transfer their pension assets into approved foreign schemes and place themselves fairly and squarely beyond the reach of the UK taxman.

Of course, as with any tax concessions there are strings attached. To qualify for the tax exemption that a QROPS permits, pension scheme members must remain outside of the United Kingdom for at least 5 years following their pension’s transfer. Occasional visits may be permitted, but investors must take care that they do not fall into UK tax residence, and into the arms of the taxman.

After that initial 5 year period has passed, the pension and its proceeds are out of the reach of HMRC.

It would be misleading not to mention that QROPS investors may fall into other tax jurisdictions and may attract tax bills from other countries. However, given that where you live and where you invest are matters of your choice, the tax bills you have to pay will not come as a surprise, and may be managed.

When people talk about tax they may typically focus on the income and capital varieties. However, inheritance tax may also take a sizeable chunk out of the amount that you intend to leave your loved ones. This is why a good QROPS adviser should bring up the issue with you. He is not just being morbid. Instead, he may have spotted an opportunity for some inheritance tax planning!

However, whilst everyone has been swift to crack down on tax evasion, offshore destinations do still provide opportunities for lawful tax mitigation, and some, like the Cayman Islands, are even free from direct taxes. The difference between the tax regimes in offshore jurisdictions and mainland financial centres will become even more defined as austerity measures come into play.

Comparison of tax rates between countries is not as simple as drawing a straightforward graph to show what percentages are charged on gains and incomes. Instead, investors have to weigh up a number of other costs to putting their money into a particular place, including the level of professional fees that are charged there and how restrictive the regulatory regime is.

Nevertheless, low tax rates do attract outside investment. This is a fact that is not lost on the Jersey government, as its latest consultation document about its tax regime reveals.

The document concentrates on corporation tax, and sets out a number of possibilities – some of which are more realistic than others.

The possibilities range from abolishing corporation tax completely (so that they would be on an even setting to the Cayman Islands, which has no direct taxes but that does impose business fees), to a flat rate of corporation tax, to a tax credit system.

Judging from the wide range of options under consideration, the Jersey government seems to be open to suggestions about what to do next. In their stated objectives about what they want to achieve, the government says that they want a system that (among other things) is simple and provides businesses with certainty. Whatever solution they impose, if they achieve these two objectives it will be a relief!

Luxembourg has recently come under fire from the European Commission for inheritance tax provisions which were said to discriminate against people who were not resident in the country.

The original position was that non-resident heirs had to jump through extra hoops to inherit assets that had been left to them. When an investor dies, his or her heirs technically owe the government an amount equivalent to the IHT on the estate.

Non-residents have to provide a guarantee that they will pay the amount before they can take possession of the assets. If the court officials cannot secure an adequate guarantee from the heir then the estate can be frozen.  Assets are not frozen if the heir is resident in Luxembourg.

The European Commission have taken the view that this is not consistent with the freedom of movement of capital that is meant to exist between Member States of the European Union.

This example illustrates the complexity that can arise in matters of probate when there is a cross border element. Accordingly, any inheritance planning that investors undertake will have to be planned by an adviser who appreciates the tax systems in a wide range of countries.

Inheritance tax planning measures are perfectly legal methods of arranging your affairs to mitigate your tax bill. This may include a number of measures such as making gifts and setting up trusts. It may also be possible for your inheritance tax planning to include a foreign pension scheme.

If you are a non-UK resident, some overseas schemes may be structured to permit the lawful distribution of your pension assets to your beneficiaries without any inheritance tax bills at all.

Of course, this is complicated stuff, and should only be attempted with professional advice. But like all financial planning, the sooner you get started, the better.

The move was announced in the March budget this year, which saw rates rise and personal allowances for non-resident investors scrapped.

In case you were wondering why anyone would want to put their hands up to this, the Isle of Man authorities are going easy on interest and penalties that would have been due had the liabilities been uncovered under normal circumstances.

The amnesty applies to companies and individuals, whether they are resident or non-resident. Despite the Isle of Man’s government’s invitation to welcome new taxpayers with open arms, anyone with anything to declare may do well to get professional advice to assist them with their tax returns. Whilst penalties and interest may have been suspended, no doubt the Manx taxmen will be going through the documents they receive with a fine toothed comb.

Amnesties are becoming a popular way of welcoming would be taxpayers into the arms of tax authorities. Italy and the UK have also recently run successful tax amnesty programme which have generated millions of pounds (or euro, as the case may be) of extra tax revenues.

However, the move may be controversial among taxpayers who have paid their bills on time – or paid a penalty and interest when the payments are late. Some commentators believe that the amnesty system may encourage taxpayers to sit on their tax money until the next one comes along, so that they can have the benefit of the interest payments. However, if anyone were found out to be doing this, they would be in serious trouble, although of course it would be difficult to prove.

Notes and disclosure forms are available on the Isle of Man Government’s website.

As an investor you may feel bombarded with marketing about financial products, both offshore and onshore. With such a lot of information available online and in the press, it seems there is a danger of drowning in choice. The other problem is the pessimism that exists at the moment. Of course, the global economic crisis has been dire, but rather than getting depressed by all the doom and gloom, why not find your way to an adviser with the experience of navigating their clients through the last recession, and the one before that?

Anyone who claims to have a crystal ball deserves to be treated with suspicion. But by the same token, your adviser should be able to look at your aspirations for the future and come up with a clear vision of what you are aiming for, and where you want to be financially.

Likewise, a financial adviser who tries to blind you with technical jargon should be given a wide berth. It should be possible for an adviser to now what they are talking about, and get the message across in a manner that means that you do too.

Finally, and perhaps most importantly, you may wish to consider using an independent adviser. Using someone who is tied to a financial institution may mean that you miss out on juicy offers from other providers. Not only might you be missing out in terms of the choices of the types of investment available, but you could also be missing out on fee discounts and other special deals that are around in the wider marketplace.

With 388,000 Brits leaving the country last year, pensioners are a significant number of expat communities.

Once settled abroad, the next big decision is about pensions, investments and savings, as leaving the UK opens up a wide range of options, like a QROPS offshore pension that can make a huge difference to pension spending power and standards of living.

Taking a pension in to tax exile is not as expensive as everyone thinks. A QROPS is not right for everyone, but in general terms anyone with a pension fund of £100,000 should profit from a QROPS transfer.

With a smaller fund, some transfer might not be financially viable because the returns might struggle to match transfer costs.

How does a QROPS work?

A QROPS pension – or Qualifying Recognised Overseas Pension Scheme – is a trust-based investment wrapper available to anyone with UK pension rights. The intention is to let expats take their UK pension funds with them when they leave this country.

Advantages of a QROPS

QROPS pensions give much more flexibility to investing than a UK pension.

Restrictions on investing in UK based funds and markets in Sterling are lifted. Self managed or managed packages that let pension scheme members put their money in to commodities, funds or markets in most major currencies are the norm.

QROPS pension members have no obligation to buy an annuity or alternatively secured pension, which allows the pension holder to pass the fund on at death rather than lose the money to the annuity firm.

QROPS still pay a 25% tax free lump sum, although in some cases they may be more. Some Isle of Man providers allow a 30% draw down and some New Zealand schemes may allow more, depending on personal financial circumstances.

QROPS pension benefits also pack a spending punch because they are paid gross in the currency the pension holder chooses. This reduces the impact of exchange rate fluctuations and means the pension holder pays income tax, if any, according to the rules of the country where they live rather than the UK.

Disadvantages of a QROPS

Most of the disadvantages come from advisers or pension holders trying to manipulate QROPS rules to their favour.

Providing QROPS advice comes from a reputable, strictly regulated with a track record of completing QROPS transfer, like QROPS.net, switching to an offshore pension should not cause any problems.

How much tax someone pays HM Revenue and Customs depends on their residence status with the UK, which falls under three categories – ‘resident’, ‘ordinarily resident’ or ‘domiciled’.

Although it’s no laughing matter, a taxpayer can fall under one, all or none of these residence categories at the same time.

To plan a tax strategy, someone must know their residence status and how this affects the tax they pay.

A common misconception is leaving the UK means someone is non-resident for tax.

This is not correct.  To qualify as non-resident for tax, some must be absent from the UK for at least one full tax year, which runs from April 6 one year to April 5 of the following year.

If someone left the UK in March 2010, they would not be considered non-resident until April 6, 2011. 

On top of that, they can only return to the UK for a total of 93 days across the five tax years following their original departure.

Once these non-residence qualifications are met, tax liabilities change as well:

No income tax is paid in the UK on income earned overseas. Instead, income tax is paid in the new country of residence. Tax might be due on any money earned in the UK regardless of where they are resident. This covers rental income from UK property and dividends from shares held in the UK.

Capital gains tax depends entirely on timing. Selling an asset held in the UK, like a buy to let triggers capital gains tax for a UK resident, but a non-UK resident is exempt from capital gains tax.

UK residents moving abroad should keep hold of any assets that would incur capital gains tax on disposal until they are non-resident and can safely sell. They also need to check the capital gains tax situation in the country where they are resident.

Even if a non-resident returns to live in the UK within five tax years of selling an asset, they might receive a tax demand equal to the unpaid capital gains tax.

Inheritance tax is related to domicile. Once domicile is established, tax authorities can test a will to work out if an estate is liable to IHT.

An HM Revenue and Customs task force is poring over payment records from NHS trusts, private hospitals and medical insurance firms to find medical professionals cheating the tax system.

Much of the money is squirreled away in office bank accounts, according to the taxman, who also has account details from 300 offshore banks to compare with the medical payment records.

Any medical professional who coughs up unpaid tax before March 31, 2010, will have fines reduced to just 10% of the unpaid tax in an amnesty encouraging them to come forward.

All tax owed must then be paid plus interest and penalties by June 30, 2010.

Anyone who does not come forward, but who is later investigated and found to have avoided tax, may be fined up to 100% of their unpaid tax, with a minimum penalty of at least 30%.

“There is a problem with a significant enough minority for us to provide this opportunity and the support that goes with it,” said an HMRC spokesman.

“We are talking about well-paid people – higher rate taxpayers.”

The HMRC campaign, called the Tax Health Plan (THP), follows efforts to uncover taxable income that has been hidden by UK taxpayers in offshore bank accounts – and the taxman warned that other professions might soon be under investigation.

The THP is part of the recently announced government initiative to make tax avoidance at home or abroad unacceptable by clamping down on banks, financial advisors and accountants as well as taxpayers.

The recent amnesty for offshore bank account tax cheats resulted in 10,000 taxpayers declaring unpaid tax on income in offshore bank accounts.

Many taxpayers believe because the taxman has not caught them out for a year or so, then they have slipped under the radar, but tax evasion is a criminal offence without a time limit. In some high profile cases, inquiries have looked back in to taxpayers’ financial affairs for up to 20 years.

It’s clear Labour sees high-earners contributing to pensions as fair game for grabbing more cash to pay for spiralling government borrowing to pay for bailing out the banks.

Hot on the heels of the 50% super income tax rate and pension anti-tax avoidance legislation comes the latest move sees about 250,000 people aged 50 and over facing extra tax charges related to the annual allowance.

Currently, the amount accrued to a pension in any given year is multiplied by 10 to see if contributions exceed the annual allowance, which stands at £245,000 with tax due on any excess.

Government wants to raise £3 billion from pension savers

Under some unenacted small print in last year’s budget, the government is looking at linking this multiple to age, with those nearer retirement subject to a higher multiple and liable to more tax.  The government is hoping to raise an extra £3 billion in tax from the proposal – which is out for consultation.

Despite introducing tax simplification legislation in April 2006, the government has systematically added new rules and regulations mostly to close loopholes and raise extra taxes from high earners gaining 40% tax relief on pension contributions.

The government sees high earners as more willing to contribute to pensions to gain extra tax relief than to keep the cash taxed as income.

Another tax blow for medical professionals

Those particularly in the firing line are senior medical professionals nearing retirement, who generally top up their pensions with extra cash, as they get closer to 65 years old.

Because they are in public funded schemes, they do not benefit from independent financial advice like other pension savers with their own personal retirement strategies.

Medical professionals are also the targets of current HMRC tax avoidance action.

For high earners approaching retirement who are planning to return to a home outside the UK to live or retire and for UK pension savers intending to retire abroad, a QROPS scheme may be a solution to increased tax as a QROPS scheme places a pension fund outside the reach of UK tax and is not necessarily subject to the same allowance issues.

QROPS.net can help anyone benchmark their current UK pension performance and then assess the benefits of a QROPS transfer.

QROPS.net is the world leading QROPS experts with a long huge track record of successful offshore and QROPS pension transfers.

Each QROPS transfer has been with the help of a dedicated team of QROPS.net consultants who deal directly with Singapore QROPS clients.

All Singapore QROPS were delisted from the HM Revenue and Customs (HMRC) list of QROPS providers in May 2008 over rumoured allegations of miss selling the pensions.

The Singapore QROPS providers repeatedly denied any allegation of wrongdoing and claim HMRC did not understand how Singapore’s financial and tax rules applied to QROPS.

Nevertheless, the doors remain closed on Singapore as a QROPS centre as HMRC has not overturned the previous delisting decision.

We have worked closely with many schemes around the world to find a solution for Singapore QROPS clients and we are pleased to say this has paid off with transfers out of Singapore in to other QROPS schemes for more than 1,000 QROPS pension holders

These transfers have helped a lot people with big worries over what would happen to their money and how they would fund their retirement.

HMRC has also clamped down on QROPS schemes in Guernsey and Gibraltar within recent months, but neither was delisted after QROPS providers and tax authorities agreed to bring their schemes in line with HMRC guidelines.

Recent figures disclosed about 3,500 transfers are made from UK pension schemes to QROPS each year. Transfers so far total more than £0.5 billion.

The special allowance is a tax penalty for anyone earning £150,000 or more who inputs more than £20,000 in to a UK pension.

The full details of the tax charge are in a new chapter added to HMRC’s online pensions manual for tax inspectors.

QROPS exempt from special allowance tax charge

QROPS are not affected by special allowance rules because the funds do not attract any UK tax relief.

The problem for many high earners is that the calculation considers total income – not just income from working.

This means a lot of taxpayers who do not earn £150,000 on their payslips are affected by the special allowance rule that reduces pensions.

Total income includes:

• Earnings from employment
• Earnings from self-employment and partnerships
• Most pensions income
• Interest on most savings
• Income from shares
• Rental income
• Income received from a trust.

Earnings from employment include the cash value of company cars, private health, cheap loans and other benefits included on a P11d return.

QROPS transfer can wipe out special allowance tax charge

The allowance was announced by Chancellor Alistair Darling in last year’s budget and is an anti-avoidance rule to stop high earners benefitting from top rate tax relief to bolster their pensions.

Any higher rate taxpayers who are living overseas or are planning to retire abroad can wipe out the special allowance charge by transferring their pension funds in to a QROPS.

To find out how the special allowance affects pensions is a six-step process to calculate relevant pension earnings – if the figures top £150,000, the taxpayer is caught in the special allowance rules, if not, the rules do not apply.

QROPS.net can help taxpayers thinking about a QROPS pension transfer who want to know the full extent of their special allowance liability. As a leading QROPS transfer specialist, we can also advise on the most suitable QROPS tailored to individual financial circumstances.

Currently set at 18%, the relatively low rate of CGT doesn’t seem to sit right alongside income tax rates of up to 50%. The discrepancy is particularly odd when you consider that many people can lawfully structure their affairs to choose whether they receive capital or income. Most crude avoidance schemes have been shut down, but structuring the pay deal of a high earner so that they are remunerated in shares is still permitted and commonplace.

 ”In so far as there is a difference [between capital and income], it is by no means clear why one should be taxed more heavily than the other,” said Nigel Lawson when he was Chancellor of the Exchequer in 1988. Subsequent governments have treated capital and income differently, supposedly because lower CGT rates are thought to encourage entrepreneurialism.

So what will entrepreneurs make of the change? The rumblings coming from the business world are predictably horrified. In 2007/8 there was a glut of business sales after Mr Darling pared down the reliefs available and at that time. This time around, there is likely to be a flood of second homes and buy-to-let properties to the market this spring, to beat the new rates.

Speculation is rife about what the new rate will be. In the bleakness of the current economic climate, taxing the better off is not just a dry issue, but is a political hot potato. The government has said that those with the “broadest shoulders” should bear the burden of the recession, but setting the rate as high as 50% would surely empty the country.  25% is the figure that has been promulgated by commentators and financial advisers alike.  

It is likely that many Brits who are undecided about emigration will sit tight until firm plans are introduced. But when you consider our high tax rates, inflexible pension arrangements and poor weather, a retirement abroad sounds very attractive indeed.

HM Revenue and Customs remains tight-lipped about possible action that may see hundreds of schemes removed from the QROPS register – reducing the available products from about 1,700 down to about 350 schemes.

An HMRC spokesman said tax experts were ‘looking carefully’ at the operation of transfers to QROPS and would act to counter any abuse of scheme rules.

HMRC would not confirm whether ‘clarification’ documents are nearing release to advise providers what actions constitute abuse that may lead to substantial fines and penalties for them and their clients.

These penalties can rise to as much as 55% of any unauthorised transfer or withdrawal of pension funds.

A QROPS – Qualifying Recognised Overseas Pension Scheme – is a special pension arrangement that allows expats or international workers with UK pension rights to transfer their UK pension funds overseas if they move permanently out=side the UK.

HMRC has already acted to halt perceived abuses -

• Singapore providers were removed from the QROPS list in 2007
• Tax officials in the Channel Islands had to make changes to trust legislation to stop UK pension transfers in to a QROPS. The trust then collapsed and clients withdrew the pension cash without tax before they were allowed to draw benefits under the plan rules.
• Prospective Gibraltar QROPS providers are embroiled in a continuing row over tax on pension benefits and have frozen transfers in from UK pensions.

Industry rumours claim HMRC is drowning in a flood of inquiries from providers who claim that QROPS legislation is poorly written and ambiguous, leaving them and advisors open to possible penalties despite trying to give best advice.

These rumours highlight the importance of arranging any overseas pension transfer through a regulated, independent expert, like QROPS.net. The importance of regulations means anyone who has taken advice by a regulated advisor usually has an independent watchdog to protect his or her investments.

British expats or international workers who have built up pensions in the UK should make their resolution finding out about transferring their retirement funds in to a Qualifying Recognised Overseas Pension Scheme (QROPS).

Despite QROPS opening for business in 2006, many people who plan to retire abroad don’t know they could boost their pensions by consolidating their funds out of the UK system.

Not only can a QROPS put a pension fund outside the reach of the UK tax man, but also out of the hands of struggling company pension schemes. Switching to a QROPS can give you control over your own future, rather than leaving your money at the mercy of others.

Key QROPS benefits include eliminating the need to buy an annuity, as has a more flexible drawdown scheme and any remaining funds can pass to heirs on death clear of any UK inheritance tax.

A QROPS gives access to thousands of funds in any currency and share portfolios in international equities, as well as fixed-interest and index-linked securities, like OEICs, unit trusts, offshore funds, investment trusts, and commercial property.

For the best advice use QROPS.net. QROPS.net can confirm previous experience in thousands of successful transfers, knowledge of cross border taxation and who can demonstrate a ‘whole of the market’ approach and not just recommendation of a narrow selection of QROPS firms.

This way, anyone planning a transfer can ensure they receive advice tailored to their personal financial circumstances and are not steered towards a less suitable product.

Once the switch between a UK pension and a QROPS is made, the QROPS is managed in the country where the scheme is based – and another advantage is the pension holder can live anywhere else except for the UK.

Investigating how a QROPS can change your retirement should be a resolution that you keep -  even if you let the others, like losing some weight or drinking less, slip.

Anyone who is a QROPS, SIPPS, SASS or other pension saver who celebrates their 50^th birthday on or before April 5, 2010 hits that golden barrier that is the youngest age when a pension can be drawn.

But from April 6, 2010, the bar is lifted another five years to 55-years-old and your pension cash must remain untouched until then unless the pension has a specific clause allowing earlier retirement.

Think QROPS to avoid annuity trap

Expats or international workers with UK pension rights need specialist advice about whether to transfer any UK funds in to a QROPS to avoid the annuity trap.

Current annuity rates in the UK are a typical 3% – 4%, but a QROPS offshore pension removes the obligation of buying an annuity and accesses more flexible investment opportunities.

Time is running out to debate these important financial decisions with an independent financial advisor and to set the process in motion to make best use of retirement funds.

Transferring a pension from the UK to a QROPS can take 12 – 16 weeks from start to finish, and that means if savers do not spring in to action now, they may miss out on the chance to cash in.

Pension firms confirm rush for funds

Even if your 50^th birthday is only a day or two before April 6, 2010, you can still prepare your retirement plans now to drawdown 25% of your pension fund tax-free.

Several pension providers in the UK are reporting a rush from investors in their early 50′s to access funds.

Standard Life head of pensions policy John Lawson said: ‘There has been an increase in the number of people in their early 50s accessing their pension.’

In the past year, Scottish Life reports a 20% in investors aged less than 55 drawing their pension.

Pensioner John Petrie, 66, was one of almost 100,000 investors who lost money in the company’s £2.4 billion Pension Sterling Fund.

In January, the fund lost 5% of value that led to Standard Life compensating fund members with £100 million in February.

In November, the fund dropped another 0.5% but refused to pay compensation.

Mr Petrie took Standard Life to the small claims court in Milton Keynes, and at yesterday’s hearing the firm was ordered to pay more compensation, court fees and interest.

Judge Hickman pointed out that the marketing literature stating that the investment was 100% in cash without any ‘explicit mention’ of asset-backed securities until November 25, 2008.

He said: ‘I regret to say that I can accordingly place no reliance on what Standard Life tell me about what they made publicly known, and when, save where it is corroborated by contemporaneous documentary evidence.’

‘If Standard Life had made it clear that nearly half the fund was actually made up of asset-backed securities, what would have been the likely reaction of the average investor or indeed the average financial journalist?

‘I bear in mind that this was more than a year after the run on Northern Rock and the start of the U.S. sub-prime crisis.’

Judge Hickman concluded by criticising the firm for attempting to ‘frighten’ Mr Petrie with ‘hints of adverse orders for legal costs should he lose’.

‘Even if Mr Petrie’s case had failed, it was plainly arguable and one which it was reasonable for him to advance, and for large organisations to attempt to bully litigants in this way is unattractive,’ he said.

A Standard Life spokesman said: ‘While Standard Life was disappointed in the verdict, we have decided not to appeal and will abide by the court judgment, and have borne all costs in this case. We have no further comment to make.’

A small claims court ruling does not set a legal precedent. However, others can cite the case in similar actions against Standard Life that could cost up to another £10 million in compensation.

Sunday Times Rich List compiler Philip Beresford has analysed data from Companies House that shows more and more limited liability companies and partnerships are moving offshore.

The main beneficiaries are Jersey, Guernsey and the Isle of Man.

About 6,725 British businesses are based in the Channel Islands and 615 in the British Virgin Islands, and the number has increased by 500 in a year, says Beresford.

The main factors affecting the moves abroad are:

• Impending 50% tax for high earners from next April
• Increased National Insurance Contributions
• New restrictions on pension contributions

The tax advantages for companies and international workers are much lower taxes  – for instance Jersey has no capital gains tax, capital transfer tax or VAT.

Workers earning £90,000 may be hit by super tax

Guernsey-based Clydesdale Bank International believes that the number of wealthy people leaving from the UK could become an exodus when the reality of the 50% tax rate bites.

Clydesdale has calculated that not only are high earners picking up £150,000 an year in the tax net but also when taxable benefits like cars or loans are factored in, the 50% rate could affect taxpayers with a salary of £90,000.

“We have already started to see and hear of intermediaries as well as individuals looking to transfer capital to institutions, or work with structures here in Guernsey,” said James Blower, managing director of Clydesdale Bank International. “The knowledge that people earning less than the £150,000 threshold may also be liable for the full 50% tax rate could lead to even further enquiries. It may ultimately also mean a wider range of earners doing business in Guernsey.”

Income that will be subject to the 50% tax can come from various sources, such as salary, taxable profit from a trade, state or private pension, bank interest, share dividends, rental profit, and redundancy payments.

The rules are that if you leave after two years you are entitled to your contributions back – or if you have more than three months with the scheme, you can transfer them to another pension fund.

But – most schemes will close your account with the fund if the transfer is not made within six months of leaving the company.

So what if your contributions have been by salary sacrifice?

In this case, you have not made any contributions at all because salary sacrifice is paid in to your pension by your employer not you.

The net result of salary sacrifice is often that you accept a reduced income in favour of a payment in to your pension, which saves you and your employer national insurance contributions – but if you leave and request a return or transfer of the contributions, you will find that the cash belongs to the employer and not you and the repayment goes to them.

This is a salary sacrifice pitfall that most pension scheme members do not realise is awaiting them if they change jobs quickly.

What sounds like an excellent tax break at the outset actually adds up to a lesser salary for the time you are with the employer and no pension savings.

Expats and international workers should take independent tax and pension advice on salary sacrifice schemes. This pension pitfall can rob many well-intentioned pension savers of significant cash.

The six-month transfer rule is beneficial to employers, who can act to get their cash back, but employees unaware of the rules are in a much poorer position.

An alternative is to discuss a QROPS scheme with your pension advisor before agreeing a salary sacrifice if you are intending to become an expat or are an international worker leaving the UK.

Running the figures may show alternatives like taking the rather than accepting the lesser salary in lieu of pension contributions or other benefits is the better option.

For the first time, the Office Of National Statistics has compiled a picture of household wealth looking at asset values as an indicator of how well off people are rather than income.

If this is a case of history repeating itself, William the Conqueror’s famous original Doomsday Book was a census of the nation’s wealth for taxation.

The survey – compiled over the two years from 2006 -2008  – does not take in to account the affects of recession.

Nevertheless, the figures show that Britain’s estimated £9,000 billion of household wealth is mainly made up from property and pensions – each making up 20% each of the total.

They also show the wealthiest 10% own 44% of the assets, while the poorest 50% own just 9% of them.

The distribution of assets presents a completely different picture from the distribution of income.

The survey shows that as people age, the source of wealth changes.

The poor tend to spend and do not save, so have any wealth they have tied up in cars, electronic goods and household goods.

The middle aged have more valuable homes and the rich have cash in pensions.

Business holdings and future earnings, like the state pension are excluded from the calculations.

The surveys also showed those with a degree are more likely to end up wealthier than their peers who do not go to university.

Unsurprisingly, wealth is also split across the regions, with higher property prices in the southeast increasing the wealth of those who live there. The self-employed are also more likely to be well off than their employed counterparts.

Interestingly, as these figures have come available, the government has looked at taxing the pensions of the wealthy with new measures in the Chancellor Alastair Darling’s pre-Budget Report earlier this week.

The figures show the government is narrowing in their major tax initiatives on the top 400,00 or so earners who can afford to input more cash in to their pensions to increase their wealth.

The new rules only apply to those earning £130,000 or more – introducing another threshold into the higher rate income/pension equation.

Anyone earning over  £100,000 a year loses their personal tax allowance and then those earning more than £150,000 will pay 50% tax – both from the start of the next tax year.

Effective from now, anyone earning more than £130,000 is out of the salary sacrifice net – the change is expected to catch 150,000 earners.

‘Salary sacrifice’ is an agreement between an employer and employee to adjust salary in favour of increased pension contributions. The employee making the sacrifice gets tax and national insurance relief on the pension payments in return for making the sacrifice of taking less pay.

During his Pre-Budget Report speech, Darling said: “Under existing rules the highest earners benefit disproportionately from tax relief on pensions and at the moment a quarter of all the money spent on pension tax relief goes to the top 1.5% of earners.

“To make this fairer I announced in the Budget we would reduce pensions tax relief for people with incomes over £150,000.

“I want to do this as fairly as possible regardless if they receive pay as current salary or as a future pension benefit and prevent avoidance so I have decided to include employer pension contributions in the definition of income for this tax measure.

“But to provide certainty we will introduce a floor so that irrespective of the size of the employer pension contributions no one with an income below £130,000 will be affected.”

Skandia head of tax planning Colin Jelley said: “All the planning seems likely to focus around both the new £130,000 threshold as well as the previously announced £150,000. This added complexity will increase the need for those affected to get appropriate advice.”

As Jelley said, tax and pension planning for those earning more than £100,000 is becoming increasingly complex as the government zeroes on a relatively small sector to fund the tax shortfalls created by the recession.

The issue here is whether the move will actually raise any tax revenue as those earning over the £100,000 are those most easily able to pay for advice to restrict the tax they pay and whether the revenue raised will off set tax and national insurance lost by benefits paid to the increasing tally of the unemployed – and of course, the revenue the government is losing from their wage packets.

The Financial Services Authority has warned SIPP providers offering accelerated drawdown schemes face an inquiry if the products are suspected of being marketed, sold or used inappropriately.   

The warning revolves around an annuity avoidance plan that exploits a tax loophole.

UK pension rules say that pension holders must buy an annuity before they are aged 75 or pay a tax charge of 82% on their pension fund.

However, if a pension scheme member makes unauthorised withdrawals from the pension scheme, the tax penalty is 40% and the risk of a surcharge up to 15% – a total tax charge of 55%.

An unauthorised withdrawal is taking cash from a pension fund over and above what the scheme rules lays out as payable benefits.

An accelerated scheme allows unauthorised withdrawals of up to 25% of the fund value per year to empty the fund of cash before the deadline for buying an annuity – the pension firm deducts tax at source and hands the cash to HM Revenue and Customs and the scheme member can spend or reinvest the money he or she receives how they want.

This way, a pension scheme member can pass money from a pension to his family – and probably avoids inheritance tax with the help of intelligent estate planning.

The alternative is buying an annuity that dies with the pension scheme member.

The advantage is obvious with simplified math – if you have a pension pot of £1 million and draw the cash through an accelerated scheme, you lose £550,000 in tax. If you keep the cash in the pension fund and don’t buy an annuity, you lose £820,000.

In the first scenario, you keep £450,00 and in the second, £180,000

Only UK residents need to consider such schemes to avoid an annuity. Anyone with UK pension rights living overseas can transfer their pension in to a QROPS that gives the scheme member no obligation to buy an annuity and places the pension fund outside of his or her estate for inheritance tax purposes.

So here’s the inside information direct from HM Revenue and Customs on how to save tax on your pension benefits if you are a higher rate tax payer:

Who qualifies?

Any UK non-resident with UK pension rights who lives on the Isle of Man, Guernsey or Jersey.  Non-resident excludes anyone with dual nationality with the UK.

How do they make a tax saving?

The background is the UK and these three tax havens have negotiated new tax treaties during 2009 that mean anyone living on the islands paying UK tax at 40% and receiving UK pension benefits can apply to have their pensions paid without UK tax deducted rather than with tax deducted at 40% at source.

For Isle of Man, the option has been available since April 6, 2009, and for Jersey and Guernsey starts from April 6, 2010.

This means that expat retirees in these countries can opt to pay tax where they live instead of in the UK.

How much can they save?

From April 6, 2010, anyone earning over £150,000 loses their personal tax allowance and pays income tax at 50%.  If anyone in this position opted to take their pension gross instead of net of tax from the UK, their income tax would be:

• § Isle of Man – 18% – saving 22% taxes this year and up to 32% next
• § Jersey and Guernsey – 20% – saving between 20% and 30% income tax next year

What the taxman says

An HMRC spokesman told QROPS.net: “This is accurate. The UK will only exempt the pension payment from tax if the individual is resident in Jersey, Guernsey or the Isle of Man and also not resident in the UK for tax purposes, which means dual residents will not benefit.”

A QROPS is an even better tax saving solution

If you are UK non resident anywhere in the world including Jersey, Guernsey and the Isle of Man, and have UK pension rights but have not yet bought an annuity with your pension, you gain even more tax advantages by transferring your UK pension to a QROPs.

A QROPS negates any obligation to buy an annuity and allows your fund to be passed on when you die without inheritance tax problems.

A QROPS also pays benefits gross in many major currencies, so scheme members do not have to account for exchange control fluctuations.

In many cases, when the UK and overseas governments ratify the agreement, the TIEA amends arrangements over double taxation and means non-UK residents with UK pensions can apply to HM Revenue and Customs to have their pensions paid without the deduction of tax.

This can lead to substantial tax savings for 40% taxpayers who are looking at paying 50% tax from next April, if their new home is in a country that has lower rates of income tax.

The information has come to light in a statement from the Jersey financial authorities as a TIEA signed in July came in to force at the end of November.

So far, HMRC or any UK government spokesman has not mentioned the change that means reduces the pension tax take from expats.

Other TIEA agreements in force cover UK expats living in:

• Guernsey
• Isle of Man
• Bermuda
• Gibraltar
• Montserrat
• British Virgin Islands
• Netherland Antilles
• Aruba

The agreements are not necessarily the same for each country, so residents will have to check the treaty between their place of residence and the UK with local tax authorities and HMRC.

Alternatively, for more flexible benefits and other advantages, while reviewing expats reviewing their tax status should also consider transferring their cash in to a QROPS offshore pension scheme.

Jersey Comptroller of Income Tax Malcolm Campbell has confirmed that from April 6, 2010, UK pension holders can have their pension benefits paid gross instead of net of tax.

He said: “This arrangement could mean significant savings in terms of tax paid for some Jersey residents, who could have been paying 40% tax to HMRC on their pension and who may in future be subject to tax at 50%. The arrangement means that, subject to a claim being made and accepted by HMRC, Jersey residents will only be paying tax in Jersey, at a maximum rate of 20%, on their UK pension.

“The arrangement also affects residents of the UK who have been paying Jersey tax on their Jersey pensions. Under this arrangement UK residents will be able to apply to the comptroller to stop having Jersey tax deducted from their Jersey pensions and only pay tax in the United Kingdom.”

Following HM Revenue and Custom’s updated guidance highlighting investments policy for QROPS, several QROPS advisors seem to have landed clients with tax bills of up to 70% of the value of residential property holdings.

The problem arises from the QROPS.net’s understanding of HMRC rules.

In several cases, it is believed a number of QROPS providers have had investment strategies written off by barristers who have advised that the rules allowed the funds to invest in residential property.

Now, HMRC has confirmed this is an incorrect interpretation of the rules.

Anyone considering investing in residential property via their QROPS should take advice from a UK regulated, independent financial advisor before opening their QROPS scheme or investing in the property.

If the QROPS advisor is regulated in the UK that means the individual or firm is governed by the rules of the Financial Services Authority and subject to a code of conduct and complaints procedure over the quality and accuracy of the advice.

Anyone with a QROPS holding residential property needs to review their tax status urgently to try and mitigate any penalties.

Residential property includes timeshares and fractional ownership properties that give the owners rights to stay for several weeks in the year.

Most large QROPS providers are believed not to have allowed residential property investments, but several QROPS schemes are known to promote it as a permissible asset.     

‘This really highlights the fact that any obvious manipulation of the clearly defined QROPS Provisions from HMRC can certainly be fraught with problems with often severe consequences. Independent and qualified QROPS advice is becoming more essential than ever’

The current offshore amnesty was due to end on Monday (November 30) and anyone earning interest on offshore cash that they have failed to disclose to HM Revenue and Customs faces tax penalties.

Now, the deadline is extended to January 4, 2010 with any outstanding tax payments due by March 12.

HMRC has details of 100,000 offshore accounts

HMRC had threatened preferential terms will not continue after that date.

An HMRC spokesman said: “The reason we have extended the deadline is to allow more time for banks to write to their customers. This is what they have told us they need.”

The New Disclosure Opportunity amnesty started on September 1, and under the amnesty, individuals with offshore accounts must pay all outstanding taxes and duties, interest and penalties plus a 10% penalty of the unpaid amount.

Account holders who do not come forward may be liable for 100% of the tax due as a penalty and could face a criminal investigation for tax evasion.

HMRC is seeking details of 100,000 accounts with around 20,000 having hidden assets. Over 300 banks and financial companies have handed over details about their customers’ accounts.

Amnesty take up may be disappointing

The Daily Telegraph reports that about 20 institutions are still refusing to co operate with HMRC demands for customer details and are appealing against having to surrender the information.

Figures from the TUC suggest that the UK economy loses £4 billion in uncollected tax a year through offshore tax havens.

The NDO is the second similar amnesty offered in the UK, but HMRC says that it will be the last.

The initial disclosure regime, which closed in 2007, raised £400m for the Treasury after 45,000 savers came forward.

However this time, it is rumoured the take up has been small – for example perhaps just 27 people with assets in Liechtenstein, that is part of another tax amnesty.

Already hit by the new proposed super tax rate of 50% , now, a misunderstanding between the opposition and government has left the way open for the government to implement the ‘anti-forestalling’ tax on one-off pension contributions of 20% to stop high earners maximising pension contributions before April 2011.

The Tories withdrew proposed amendments to anti-forestalling in the Finance Bill believing the government would change the clause.

The Treasury has backtracked leaving those affected little time to assess their level of contributions for the current tax year.

Stephen Timms, financial secretary to the Treasury said the current measures were necessary to ensure ‘fiscal neutrality’.

He added that the extra tax revenues from high earners making annual pension contributions could offset some of the revenue it expected to lose as more people move to maximise their contributions up to £20,000 over the next few years.

The late rejection of the measures by the Treasury has given industry groups little or no time to propose an alternative before the Finance Bill is drafted.

Pressure groups representing insurers, pension funds and other financial groups, argue that self-employed people, who tend to make one-off annual contributions to their pension schemes once they have established their incomings, will be caught out by government plans to base the contributions history of a scheme member on monthly or quarterly contributions.

They wanted the government to amend the Finance Bill to allow the contributions history for self-employed people to be based on the highest two years contributions out of the last three years.

“Stephen Timms was making the point that the key issue was to maintain a fiscal neutrality,” said the chairman of the Association of Member Directed Pension Schemes, Robert Graves.

He added that the groups were frustrated at being told the government’s stance so late in the consultation process.

The Association of British Insurers and Association of Member Directed Pension Schemes have put together a joint ‘good practise’ guide for SIPPs providers that includes clearly laying out fund charges.

A SIPP is a self-invested pension plan – but the plan providers seem to be penalising investors who take out a SIPP to manage their own retirement funds.

This part of the guidelines has already exposed that many SIPP firms are forcing investors to put cash in to their own funds and penalising them if they prefer to use fund managers outside the scheme.

AEGON is channelling £416 million of SIPP investors’ cash every year in to the company’s own funds as a condition of holding an AEGON SIPP. The company has 138,600 SIPP plans contributing an average £3,000 a year to the insurance company’s coffers.

An AEGON spokesman said: “Regular premiums can only be paid into the insured element of our plan. The SIPPs market is made up largely of lump sum investments so that is what we currently support.”

Suffolk Life and Rowanmoor also penalise SIPP investors who choose unaffiliated investment managers. Suffolk Life charges up to £75 while Rowanmoor charges £50.

Suffolk Life marketing director John Moret says: “We have a data feed with a number of investment managers. Without this everything is paper-based which means extra cost and risk.”

John Moret has been outspoken in the press recently over the HMRC liquidation of Freedom SIPPs and the ability of small SIPP firms to manage their businesses.

Rowanmoor head of technical services Robert Graves says: “We charge £50 for investing with non-preferred investment partners to cover the additional work involved.” 

LV= has banked at least £18m by requiring all SIPPs investors to have a minimum £3,000 invested with the firm. LV= has over 6,000 SiPPs and £100 a year if clients choose to use an investment manager other than its five affiliates.

LV= head of pensions Ray Chinn said: “Because we are an insurance company, there has to be a contract of insurance within our plans and the £3,000 forms that contract. We are not quite as free as true SIPPs providers but it allows us to be more flexible in other areas such as not charging VAT on our SIPPs fees.”

ABI acting director general Maggie Craig said: “With SiPPs becoming an increasingly important part of the pensions landscape, it is vital that advisers and consumers fully understand what these contracts do, who they are appropriate for and how much they cost.

“This guidance will help to ensure that the product is understood better by customers and advisers and that it is targeted at those for whom it is an appropriate long-term savings vehicle.”

The technicality is causing a huge uproar in the offshore pensions sector and stopping transfers from UK pensions in to Gibraltar schemes as the firms have voluntarily put a stop on cash switches until the matter is sorted.

Both sides could easily put an end to the matter by agreeing to disagree and saving face – either by Gibraltar changing their tax stance or HMRC accepting a zero rate is still a tax.

After all, HMRC imposes a zero rate VAT tax in the UK – but the taxman obviously fears ruling in favour of Gibraltar will lead to other infringements of their QROPS rules.

Rather than report the hype, here are the facts behind the row:

At the root of the row is money. Pension providers in Gibraltar want to set themselves up as a rival financial centre to Guernsey and the Isle of Man by attracting fund transfers from people with UK pension rights.

People who can transfer their funds include British expats living permanently abroad and foreign workers who have built UK pension rights but live abroad.

The attractions of a QROPS for these groups are the pension scheme has tax advantages and other benefits that are not allowed for UK pensions.

People in these groups can transfer their pension funds in to a QROPS – a Qualifying Recognised Offshore Pension Scheme – providing the scheme meets some special rules.

These rules include one stating that a QROPS pension must be recognised for tax – which means them benefits should be liable to tax.

The QROPS in Gibraltar are subject to a 0% income tax rate for the over 60s.

• HMRC claims this means the Gibraltar QROPS flout the rules because they are not subject to tax because of the 0% rate.
• The Gibraltar pension providers claim their QROPS benefits are taxed but ay a zero rate.

Both sides have spent six months writing letters to each other arguing their point without making any process.

Now, the Gibraltar pension firms are piling the pressure on HMRC by threatening legal action if the taxman pulls the plug on QROPS transfers.

A decision is expected from HMRC by the end of the month.

The trouble is residency laws are complex and sometimes people think they have left the UK when really they are still resident, so all the cost and time spent carefully planning tax advantages go to waste.

An ongoing case in British courts between a British Airways pilot and HM Revenue and Customs highlights the point.

Lyle Dicker Grace is a British Airways long-haul pilot. He is South African by birth but lived in the UK for 10 years until 1997 when he moved back to Cape Town.

The issue is that the rule-of-thumb over non-residency is being absent from the UK for the next five tax years but Mr Grace continued to fly out of Gatwick and had a second home near the airport where he stayed while in the UK.

HMRC argue that the house available for his use in the UK means he has not broken all residency ties and makes him a UK resident for tax.

The argument has gone backwards and forwards on appeals between Mr Grace and HMRC for the past couple of years – with the latest ruling by the Court of Appeal.

The court agreed with a decision by High Court Judge Lewison that Mr Grace was UK resident for tax and that the tax commissioner made a mistake when ruling he wasn’t in 2008.

However, it also ruled that Lewison should not have simply reversed the tax commissioner’s decision but should have referred the matter back to her for re-determination. (Grace v Commissioners for HM Revenue and Customs, EWCA Civ 1082).

The moral of Mr Grace’s story is that if he had sold his house and stayed in a hotel when he returned the UK, HMRC would not have investigated his case, as they would have considered he had severed all ties with this country and was no longer resident for tax.

Certainly anyone leaving the UK permanently should take solid professional tax advice because so many small and seemingly irrelevant factors can make a huge difference to tax status.

One in four (26%) SiPP and SSAS schemes only pick up interest at bank base rate of 0.5% and many others are offered less than 1%, according to research by Investec.

Fund managers are refusing to let investors move their cash because banks pay a commission for the fund placing money on deposit with them, says Investec.

‘We do an annual survey of returns paid for cash on deposit in SIPPs and our research confirms Investec’s findings – most SIPP providers pay less than 1%,’ says Geordie Clarke, of Money Management magazine.

The magazine is publishing a comprehensive survey of SIPP returns for cash on deposit in the edition for January 2010.

‘The problem is that most SIPP managers do not allow investors to choose their deposit taker.  Our last survey revealed that only Mattioli Woods gave investors any choice.  Many providers are very cagey about disclosing what they pay and will only say that it is linked to base rate,’ he said.

Independent experts feel this is a matter the Financial Services Authority should investigate – and advise SIPP and SSAS investors to check out the small print of their pension schedule if they cannot control their own money or move to another scheme – like a QROPS if you qualify as a UK non-resident.

So how much money are SIPP and SSAS investors losing in this time of low interest rates on savings?

For instance, Investec pays 2.5% gross on balances of £100,000 with a minimum investment of £25,000. Higher rates are available through some offshore banking arrangements with a QROPS – and most QROPS schemes do not pay tax on their gains.

If you have a SIPP or SSAS and believe you are in charge of your own financial destiny – ring up the fund manager and tell him you want to move any cash you have on deposit to another account and listen to the resounding ‘no’.

If you have a SIPP or SSAS and now live overseas, you are entitled to move to a QROPS and benefit from the massive amounts of features.

Current rules say migrants must have skills that are in demand – like doctors or engineers.

New rules have dropped this criterion to allow expats with significant cash to gain immediate residency under two categories:

• Emigrants with £4 million to invest over three years with no business or age restrictions who spend a minimum of 73 days a year in New Zealand
• Emigrants with £658,000 to invest over three years with three years of business experience and are less than 65-years-old who spend 146 days a year minimum in New Zealand.

Expats on an investor visa will have opportunities to invest in a wide range of bonds, equities and managed funds.

For expats with UK pension rights, New Zealand also has providers with QROPS offshore pension schemes that give tax advantages.

Announcing the investor visa, immigration minister Dr Jonathan Coleman, said:  “The last government’s business migration policies have not attracted investment. Since 2007, there have only been 23 migrants bought to New Zealand through Labour’s business migration policy.”

“Business migration needs to be urgently addressed, and stakeholders’ feedback has been extremely positive regarding this new package,” said Dr Coleman.

This failure to attract emigrants has been blamed on the previous policy setting the investment qualification bar to high – at £1 million – £8.75 million.

UK Immigration New Zealand regional manager Andrew Lockhart said: “It provides opportunities for people to invest in New Zealand and brings skills they might have in terms of investment into the country.”

Immigration New Zealand said new Zealand is more than a ‘large farm’ but also has strong technology and media sectors – with the added benefit of free trade agreements with Australia, Singapore and China that make New Zealand a gateway to Asia for business.

New Zealand is seen as a nation emerging from recession with a tiny 0.1% GDP growth in the last quarter.

The US Pension Benefit Guaranty Corp has tied in with the Pensions regulator, that oversees UK defined benefits pension schemes, and the Pension Protection Fund, that pays compensation to pensioners if an employer’s scheme goes bust.

Under the agreement, the each regulator has access to data, intelligence, and other records except confidential financial information relating to companies running pension schemes.

Pension Protection Fund chairman Lawrence Churchill said the agreement “sends a clear signal that there is a high level of co-operation between the various national institutions charged with protecting retirement incomes in an era when many sponsoring employers have a global presence.”

The object of the pact is to monitor multinational company pension funds so regulators in the US and UK do not have to pay out compensation to pensions if company assets have been transferred leading to a shortfall in funds.

A second aim is stopping tax avoidance as the UK regulators and US regulator have the benefit of tax information sharing treaties with numerous countries – for instance, the US regulator has recently signed such a treaty with Swiss tax authorities to share information and intelligence that will now be available to UK regulators.

Governments are sending a clear message to companies and individuals that the days of tax evasion are numbered and that the system is progressively tightening to capture tax cheats.

“We are not trying to make a treaty,” said PBGC Acting Director Vincent Snowbarger. “We’re trying to layout our understanding of the kind of information that we both feel comfortable in providing one another.”

Snowbarger said the agencies want to be “cautious about how much we are perceived to have locked ourselves into some kind of agreement that would be objectionable” to US other agencies and what businesses might perceive this as being.

Other US agencies, such as the Commodity Futures Trading Commission and Securities and Exchange Commission, have also linked with other international regulators.

Dave Hartnett, permanent secretary for tax at HMRC has posted a two-minute video on YouTube (Link: http://www.youtube.com/watch?v=a7qb8Y8RvE0) urging tax dodgers to face up to their responsibilities.

This is the latest move in the HMRC strategy to track down UK residents with offshore bank accounts that pay interest on savings that is not declared on tax returns.

HMRC agrees having money offshore is not illegal – but earning interest and not paying tax on what is received is and is costing the government about  £0.5 billion a year in lost tax.

“For some people, offshore bank accounts and tax havens typically conjure up images of exotic and far away places, well out of the reach of the taxman at home,” Mr Hartnett says in the video.

“Well, life’s just not like that any more. The taxman now has more powers and more information.”

UK taxpayers with money in offshore accounts run by 300 UK and foreign banks are offered the chance to confess to hiding taxable income by November 30, 2009.

Hartnett says in the video that the warning is “not a hollow threat” and that taxpayers who fail to come forward and are found to have undeclared tax liabilities will face a fine of at between 30% and 100% of any unpaid tax plus they will still have to pay the tax due.

Taxpayers who come forward before the deadline will have their penalty capped at 10% of the unpaid tax, or 20% if they failed to declare during the first disclosure campaign that ended in 2007.

Many people who have worked hard and contributed to company pensions all their lives are unsure of how much money they will have to live on.

Add to that the debate about how retirement ages may change in the future and the concept of a rosy retirement is not quite what most people have worked towards.

One way to sidestep all this pension grief if you are considering moving abroad permanently is transferring your pension to a QROPS. A QROPS is a specialised financial product that has many tax advantages for retirees living overseas who have UK pension rights.

If you have already purchased an annuity or are drawing down from an employer’s final salary scheme, then the QROPS door is closed.

For everyone else, the door is open, including those who are taking benefits from a pension as a drawdown or unsecured pension.

Consolidating all your UK pension funds in to a QROPS allows the investor to put their retirement savings outside the UK pension systems, immediately removing the uncertainty surrounding your pension in this country.

Your UK state pension has to stay outside the scheme, but you can move your other funds offshore to a more tax friendly environment and have no restriction where you live outside the UK – so your pension can be based in a good investment jurisdiction while you can live where you please.

Rather than ask your pension scheme provider about a QROPS transfer, approach a regulated and experienced independent financial advisor as many small scheme trustees and administrators have given wrong advice to pension holders in the past about their ability to transfer to a QROPS.

A QROPS is a highly specialist financial product and to protect your money and your retirement plans, always make sure the advisor can give ‘whole of the market’ advice and has a track-record in successfully completing QROPS transfers.

Another QROPS bonus is investments and payments inside a QROPS can be in many currencies, so your living standards overseas are not dependent on the fluctuation of the Pound against other major currencies that removes another uncertainty for many who want to retire abroad but have a tight budget.

As anyone who has had a brush with the French equivalent of HM Revenue and Customs knows, the tax system is devilishly complex.

This is a throwback to the 19^th century and how the laws in both countries developed down different routes.

One of the main issues is a hugely different interpretation of how your estate is handled once you pass on and how the assets you have built up are taxed.

The good news is with the help of an independent financial advisor with expatriate experience and estate planning, you can minimise your inheritance tax in both countries.

In France, on your death all your assets are totalled – that’s property, belongings and investments and tax paid on the whole amount.

In France, one of the key tax saving products is Assurance Vie – which translates in to something similar to an investment bond in UK financial services.

If you arrange Assurance Vie before you leave the UK, as a non-French resident the advantages are:

• No CSG tax on French Assurance Vie investments
• No IHT on any assets wrapped in the Assurance Vie

Another tax advantage is that Assurance Vie has no caps on assets or savings held in the policy.

The tax rules apply to expatriates intending to move to France permanently and to UK residents who own and let out property in France.

If you are considering retiring to France, the policy has to be started before you are aged 70 years to benefit from the tax advantages.

The tax saving benefits of Assurance Vie are advantageous if your inheritors are not direct related – because it wipes out tax that can be charged at up to 60% of the amount transferred on your death.

As with all financial advice, make sure you speak to a UK regulated independent financial advisor who has experience in dealing with the affairs of expats to ensure you receive the best advice and have some come-back, on the advisor if your financial plans go wrong.

Many retired people receive income from several different sources and are entitled to extra allowances that makes working out how much tax they pay more complicated than working out the amount for younger people, said the NAO.

This means up to 1.5 million pensioners have on average overpaid £171 each – that adds up to a massive £250m million more in the tax office bank accounts than should be there.

Yet another 500,000 had underpaid tax by £100 million because of failures in HMRC systems and differences between HMRC calculations and those of employers and pension providers.

Amyas Morse, head of the National Audit Office, said: “Older people want to pay the right amount of tax but too many pay more than they need to because they do not claim allowances to which they are entitled and because of errors.

“By providing a more coherent service, HMRC could make substantial savings as the number of enquiries from older people about their tax affairs would reduce. A win-win situation for all.”

If all older people claimed age-related allowances to which they are entitled, their average income would go up by 4% each, the NAO indicated.

New HMRC IT systems have been installed to reduce the errors, but the NAO warned that with an aging population, if HMRC does not get on top of the problem, it would only get worse.

The NAO also discovered that older people are less likely to contact their tax office than anyone else and about a third do not understand income tax or allowances they can claim.

The costs of dealing with tax inquiries from older people are £36 million just on staff – and these inquiries cost twice as much to deal with than other inquiries as they are more complicated to deal with.

Unlike a UK pension, QROPS investors can invest in almost any tradable paper or commodity in any currency – but often widening the choice increases the risk of putting cash in the wrong place.

Like all investment advice, the first good tip is don’t put all your eggs in one basket, because if you drop it the likelihood is they’ll smash and you’ll be left with nothing.

During a recession, investors are inevitably looking for a safe haven giving prospects of reasonable growth.

Emerging markets – like the BRIC economies of Brazil, Russia, India and China are generally the first stop for most investors.  Each of the BRICS has its own financial problems, and is looking at how to create a second global currency to untie the knots between their economies and the US dollar.

China has special problems – the economy has slowed in the recession but the economy relies on exports and until the US and European economies recover, some doubts exist about just how long the economy can keep expanding with the bubble bursting.

Brazil is an interesting market – a massive oil and gas field has just been discovered offshore that makes the oil-dependent economy of neighbouring Venezuela suddenly look like a tiddler in a big pond full of sharks despite being a top 10 world oil producer.

Single commodity reliance has problems – as the oil-rich nations of the Middle East have discovered.

Eastern Europe’s new boys in the European Union are also having problems. Lack of infrastructure and a state-control mentality have held some economies like the Baltic States back.

Then there’s debt and currencies.  Possibly many investors would rather stack their cash under the bed than buy in to economies and currencies in trillions of debt.

The advantage of a QROPS is you can hire a fund manager to keep up with global investments for you.  With a QROPS, the investment possibilities may be endless but perhaps keeping your money safe is better than being sorry after making a rash investment decision.

HM revenue and Customs also plans to speed up the review process of offshore investments by taking direct action rather than waiting for other regulators to hand over information, said Permanent Secretary for Tax Dave Hartnett.

He threatened that HMRC is at the vanguard of a global assault on tax evasion and will continue to pursue taxpayers who do not pay their dues – and revealed that the days of shielding assets in tax havens was at an end.

“What the UK taxman does today may well be followed by other tax authorities tomorrow,” he said at a meeting in Madrid.

“The world has begun to change. There may well be a place for offshore financial centres but it will be different. There is considerable political will to end banking secrecy and to establish tax transparency as the standard. Such centres will be able to continue only if they are fully transparent.”

Hartnett sees the exchange of tax information on request – which is the basis of the current Organisation for Economic Cooperation and Development (OECD) initiative – as the first step.

“I see automatic exchange of information as the benchmark. That is the position which I would like to reach as standard,” he said.

The Isle of Man has already to share tax data and Hartnett hopes that more jurisdictions will adopt automatic exchange as the basis of agreements between states as a mature approach for international financial centres to adopt.

Tax advisers are warning clients that the HMRC‘s tough stance is not just rhetoric but investors who fail to admit to their offshore liabilities are chased to the courts.

“Anyone who has not disclosed all their offshore income should look at their position rationally: it makes good financial sense to come clean now which, for the vast majority, means taking advantage of the New Disclosure Opportunity,” said John Cassidy, tax partner at PKF.

Tax on unearned income rises 1% to 19% and the annual 400 Euro income tax rebate is abolished; meaning the average pension pay out will face extra tax.

The Spanish government is trying to spin the income tax increases by targeting the rich – but many UK expats are caught in the tax net.

“Those with the most should make the biggest contribution,” said finance minister Elena Salgado.

The increase in unearned income tax is expected to raise 800 million Euros a year, only a small amount of the cash needed to plug the country’s budget deficit.

Living costs will rise as VAT goes up 2% to 18%, with the secondary banding for restaurants and hotels up 1% to 8%. VAT on food at 4% remains the same.

Other taxes to increase include those on capital gains and interest on savings.

Spain is one of the most popular retirement destinations from the UK, because of a better climate and the cost of living was cheaper in the UK.

Now, Spain is the first of many countries introducing tough budgets to cope with bailing out the banks in the recession.

Prime Minister Gordon Brown and Chancellor Alistair Darling have already warned that the UK faces some tough spending choices and many financial observers feel that taxes must rise as well.

UK VAT returns to 17.5% at the end of the year and the controversial 50% income tax rate for those earning more than £150,000 comes in from April.

Generally, the UK pre budget report is announced in November – but the big issue for the government is whether the measures will actually be put in to place due to the forthcoming 2010 General Election.

Both companies are tight-lipped, but the City speculation is that Barclays will take-over soon in a deal worth £200 – £300 million.

Standard Life employs 300 staff in Edinburgh and in 2008 made a profit of £9.5 million.

Barclays is one of the few banks to refuse government aid during the recession and stands outside of any public ownership. The bank is looking at potential targets like Standard Life in the UK and other banks in Europe to pick up on the cheap while they struggle with financial problems.

Recently, Andrew Tully, head of pensions policy at Standard Life, said: “Some of the small SIPP providers are struggling to meet regulatory requirements and we are likely to see some consolidation between providers as a result.”

The Financial Services Authority has recognised this particular problem, and issued a paper this month outlining its dissatisfaction with the way some small SIPP providers treat investors.

Other issues facing SIPP providers are compensation levels for investors if the funds collapse or are victims of fraudsters like the Madoff Ponzi scheme.

An estimated 80,000 people with £22 billion of pension savings could find that their life savings are at risk because the Financial Services Compensation Scheme (FSCS) provides them with less protection than conventional retirement funds if they suffer fraud or insolvency.

Many investors rely on shares, unit trusts, property, bonds and cash to build retirement savings. Only the first £50,000 of cash deposits covered under current compensation rules, and for investments, only up to £48,000 can be reclaimed – which would generate a meagre pension at current annuity rates.

Standard Life, for example, only 40% of SIPP assets have £50,000 compensation protection in insured funds.

Cash in Standard Life SIPP is 11% of the total; 20% is in mutual funds like unit trusts and 29% is held in property and other bank accounts.

Financial Services Authority inspectors who regularly visit the banks are collecting tax data and information about tax avoidance schemes for clients.

The move follows Chancellor Alistair Darling’s criticism at the Brighton Labour Party conference this week of ‘stupid bankers’ taking the UK financial system to the brink of collapse and then bringing around the begging bowl for a £1.4 trillion bail out.

The FSA announced in July that plans were in the pipeline to penalise banks for giving tax avoidance advice. Part of this review is demanding proof from banks that they are adhering to tax laws.

Failure to comply was highlighted by a recent BBC TV Panorama programme that secretly filmed offshore advisors of UK banks giving misleading tax advise that might be considered as tax evasion by investing money through Hong Kong.

This inquiry is likely to end up costing the banks more in tax, said FSA chairman Adair Turner.

The financial collapse has revealed the internal workings of banks to financial regulators and the public as many of their processes are more transparent because government representatives now sit on their boards of directors.

This public investment has lifted the veil of secrecy that banks traditionally impose on their inner workings and customers can now see that huge profits are made at their expense often without justification – like extending margins on mortgage lending, revealing tax avoidance schemes and risky dealings.

Mean while, the Bank of England and FSA are still considering whether to penalise banks for keeping too much of their bail-out money in their vaults in stead of easing credit for homeowners and businesses that is contributing to the UK’s recovery from recession.

HM revenue and Customs is about to join the anti-banker party by drafting a voluntary code of tax conduct and ethics the banks need to adhere to – and if they don’t sign up, HMRC is threatening more tax investigations.

Countries like Panama, the Dominican Republic and the Turks and Caicos Islands are in the firing line for refusing to reveal details of who is hiding cash in their banking and financial systems.

The G20 leaders, including President Obama and Prime Minister Gordon Brown meet in Pittsburgh today to discuss the global financial crisis.

Darling made a statement prior to the start of the summit calling for the G20 to blacklist countries that fail to share information with financial regulators in other countries.

Failure to comply could result in economic sanctions.

“Just as we have been tackling tax havens, we also need to go after those countries that offer regulatory havens where mainstream regulators here and in America and in Europe can’t get the information they need,” Darling said. “If you don’t comply you get until March next year then you will be blacklisted.”

Brown and Darling will encourage other G20 leaders to back the blacklist when the G20 meets in November.

Besides threatening sanctions against nations that fail to comply, they also want the G20 to offer financial support to tax shelters that drop their status and allow G20 regulators access to their banks and finance houses.

“What we are saying to these companies is, ‘Look, you live in the same world as the rest of us; you enjoy the privileges when you travel that everybody else does,” Darling said. “You can’t shelter behind this veil of secrecy where we can’t get the information we need to understand the risks to which some of our institutions may be exposed.”

Darling wants the Financial Services Authority to have reciprocal access with other regulators so information that might help the government assess financial risk to UK banks and financial institutions.

Darling said he was hopeful the G20 would agree as the “whole climate” of thinking on regulation has changed over since the financial crisis began – especially as many G20 countries now hold large stakes in banks.

Offshore finance expert Michael Foot is drafting a report on the government’s options and financial responsibilities towards the economies of overseas territories and crown dependencies.

The Treasury suggests the Government may have to make a provision of tens of millions of pounds to bail out the struggling former tax havens.

The irony is that Britain led a global campaign to close them down as tax avoidance schemes and evasion were siphoning £25 million a year out of the UK.

Presumably the government balanced the debit of tax gained from closing down the tax havens against any credit of aid payments that may go out to sustain their struggling economies.

Recently, the Cayman Islands asked the government for permission to raise £278 million in loans to plug a cash deficit in the economy – claiming no cash was available to pay civil servants.

The request was refused and the island’s government was told to look at raising income and property taxes instead.

Offshore

British dependencies and territories in trouble are thought to include Jersey, Guernsey, the Isle of Man, Bermuda, the Cayman Islands, Gibraltar and the British Virgin Islands – among the world’s most important tax havens.

The Guardian says Foot is concerned that tourism on Caribbean islands is also down and making problems worse.

The Treasury has clearly stated that it is not “the business of bailing out tax havens”; while the Foreign Office said overseas territories are responsible for their own finances.

Meanwhile, Jersey is projecting a £100 million budget deficit.

The Isle of Man is facing issues over the collapse of Icelandic bank, Kaupthing, which had a business on the island and may have to spend hundreds of millions of pounds to compensate savers.

Guernsey faces similar problems over the collapse of a Channel Island subsidiary of another Iceland bank, Landsbanki.

Britain has imposed direct rule and suspended the government of the Caribbean Turks and Caicos islands following allegations of corruption.

A little known rule in the Finance Act 2005 says that if expats defer drawing their state pensions for at least a year, they can withdraw the amount as a one-off lump sum or enhanced weekly payment at the standard rate.

This rule does not apply to expats whom have already retired and started drawing their pension.

The index-linked gain is because the state pension is deferred and paid at the standard rate, the pension has some inflation linking.

The catch is once the state pension is withdrawn; future pension payments are frozen at the amount of the first payment.

The rule is of significance to hundreds of thousands of expats who live outside Europe in countries with strong Commonwealth links like Canada, Australia, New Zealand and South Africa.

Expat Pension

Currently more than 500,000 British expats who have retired overseas have their pensions frozen at the payment amount when they first draw their state pension.

Their case bidding to force the government to index link all state pensions disregarding where the expat lives is before the European Court of Human Rights and a ruling is expected in March 2010

Of course, any expat planning to defer taking their state pension would need to have other cash to support their lifestyle.

Pension rules say anyone deferring their pension is compensated for the amount foregone by receiving enhanced weekly pension payments once a claim for payment takes effect as part of the Government’s policy of encouraging flexible retirement.

Other special rules apply if the pension was deferred before April 6, 2005.

Normal state pension requirements, like the expat reaching the state pension age and having a sufficient National Insurance Contributions record also apply.

The loophole does not change the way any state pension payments might be liable to income tax.

Anyone drawing their pension will have to wait for the European court ruling to see if their payments will be index linked.

Every tax haven has folded under pressure from the world’s leading financial countries led by the UK and USA by signing agreements with one or more OECD countries.

Even ultra-secret Switzerland, Monaco and Liechtenstein have signed up to hand over sensitive financial information about bank holders and assets they had squirreled away where they thought was beyond the reach of the tax man.

Not only are thousands of bank accounts and investment now open to view, but also the financial world is seeing a shift towards transparency in financial transactions.

This shift is knocking the fat cat economies of former tax havens:

• The Cayman Islands, reportedly home to the largest number of hedge funds in the world and the fifth biggest global banking community is going broke.The government has come to the UK with a begging bowl for loans to pay civil servants and has been rebuffed because of doubts that the country has the ability to repay what it would owe.

  Venezuela has already handed a US$50 million lifeline and the government wanted £280 million from the UK.

• Offshore investments to Mauritius have dropped 50% as the country diversified away from sugar and textiles to banking and finance.
• Antigua and Barbuda is in serious financial troubles.
• The British Virgin Islands is in turmoil over a corruption inquiry relating

In reality, the days of exploiting grey areas and tax loopholes have gone – especially with so many governments worldwide taking controlling stakes in banks during the recession.

Sensible investors should now consider reviewing their options with a regulated and whole-of-the-market advisor who can offer a range of wealth management strategies that won’t exploit grey areas and attract the attention of tax investigators.

Savers who ignored the taxman’s amnesty of offshore investment in 2007 have a second chance to disclose details of their investments and to bring their tax affairs up to date 1 September and will run until 12 March 2010.

For a limited period, investors can benefit from the favourable penalty terms offered, but this offer is undercut by a second amnesty with reduced penalties for investors with cash in Liechtenstein.

For offshore investors with money stashed away anywhere other than Liechtenstein, they must make a full disclosure of all undeclared liabilities, not just those connected with an offshore account or asset.

Tax

This means the taxman will agree to:

• A fixed penalty of 10% of the taxes/duties underpaid.
• No penalty where the total of unpaid taxes or duties is less than £1,000.
• A fixed penalty of 20% must be paid by anyone who HMRC wrote to about the availability of the Offshore Disclosure Facility in 2007, either to tell them that they had their account details or to remind them to disclose after they had notified.

Anyone who meets the above criteria may have a chance to cut their 20% fixed penalty by half if they transfer their offshore funds to Liechtenstein and then make their declaration.

The UK government recently signed an agreement with financial authorities in Liechtenstein that will result in the grand duchy handing over details of an expected 100,000 previously secret bank accounts to HM Revenue and Customs.

From 1 September 2009 until 31 March 2015, UK taxpayers with undeclared investments in Liechtenstein can volunteer to put their past and future tax affairs on the right footing.

The Liechtenstein agreement allows them special terms:

• 10% fixed penalty on the underpaid liabilities with full interest paid
• No penalty where an innocent error has been made
• Assessment period limited to accounting periods/tax years commencing on or after 1 April 1999
• The option to choose a single composite rate of 40% or to calculate actual liability on an annual basis
• Assurance about criminal prosecution

HM Revenue and Customs has a long reach, so you need to be absolutely sure you have done everything you can to show you no longer have any connection with the UK when you leave for your new home.

Even when you have left and HMRC confirms you are not liable to UK income tax, some nasty little tax traps can still be sprung.

• If you sell property, stocks, shares or other assets that trigger a capital gains tax charge, you could be liable for all the tax due if you return to the UK within five years of leaving
• The millstone of inheritance tax remain hanging around your neck for three years after leaving the UK
• National Insurance liability can last up to a year after you have left the UK

Becoming an expat is not quite as easy as it may seem at first – but here are some tips of how to prove to the taxman that you have broken links with the UK for good:

Tax

• File forms P85 with HMRC to tell them you are non-resident.
• Try not to return to the UK for an entire tax year to emphasise the break in residence – for instance if you leave the UK in December 2008, don’t come back until after April 6, 2011.
• Do not return to the UK for more than 90 days a year after the first full tax year away.

Finance

• Cancel your UK credit cards and reduce the balances in your UK bank accounts.
• Consider transferring your pension in to a QROPS – if HMRC agrees you can transfer funds in to a QROPS, then they are agreeing you are a non -resident because UK residents cannot invest in an overseas pension.

Property

One of the keys is not to maintain a home in the UK so the taxman cannot claim you are only away temporarily and not really an expat.

• Sell your UK property after you have left the UK or let it out for at least 12 months.
• Do not leave your property empty so the tax man can claim you have a home here.

Pension administrators are in talks with UK tax authorities about Gibraltar’s controversial 0% income tax for the over 60′s and are accusing rival pension companies in Guernsey of spreading rumours that Gibraltar is about to dropped as an ‘allowed’ place to transfer UK pensions.

Removal from the list would mean that no UK pension provider would allow pension transfers to a Gibraltar based scheme, effectively cutting the country out of the market.

Gibraltar companies STM Fidecs and Castle Trust have set up an Association of Pension Fund Administrators (APFA) to counter the bad PR and to formulate the jurisdiction’s QROPS products. They are locked in talks with HMRC about the nitty gritty of the terms and conditions that their QROPS products need to meet to retain HMRC  ‘allowed’ status.

APFA chairman David Erhardt said: “We think that we have fulfilled all the necessary requirements and are hoping the scheme gets the go-ahead soon. Gibraltar needs this to be resolved to avoid any kind of confusion. The bad publicity we could receive from being taken off the QROPS list would be disastrous, just as it was when it happened to Singapore.

“Gibraltar as a jurisdiction needs to ensure that this is resolved to retain the right of Gibraltarians to transfer their UK pension funds. It is really a case of ensuring that we do not get an unjustified bad global reputation.”

Tax

The issue that is causing the delay is that Gibraltar taxes income for the over 60′s at 0%. HMRC wants another band of income tax introduced that would catch higher income earners.

The Gibraltar QROPS scheme will also have a maximum 25% fund drawdown – that would allow the product to compete with those offered by Isle of Man pension providers. Currently, the Isle of Man is the only pension provider to allow a 30% QROPS drawdown.

APFA secretary, Jane Caulfield, believes that a lack of an agreement could have a negative impact: “If Gibraltar cannot accept QROPS, people could easily transfer their overseas pension funds to places like Guernsey. That is why we have received no help from other jurisdictions as it would be in their best interests for us to be out of the picture.”

Changes in pension legislation mean that from April 2010 the minimum pension age is being raised to 55 years of age. Until this time, a pension can be drawn from the age of 50. The new rules mean that those planning to use pensions to supplement income or draw a lump sum may find it necessary to take action now to protect future finances.

For those not planning to retire completely but who do need some flexibility (perhaps to pay off debts or make the best use of pension funds) it may be worthwhile to review the current situation before the rules stop you from doing so.

Any change to a client’s circumstances, especially one as fundamental as repatriation, will mean seeking new advice both in the jurisdiction the client is leaving and to which they are returning.

QROPS.net has offices around the globe, allowing our clients to speak face to face with an adviser to discuss any changes in their circumstances.

Protected and guaranteed products give peace of mind, which is a major factor in any investors life. These type of funds help to safeguard already built pension pots and to reduce the risk associated with exposure to equities.

Standard UK pensions and many Sipp structures allow for protected and guaranteed products to be used. However these usually come at a price. These products normally have a much larger management charge and can also have a long lock in period. This should be a concern of anyone approaching retirement.

Building your pension with a QROPS is as flexible and cost effective as having your own offshore investment portfolio. When a QROPS is chosen and a structure put in place, you have access to the worlds investment markets.

Its possible to construct a Qrops solution so that you have access to funds at institutional rates. This means protected and guaranteed products are available with minimal charges. Having this “institutional status” also opens up access to many funds that are just not available as an individual investor.

To find out more about Qrops and the different Qrops solutions available, contact us now.

Standard UK pensions have a life insurance element to them, making them covered by insurance compensation, which is 100% of the first £2,000 and then 90% of the rest with no upper limit.

For example if you had a pension pot of £500,000 and your UK pension provider went bust you would receive £2,000 plus 90% of £500,000, which is £450,000. That’s a total of £452,000 and a loss of £48,000. As you can see, you still take a hit but this hasn’t shattered your retirement dreams.

Many individuals have taken advantage of self invested personal pension plans or SIPPs. Its important to realise that if a SIPP provider goes bust the assets of the SIPP could be at risk!

Those with SIPPS are protected under the investment compensation scheme. This protects the first £30,000 at 100%, then 90% of the next £20,000 only. This means that the maximum protected is just £48,000. So if you had £500,000 then receiving just £48,000 will be considerably less then if you had a standard pension as described above. This would leave your dream of owning a yacht quickly taking on water and sinking.

QROPS allows for a much wider expanse of investment opportunities. Many are transferring into a QROPS and placing their money in funds wrapped up in a life assurance structure. This gives them the insurance compensation protection and with Guernsey compensation being 100% of the first £2,000 and then 90% of the rest with NO limit, a transfer to QROPS is proving to be a very safe move.

To discuss your situation and how we can help you make the best financial move, fill out the contact form here and we will contact you as a priority

Cyprus has double taxation treaties allowing expats to pay the lower Cyprus tax rates on their worldwide pension income. Many believe that Cyprus has the lowest expat pension tax in the world. If you are suitable for a QROPS and live in Cyprus, you could be making one of the best financial decision by transferring your UK pension to a QROPS.

QROPS.net are pleased to announce that we now have a permanent office in Cyprus to service our growing client base. We can help individuals around the world either via the Internet and telephony service or face to face consultation in our global offices.

Contact us today to request more information and we can arrange a call back to schedule your confidential discussion, contact QROPS.net by simply completeing the contact form and one of our senior advisers will contact you as a priority.

This highlights a major issue that neglect of personal pensions is extremely common. And in our experience, this neglect is seen at all levels of pension pots. From the very small, to the seven figure pensions. It is essential to keep up to date with pension developments and to keep a close eye on what your pension is doing.

If you are reading this site, then you will most likely be in a situation to benefit from a QROPS. If so, then the time is now to to take control of your pension.

Don’t neglect your future, contact QROPS.net to find out how we can help, and start on the road to a brighter financial future.

Each jurisdiction will have its own pros and cons, different tax regimes, different rules and regulations. It is how these effect you and your situation that makes a jurisdiction a “best” choice.

Not only is the QROPS jurisdiction important, but equally the actual QROPS provider needs to be examined. There are hundreds of QROPS available ranging from one man trustee offices in questionable jurisdictions to wholly owned expert pension trustee divisions of blue-chip merchant banks, located in highly regulated and respected international finance centres.

Understanding the differences of each jurisdiction and provider is what makes QROPS.net service indispensable. QROPS.net is the leader in QROPS advice. We are totally independent and since we are not tied to any individual QROPS provider, we can look at your situation and find the best QROPS in the best jurisdiction for you.

To find out more on how we can help you in your unique situation or for some friendly advice in plain English, contact QROPS.net by simply completeing the contact form and one of our senior advisers will contact you as a priority.

Experts believe that the selling of “pensionbusting” promises, by unregulated advisers was the downfall of QROPS in Singapore. With little or no regulation of advisers in many worldwide locations, there is clearly a risk of abuse.

It is very important for UK expats to seek advice from regulated companies & advisers such as QROPS.net advisers. We urge all individuals to do a simple background check on all financial advisers and ask them to provide a regulatory number from the governing body before you proceed.

To find out more about QROPS.net advisers and how we have the highest regulation standards, please contact a QROPS adviser