QROPS Demand Set to Increase

QROPS Demand Set to IncreaseWith yet more unfavourable tax legislation on the way for British expats courtesy of Chancellor George Osborne, overseas financial institutions are bracing themselves for another huge spike in demand for QROPS solutions to help counteract the latest plans of the Exchequer.

Although under consultation currently, the proposed plan is to make expats pay tax on any income from the UK. This means that non-UK residents will be prevented from off-setting any UK-generated income against their Personal Allowance of £10,000.

Currently, this is allowed, but it is estimated that if the consultation come into effect, it will have an impact on 400,000 British expats worldwide. Should this latest legislative measure come into force, it is predicted that many will see the UK as providing no real tax benefits in keeping their money there, and will sever financial ties completely.

Public Sector Reacting

This includes the transfer of any UK pensions into overseas schemes such as QROPS which allow stability, restructuring options and strong investment potential, as well as freedom of choice and tax advantages. QROPS have already seen a huge uplift in enquiries in the first half of 2014, mainly due to the public sector pension market soon to be frozen, meaning that those with defined benefit schemes will be forced, as of April 2015 to remain in the £1 billion deficit that the country faces moving forward.

This is not an attractive proposition for most expats who were formerly UK teachers, police, fire service, NHS staff or civil servants, and a large majority of the 10,000 transfers currently made each year are down to this particular sector.

Changes on the Way

While QROPS is currently continuing to increase in popularity, it is not certain if the government plan to make reform to the scheme’s rules to make it harder to get into. The more money that leaves the UK’s shores, the more  they stare at the deficit and struggle to see a way out, so when a QROPS announcement is made in September, will Osborne resist the temptation to tinker? It is inconclusive, but unlikely at this stage…..

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