The number of transfers to qualified recognised overseas pension schemes (QROPS) dropped by 6,400 in the year 2015/16, it has been revealed.

Statistics published by HM Revenue and Customs show that in 2015/16 there were 13,700 QROPS transfers with a value of £1,500m, compared to 20,100 in 2014/15 when there was a value of £1,760m.

Individuals have been able transfer their pension savings in a registered pension scheme to a QROPS scheme since April 2006. Since then, in total there has been 108,700 QROPS transfers with a total value of £8,810m.

To be a QROPS a pension scheme must be based outside the UK and meet certain requirements. Provided the requirements are met transfers to QROPS are free of UK tax up to the lifetime allowance. This is intended to allow people who wish to emigrate to take their pension with them to their new country of residence.

At the Autumn Statement 2016, it was announced that the government will make further changes to the tax treatment of foreign pensions from April 2017.

According to the background document, the tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones.

It also stated that the government will close specialist pension schemes for those employed abroad (‘section 615’ schemes) to new saving. In addition, it will extend from five to 10 years the taxing rights over recently emigrated non-UK residents’ foreign lump sum payments from funds that have had UK tax relief.

The government will also align the tax treatment of funds transferred between registered pension schemes, and update the eligibility criteria for foreign schemes to qualify as overseas pensions schemes for tax purposes.

Share Story: