Thousands of UK expats in the Gulf could be breaching LTA limit

Up to two thirds of UK expats living in the Gulf could be unknowingly breaching pensions tax regulations, according to Hoxton Capital Management.

It has urged the estimated 350,000 expats to check that they are not in contravention of the lifetime allowance (LTA) limit for pensions tax relief.

Hoxton managing partner of independent financial advisers, Chris Ball, said: “Just under a third of the people we speak to know what the LTA is. Those who know what it is are typically aware of where they stand.

“However, we frequently speak to people in the oil and gas sector who have breached the LTA, some of whom have breached it by substantial margins.”

According to Ball, many of the expats are working in sectors that have traditionally offered generous pension scheme in the UK, such as energy and construction.

Therefore, they are more likely to be affected by the LTA limit, which is currently £1.055m and places a limit on the level of benefit that can be drawn from pension schemes without incurring additional tax penalties.

Ball has advised any expat that is already in breach of the LTA limit to check if they are eligible for protection.

He continued: “If they haven’t paid in to their pension since 6 April 2016 they can apply to increase their LTA limit.

“Failing this, if they are within the European Union, transferring their pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) could have potential benefits.

“If, however, an expat is not yet in breach but feels that they could become so, our advice is to stop paying in if they haven’t already done so, and again, if it is a viable option, to look at a QROPS to crystallize the benefits before they are in breach of the LTA.”

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