UK Pensions And QROPS For The Expatriate In Spain

06.07.11

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

With effect from 6th April 2011 there are new rules on taking retirement income from UK pension funds.

There is no longer an age limit to buy an annuity and no tax disadvantages if yo

With effect from 6th April 2011 there are new rules on taking retirement income from UK pension funds.

There is no longer an age limit to buy an annuity and no tax disadvantages if you never buy one at all. The age limits for drawing an income and taking most pension commencement lump sums have also been removed. UK inheritance tax will not typically apply to drawdown funds.

On the negative side, the death charges applied when the balance of your fund is passed on to your heirs have increased from 35% to 55% for those under 75 (unless you have not taken any benefits from your pension, in which case there are no charges). For those over 75 it has reduced from 82% to 55% regardless of whether you have drawn benefits.

How does this affect QROPS?

Qualifying Recognised Overseas Pension Schemes continue to look attractive for expatriates who have pension funds totaling over ?100,000.

?Exemption from all UK taxes on death if you have been non UK resident for the previous five consecutive UK tax years ? i.e. a potential saving of 55%.

?Greater flexibility on drawing benefits and greater discretion over investment choice compared to UK approved pension schemes. This helps you structure your fund for your lifestyle in Spain.

?Your fund can grow without limit and without risk of further lifetime allowance charges.

?Income is paid gross and can be set up to be very tax efficient in Spain.

?Option to invest and receive income in Euros, therefore eliminating exchange rate risk and currency conversion costs.

?Consolidation of various funds into one scheme.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual must take personalised advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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