For expats concerned about the impact of Brexit on their UK pension pots a QROPS, or ROPS in Ireland, could provide the ideal solution. With the ongoing Brexit and the challenges it presents, Ireland is becoming a place of destination for both Irish expats and expats taking residence in Ireland. As Brexit does not seem to go as planned, this solution will help you shelter your UK pensions from any future arising taxes. However, we will not know the impact of Brexit for at least another year.
If you are moving back or to Ireland, take control over your investments and have them all in your new country of residence. You can transfer both personal and occupational pensions. In order to qualify for the ROPS, you will need to be tax resident in Ireland. On the UK official government website, you can check which schemes are registered with the HMRC. If you are moving to Ireland in the very near future or have already made the move, have a look at the potential benefits a ROPS in Ireland might offer you.
ROPS Ireland benefits and things to consider
- Benefits can be drawn from the minimum age of 55. You need to wait for 10 tax years before withdrawing funds in Ireland, if not you will be liable for tax in the UK. If unsure, it is best to ask your provider if you will be liable for UK tax rules before drawing down on your pension.
- A lifetime income can be provided by way of income drawdown, a fixed annuity, or a combination of both.
- In most cases, you are also able to draw-down a higher annual pension income than you would if you were to retire in the UK.
- The new provider could potentially offer a greater choice of investment options. This will allow you to access funds managed by renowned investment groups.
- You will be able to consolidate a multiple of pensions in a single scheme. Take advantage of an increased level of flexibility.
- If you have a pension in the UK and decide to retire in Ireland you will have currency risk. It will be convenient for you to have a pension in EUR and avoid the exchange rate variations.
- There will potentially be no tax charge for transferring your UK pension to Ireland.
- Standard Fund Threshold in Ireland is currently at €2,000,000. This is the maximum pension a person is allowed at retirement for tax purposes.
- Inheritance planning: When you transfer your UK pension to Ireland, the value of the pension upon your death is payable to your estate. You will not be accountable for paying British Inheritance Tax. However, there are certain situations and criteria where you could be subject to British tax when you transfer the payment.
How to avoid the 25% tax charge with a QROPS in Ireland?
In order to avoid the 25% tax charge on pension transfers from the UK to a Recognized Overseas Pension you must ensure the below points are satisfied:
- You must be tax resident in the country in which the QROPS is set up, i.e Ireland
- There is no charge to be paid if you are a tax resident in the European Economic Area (EEA) and the QROPS is set up in the EEA. You can not leave out of that area within 5 years of the pension transfer.
- The QROPS is an Occupational / Public Sector Scheme or an International Organisation and you are an employee of the sponsoring employer under the schemes.
See how Harrison Brook can assist
At Harrison Brook, we can assess your pension situation and further advise on ROPS implications. We can provide a full holistic financial planning service. What we believe is that we can not provide you with the best advice without considering the full spectrum of your financial situation. We also provide you with fully independent advice.
Get in touch today to discuss your unique situation and see how we can assist.
The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.