Pros and cons
With a QROPS (a Qualifying Recognised Overseas Pension Scheme) you can benefit from:
- Lower taxes: You do not pay UK “death” tax or UK income tax on your pension.
- More flexibility: On your lump-sum as well as the age at which you can start taking benefits.
- Convenience: Your income can be paid in any currency.
However, a QROPS is not always the best option. You must make sure you have considered the following points:
- There are specific criteria for qualifying. For example, you will be able to visit the UK, but must follow the six-month and three-month average rules:
- You cannot spend 183 days or more in the UK in one tax year (six-month rule).
- You cannot spend 360 days in the UK over four year (three month average rule).
- Funds less than £50,000 may not generate enough tax savings to justify the set-up and running costs.