QROPS and SIPPs Pension

Posted by QROPS on April 10, 2012 at 12:20 AM

The holy grail of pensions for many ex pats are the tax-effectiveand flexible QROPS pension schemes.

The problem is huge numbers of ex pats do not qualify to take out aQROPS.

To switch any UK pension funds in to a QROPS, the pension investorhas to have left the UK permanently or be about to do so.

Keeping a home in the UK and working abroad does not cut the mustardwith HM Revenue and Customs.

Maintaining ties with Blighty while earning a tidy tax-free incomein Oman does not make someone an ex pat under complicated residency rules.

So if a QROPS is out of the question, what’s the best alternativefor a UK taxpayer working overseas.

Numerous pension options are available, but one worth looking at isa SiPP - short for self-invested personal pension.

SiPPs are the onshore versions of QROPS and offer many of theflexible investment advantages that come as standard with the QROPS.

Like a QROPS, a SiPPs can include a range of funds, shares, bondsand gilts; commodities, hedge funds and derivatives; and commercial property.

The big advantage is as a UK taxpayer, any contributions attract taxrelief at the highest rate of income tax - then the fund including the taxrelief can be swopped overseas in to a QROPS if and when the investor becomesan official ex pat.

This year, the government has removed some of the more unfriendlytax hurdles that discouraged investment, including the obligation to buy andannuity before the age of 75 years old.

Inheritance tax issues are also more streamlined for some investors.

Now’s a good time to start a SiPP - the maximum annual contributionis £50,000, but unused allowances from the last three years can also be rolledover if you have the cash.

Consolidating lots of smaller pensions in to a SiPP makes it easierto keep tabs on investments, but check out any penalties and exit fees - anddon’t leave a pension scheme with extra contributions from an employer.

To read more about whatis a QROPS pension then read more further down this page. There arehundreds of articles and blogs out there, many with good free information. Wesuggest reading up as there are constantly new rules and law changes


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