Budget hikes make Isle of Man QROPS less attractive
Tax rates on QROPS benefits went up and tax allowances for non-residents were scrapped in an austerity budget by the Isle of Man.
For anyone with an Isle of Man QROPS pension, this double whammy means income tax on payments out of a QROPS fund rise from 18% to 20%.
For Isle of Man non-residents with a pension based on the island, the £2,120 tax-free personal allowance is scrapped from April 6, 2010.
The measures were included in a moneysaving budget Treasury Minister Allan Bell blamed on the continuing effects of the world financial crisis and a decision by the UK Treasury to reduce the amount paid to the island from a ‘common purse’ tax take from VAT.
Although the QROPS pension tax changes will not cause undue hardship for many wealthier investors, the island’s pension providers may find problems in attracting new business at the rate they have over recent years.
The Isle of Man is one of the popular destinations for expats to transfer offshore pension funds to a QROPS scheme, but the tax changes make the island’s QROPS less attractive than those in other tax jurisdictions.
Other QROPS pensions may be better than the Isle of Man
Nevertheless, some of these rival QROPS jurisdictions have yet to set their 2010-11 budget.
Attractions of the Isle of Man QROPS to British expats included close ties between the UK and the island, a common language, stable government and a flourishing economy.
Other QROPS providers offering these advantages plus QROPS schemes without the new tax disadvantages include Guernsey and QROPS list new arrivals Gibraltar, where the first QROPS is due to launch in April 2010.
QROPS Adviser suggests that if you already have an Isle of Man QROPS or were intending to transfer funds to a new scheme from a UK pension, then consider the alternatives.
Several years experience successfully transferring hundreds of QROPS to tax jurisdictions all over the world have shown us that the market is in a state of flux during March and April due to budget announcements.
QROPS Adviser has researchers and tax advisers keeping an eye on QROPS pension changes as they happen, so you can always rely on the latest financial advice that ensures your QROPS transfer is to the best provider you can get.
