QROPS investors have a right to pay the least tax they can
QROPS pension investors have the same rights as any British taxpayer to pay the least tax they can by arranging their financial affairs however they want - as long as they don’t break the law.
The quirkiness of tax law means that no rules actually spelt what is tax avoidance - which is legal - and tax evasion - which is not legal.
The problem comes when taxpayers and their entourage of accountants and advisers try and manipulate the grey area between avoidance and evasion.
QROPS pensions and their tax benefits for investors are perfectly legal while a provider meets HM Revenue and Customs regulations.
QROPS pensions have three main areas of conflict with the taxman:
QROPS tax free lump sums
The rules say at least 70% of the pension must be retained to pay pension benefits to the QROPS investor after retirement. Reversing the figure gives the 30% tax-free lump sum paid, for instance, by Isle of Man QROPS.
Most QROPS schemes pay a 25% tax-free lump sum on retirement, although some offer more if the investor meets certain conditions.
Investments that can be put in a QROPS
Most QROPS have wide-ranging self managed and managed investment options that offer opportunities to put money in currencies, commodities and assets they are unavailable to a UK pension holder.
HMRC does not encourage a QROPS pension investing in assets directly or indirectly giving a benefit to the pension holder, and sometimes this can cause conflict with the taxman.
Country of residence for QROPS pension holder
QROPS are designed for expats and international workers who have left the UK permanently to live or retire. Failing to break all ties with the UK when moving abroad can lead to problems with HMRC.
Setting up a QROPS pension is not as straightforward as starting a UK pension.
That’s why QROPS Adviser has highly qualified consultants and administrators who are fully conversant with the intricacies of starting a QROPS in many different countries where pension laws and tax rules may mean someone inadvertently flouts regulations.
