QROPS Isle Of Man

The IOM is a British Crown dependency situated between Ireland & the UK in the Irish Sea, with over 1,000 years of democracy, which makes it the oldest in the world, and its parliament being older then the UK’s parliament, it is obvious that this political solid jurisdiction is an ideal location for offshore financial services

The IOM has an AAA rating with Standard & Poors and Moodys, providing a stable base for retirement planning. With the Isle of Man being another politically stable, low tax, major offshore jurisdiction such as Jersey, Guernsey, Dublin & Luxembourg, it was inevitable that QROPS schemes would become available from this small island.

With its low tax laws, Isle of Man can offer very similar benefits to a Guernsey based QROPS; however there are some differences that need to be taken into consideration before proceeding with a QROPS pension transfer to the Isle Of Man.

The Isle of Man currently deducts 18% income tax at source for non IOM residents. This can be taken into account in the members own country of residence where that jurisdiction has a double taxation treaty with the Isle of Man. The Isle of Man can be attractive to UK Nationals who have retired to Norway, Sweden, Finland, Denmark or Iceland because of Manx Double Taxation Agreements signed with the Nordic region. If you don’t reside in a Double Taxation agreeing country, then transferring to an IOM QROPS could cause you to be hit twice by the tax man. Contact QROPS Adviser to discuss your situation.

Pension assets can be passed onto family members subject to a 7.5% tax charge. Guernsey is currently 0%

There are few restrictions on the assets which can be linked to your scheme (for example commercial and residential property can be linked to a scheme).

QROPS Isle of Man Summary

Is income drawdown available?
Yes.  Subject to UK GAD rates, both USP and ASP.  Income will be paid less 18% tax.  First £2,120 (tax year 2009/2010) per annum of income is paid gross (for non-IOM resident).

What is the maximum amount of lump sum available at normal retirement age?
25% without penalty but increases to 30% after 5 full tax years of non-UK residency.  Subject to trustee discretion.

How the pension is payable calculated?
Using either UK Government Actuary tables as per UK’s Unsecured/Alternatively Secured Pensions.  Actuarially certified by scheme provider.

What happens if the member dies before retirement (during first 5 years of non-UK residency)?
100% return of fund to deceased’s estate/nomination with 0% tax charge or a spouse’s/dependant’s pension could be paid, subject to tax at applicable rates.

What happens if the member dies before retirement (after 5 years of non-UK residency)?
100% return of fund to deceased’s estate/nomination with 0% tax charge or a spouse’s/dependant’s pension could be paid, subject to tax at applicable rates.

What happens if the member dies after retirement (during first 5 years of non-UK residency)?
Post retirement pre 75, return of fund less 35% tax charge.  Post retirement post 75, return of fund less tax charge up to 82%.  Alternatively, in both cases, a spouse’s/dependant’s pension could be paid.

What happens if the member dies after retirement (after first 5 years of non-UK residency)?
Post retirement, pre and post 75, return of fund less 7.5% tax charge, or a spouse’s dependant’s pension could be paid.

What are the tax rates on taking a pension if the member is resident in same jurisdiction as the QROPS?
Single Personal allowance is £9200 (tax year 2009/2010).  10% band on income up to £10,500.  Balance at 18%.

What are the tax rates on taking a pension if the member is resident outside of the jurisdiction?
Single personal allowance available of £2120 (tax year 2009/2010). Balance is subject to 18%. May be subject to double taxation if country of residence taxes pension income.

For more details on Isle of Man QROPS providers and further information on a QROPS transfer to the IOM please complete the form on the contact QROPS Adviser page or email us direct.