If you are moving abroad or have a job overseas you may want to transfer your UK pension rights normally the value of your pension fund, to an overseas pension scheme. There are conditions that must be satisfied at the point of transfer and restrictions on accessing the fund afterwards to which tax charges may apply.
Transfers to an overseas pension scheme that is not a QROPS are treated as ‘unauthorised payments’ and are subject to tax charges.
A QROPS is an overseas pension scheme that can receive a transfer of the value of your rights from a UK registered pension scheme without you incurring tax charges. HM Revenue & Customs requires a QROPS to broadly mirror a UK pension scheme. This means that if you transfer your pension fund to a QROPS you can still receive a lump sum and pension when you retire, much as you would expect if you had kept your pension savings in a UK registered pension scheme. This is subject to any local laws & tax treatment in the country where the QROPS is established or the country where you become resident.
You must give certain information to the scheme administrator of the UK scheme before the transfer can be made. One can use certain prescribed forms such as APSS263 Qualifying Recognised Overseas Pension schemes-Member information to give this information to the scheme administrator or if you prefer you can give the same information in a letter. The above mentioned prescribed form can be downloaded from HMRC website.
The information is needed to enable HMRC to monitor transfers to QROPS more closely. Transfers should be made for genuine reasons consistent with providing pension benefits when you retire. HMRC expects you to be aware of and have fully considered, the possible tax charges that may arise from a transfer. This is why you are asked to sign an acknowledgement confirming you understand that a transfer overseas may result in you having to pay unauthorized payment tax charges to HMRC after the transfer is made. You should be aware that such charges can still arise long after the transfer is completed.
The value of your UK registered pension scheme will still have to be tested against the lifetime allowance that is 1.5million pounds for 2012-13 when you transfer your rights overseas. The lifetime allowance is the maximum value you can build up in UK registered pension schemes without incurring tax charges. Your UK pension scheme administrator will tell you what percentage of the lifetime allowance has been used up by the transfer.
If the amount transferred is more than your lifetime allowance the excess will be taxed at 25%.
UK tax charges can still apply even after you have transferred your pension fund value to a QROPS. Certain payments made out of the QROPS may be subject to UK tax charges. The same charges apply to similar payments made out of a UK pension so you will not avoid tax simply by transferring your pension fund value to a QROPS.
Contact For advice & Start up of the processRavi Kumar
Senior Manager- Branch B-21
Exide Life Insurance Company India Ltd
# 28, 6th floor, Centenary building, MG Road
Bangalore-560001. Karnataka- India
Cell: +91 9844519872
Email 2: ravi.sampige@gmail.com
Note: The service to the customers in transferring their pension fund will be given irrespective of the locations where ever they stay, like any parts of India or Abroad.
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