Facility to reclaim QROPS transfer charge, Montfort explains more…

Earlier in the year HM Revenue & Customs published details on how expats, who have wrongly paid the Qualifying Recognised Overseas Pension Scheme (QROPS) Overseas Transfer Charge (OTC), are able to request a refund. Expats have always had the facility to reclaim the charge, however, the 2019 regulations formalise the process. This may have gone under the radar for some and therefore at Montfort we would like to draw attention to the new regulations which came into force in April this year.

The overseas transfer charge is a 25% tax on the value of a QROPS pension transfer which becomes payable when a retirement saver transfers a UK pension to a QROPS or even if they transfer an existing or former QROPS to another QROPS which does not meet any of the conditions outlined below:

The member is resident in the same country in which the QROPS receiving the transfer is established.

The member is resident in a country within the European Economic Area (EEA) and the QROPS is established in a country within the EEA.

The QROPS is set up by an international organisation for the purpose of providing benefits for or in respect of past service as an employee of the organisation and the member is an employee of that international organisation. PTM112200 provides guidance on the definition of an international organisation. It does NOT simply mean a multi-national employer.

The QROPS is an overseas public service pension scheme and the member is an employee of an employer that participates in the scheme.

The QROPS is an occupational pension scheme and the member is an employee of a sponsoring employee under the scheme.

It should be noted that this only applies to funds which were originally transferred out of the UK to a QROPS before 9 March 2017. For example, you are living in Australia, having moved your funds to a QROPS in Gibraltar back in March 2016 and you have now decided you wish to move the funds to a Malta QROPS. As the initial transfer took place before 9 March 2017 the OTC would not apply.

Scheme members can claim back the OTC if circumstances have changed and they are now exempt by meeting one of the conditions above. For example, if the person transferring the funds subsequently becomes a tax resident in the same country as their QROPS. For the latter they would need to meet these conditions for the following five years.

Any claim for repayment of the tax charge must be in writing using a form issued by HM Revenue & Customs. Montfort can help eligible clients with the procedure on their behalf.
HMRC states: “These (statutory) instruments provide the detail that individuals, pension scheme administrators, pension scheme managers and HMRC need for the process of claiming a repayment of overseas transfer charge in certain specified situations, including who should make that claim and how to make the claim and the repayment.”

If you would like further information on QROPs, contact Montfort to speak to one our leading Financial Advisers. Call +44 (0)1483 202072 or email info@montfort-intl.com