Guernsey's proposed new changes to maintain QROPS status...
QROPS have been around since April 2006 to help UK pension holders living overseas by enabling them to put all of their pensions into one scheme. This also gave holders definate tax advantages like low or nil income tax from their holdings and similar for inheritance tax. Regrettably this was sometimes abused in a way the HMRC wasn't intending. With this under consideration the HMRC are making many changes to the schemes over the approaching days and months. One of the largest affected jurisdictions is Guernsey.
With Guernsey being such a giant player in this area some options had to be achieved and new proposals have been presented by the Guernsey Authorities for its approaching meeting in March.
With the draft changes to the present legislation by the HMRC back on the 6th December 2011 the Guernsey Govt. obviously had plenty of concerns which have been released for its March meeting.
Since the HMRC announcement a small focus group from the Guernsey Association of Pension Providers, frequently known as (GAPP), have been taking a look at solutions to the offers with the Guernsey govt.. While working with the HMRC toput forward Guernsey's position with them and to keep the GAPP members informed along the way.
The root problem with Guernsey was its treatment of resident and non-residents in relation to tax on their pensions with non-residents not being taxed and residents being subject to standard tax that the HMRC felt was one-sided. If the condition of the tax was made the same for all concerned then Guernsey would lose its QROPS status!
For existing holders of schemes with the Guernsey jurisdiction would likely not be affected and would be considered sanctioned. The real issue would be to continue to offer QROPS to new members as well as existing.
The Guernsey govt. has released a new suggestion that lives up to the draft HMRC rules.
- There will be no tax subsidies on monies paid into a scheme.
- Whether you're a resident or not revenue and benefits won't be taxed.
- The pension income will be free from taxation from both revenue and growth viewpoint.
If these new suggestions are put through in March then all bearers of a Guernsey scheme will be informed of their options to stay on with the scheme or to opt out. It is likely that most will decide to remain
Some facts:-
- Minimum commencement age of 55.
- 70% of holders assigned to pay earnings for life.
- Commencement payments not to exceed 30%.
All of the above as per HMRC rules which is similar to current conditions.
