Qualifying recognised overseas pension schemes (QROPS)

By Tolley
Employment_tax_img4

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Qualifying recognised overseas pension schemes (QROPS)
  • A pension scheme
  • An OPS
  • ROPS
  • QROPS
  • Transfers to QROPS on or after 9 March 2017
  • The member payment provisions
  • Payments from a QROPS and their taxation

Until 6 April 2006, transfers from UK pension schemes overseas were relatively unusual. This was because of HMRC restrictions and the fact that some transfers overseas required HMRC consent.

It is possible to make transfers from UK registered pension schemes to overseas pension schemes (OPS) so long as they are registered with HMRC as QROPS. A transfer from a UK registered pension scheme to a QROPS is a ‘recognised transfer’ and so does not involve any tax charge as it is an ‘authorised payment’. It is nonetheless an ‘event’ that a UK pension scheme administrator must report to HMRC. However, transfers to QROPS from 9 March 2017 may be subject to an overseas transfer tax charge at 25% (see below).

FA 2004, s 169

Although, generally, the term QROPS is used, from an HMRC perspective the term ROPS is often used instead because the statutory definitions are concerned with what constitutes a ROPS. A QROPS is simply an ROPS which has given certain undertakings to HMRC.

HMRC publishes a list twice a month of what it understands to be ROPs  at the appropriate time, but does not provide any guarantee that the scheme is actually one that meets the necessary conditions to be an ROPS.

There are four tests that a scheme must meet in order to be a QROPS. It must:

  • be a pension scheme
  • be an OPS as defined by the relevant UK legislation
  • be a recognised overseas pension scheme (ROPS)
  • give the necessary undertakings in order to be deemed a qualifying ROPS

See SI 2006/206.

A pension scheme

If a scheme is designed to provide benefits in respect of retirement, ill health, death or similar circumstances then it is likely to be

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