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    Specialist Help for USA Residents

    It is estimate that there are over 1.5 million British expats now living in the USA. A very large proportion of this number will never return to the UK. Choosing to live out their twilight years in sunnier climes.

     

     

    The USA is certainly a favourite destination for many UK ex-pats, however transferring a pension into QROPS is problematic for stateside residents as well as ex-pats.

    For the first time some QROPS is now available that tackles the necessary legal and administrative issues that have prevented US residents and nationals from picking up the tax and investment benefits or transferring to a QROPS.

    QROPS advisers do confirm that the HM Revenue and Customs listings of QROPS have included several US 401(k) pension schemes more or less from day one of April 2006. In principle QROPS transfers were available to US nationals living abroad along with UK ex-pats moving to the United States.

    It does remain that the HMRC’s counterpart in the USA namely the Inland Revenue Service (IRS) has so far refused to recognise QROPS transfers into a QROPS USA 401(k) pension by UK ex-pats living there. The reason for this they claim is that the QROPS structure is not legal.

    A similar no-go status was imposed on US nationals overseas who transferred from a 401(k) to a QROPS.

    QROPS 401(k) And IRA Transfers

    Both triggered IRS tax penalties on any funds that were transferred.

    This unfortunately is likely to tighten up further from January 2013 when the Foreign Account Tax Compliant Act comes into force. The Act will virtually bar all US residents and US nationals living outside the country from transferring their pensions into a QROPS.

    Although this complicates any QROPS transfers in or out of a 401(k) pension some providers have managed to re-structure the master trust that manages a QROPS into a USA-friendly legal entity.

    This is a legal alternative that opens QROPS USA investments as a two-way street between transferring from a UK pension to a US QROPS and likewise from a US 401(k) to an offshore QROPS.

    The framework is now in place, however QROPS USA is still tied up in red tape and successful transfers do require patience, specialist skills and expertise.

    The possibility of moving QROPS pension transfers for UK ex-pats living in the US does open a new world of investment opportunities that were once unavailable.

Qrops Pensions Gibraltar

Gibraltar has had to tread an awkward path before finally sorting out the opportunity to run QROPS pensions from the UK’s taxman.

For many months, Gibraltar’s QROPS providers self imposed a pension transfer ban as HM Revenue and Customs threatened to withdraw their QROPS status as the terms and conditions of their pension schemes apparently failed QROPS legislation compliance tests.

HMRC claimed Gibraltar’s zero per cent tax rate on pension payments was not really a tax but an SOP to meet the necessary compliance.

Gibraltar’s pension providers claimed however that the nought per cent rate was a tax so after months of huffing and puffing with HMRC, the government finally agreed to amend the state’s tax legislation to meet QROPS’ rules.

This has allowed QROPS’ providers to lift their ban and begin to start trading again.

Any QROPS transfer to Gibraltar now thoroughly meets HMRC’s rules.

Gibraltar Provides A Low Offshore Tax Financial Centre

Throughout the disagreement Gibraltar kept QROPS status and remained on the QROPS listings.

Gibraltar is certainly an appealing offshore financial centre with many British ex-pats. Its historical ties, common language, low tax and stable government are a few of the reasons why Gibraltar is still attractive.

Many ex-pats relocate and retire to Gibraltar for these reasons despite some political difficulties with neighbouring Spain.

Individuals can set up QROPS pensions in Gibraltar to take advantage of the low tax environment and like other QROPS the rules allow them to live wherever they want across the globe.

Gibraltar’s QROPS offers all the advantages of other QROPS, for instance a 25% tax free cash lump sum as well as flexible investor opportunities. There is also no obligation to purchase an annuity or other alternative secured pensions (ASP).

Income tax on Gibraltar’s QROPS benefits depends largely on where the person receiving the cash lives and of course their nationality.

Gibraltar’s QROPS pay out gross benefits in numerous major currencies, for instance the Euro and the US dollar.

Although the 25% lump sum is tax free, regular pension benefits are however subject to income tax at the usual rates in the country where the scheme holder resides.

Gibraltar Tax Rates More Than Rival Other Offshore QROPS

Tax rates on fund growth are very competitive with rival offshore centres such as the Isle of Man and Guernsey.

For more information, visit the HMRC website here.

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