Last week HMRC issued, without any prior warning, a consultation document which set out proposed changes to the tax regime governing QROPS.
Attached to the consultation document was draft secondary legislation proposing changes to the qualifying conditions for QROPS, together with increased reporting conditions for such schemes. HMRC intends that, subject to any matters that arise in the consultation process, the new regime will start on 6 April 2012 – and will affect all current QROPS.
Against this background, we would highlight the following fundamental changes that HMRC proposes for continuing QROPS.
- From 6 April 2012 any tax exemption that is available in respect of benefits paid to a non-resident of the territory in which a QROPS is located, must also be available to residents of the QROPS territory
- QROPS managers will be obliged to make reports to HMRC for a total of 10 years from the date of transfer to a QROPS – as opposed to the current 5 years from the date of first becoming non-resident outside the UK
- More detailed reporting is required from QROPS administrators
- At least 70% of the funds transferred to a QROPS must be used to provide income in retirement
Pension Schemes wishing to qualify as QROPS or maintain their existing status will need to meet the above additional new conditions
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