Update on Gibraltar QROPS

By Retirement
Update on Gibraltar QROPS

If Guernsey has been given the red light for QROPS by having hundred removed from the HMRC list, and Malta has been given the green light by HMRC to proceed, then Gibraltar is waiting anxiously on amber.

The authorities in Gibraltar are hoping to hear soon about whether HMRC considers some pension schemes in the jurisdiction as suitable for inclusion on its list of Qualifying Recognised Overseas Pension Schemes. If they are, then people who do not live in the United Kingdom can transfer their UK pensions into the funds in Gibraltar with some positive tax consequences.

QROPS have existed in a variety of countries since 2006, and hundreds of thousands of expats have used the schemes to get their pensions out of the United Kingdom without having to pay a tax charge. Tax planning is not the only reason to get a QROPS, but it does feature highly among the motivations of people who have got them.

Malta has just been through the process of getting HMRC approval and is thought to be attracting lots of new businesses from investors who are keen to explore a fresh jurisdiction.

After so many schemes were delisted in Guernsey, there is a feeling that some of the traditional jurisdictions have fallen from grace, and that other places are worth a look.

What does Gibraltar have to offer?

The rate of tax paid on Gibraltar QROPS will vary depending on an individual’s circumstances, but spokesmen are talking about a rate of 2.5% per annum on pension distributions, with the ability to take tax free withdrawals of around 30% as a lump sum.

Expats may find they need or want to take a lump sum early in retirement, to fund the purchase of their new home overseas, or to help out grandchildren as the property ladder “back home” becomes increasingly difficult to access.

HMRC are taking their time to decide. Some commentators are concerned that the legislature in Gibraltar seem to want to do the bare minimum to make their pension schemes compliant with HMRC’s requirements. This, they argue, could lead to claims that Gibraltar QROPS are nothing but a tax avoidance schemes, which could make HMRC refuse to put or keep them on the list.

There has been no comment from HMRC, which does not discuss individual jurisdictions in advance of making a decision. One thing is for sure is that consumers will have an exciting new alternative if the answer is “yes” and Gibraltar can proceed to the green light.

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