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How expat investors eliminate lifetime allowance tax

The number of expat retirees choosing to take out a QROPS (Qualifying Recognised Overseas Pension Scheme) is expected to see a significant increase, after Chancellor George Osborne decided to reduce tax relief for pension funds by cutting lifetime allowance for a second consecutive time.


Just like the savers who’ve already achieved the minimum £1.25m pension fund to which the cuts apply, expat investors with realistic expectations of breaking the same savings barrier in the near future, are also likely so suffer the same financial consequences if their savings remain inland.


Some savers have considered keeping UK accounts with balances equalling lifetime allowance levels, but they’d have to surrender between 25% and 55% of their funds upon reaching their 75th birthday, depending if funds are withdrawn as a one-off payment or regularly, as a pension fund.


Whilst initially transferred sums will remain subject to 55% inheritance tax at the expat pensioner’s time of passing, any account funds exceeding that initial figure will be excluded from calculations.  UK savers will enjoy no such joy because HMRC dictates the tax applied to their account growth.


By transferring their pension funds to an offshore QROPS account, expat retirees automatically immunise their savings from future HMRC money-saving measures.  Funds of an equivalent or lower value than the lifetime allowance will also escape any and all applicable transfer fees.


It’s essential that prospective investors fully appreciate the importance of employing the professional services of an independent financial advisor with a proven and successful history when dealing with international expats and others amidst the financial sector.

By Anthony Standring
Expats Village
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