QROPS and the International Enhancement Factor
QROPS and the International Enhancement Factor seem to get little mention on websites that promote offshore pension transfers. However, this is a suprise as they are a major benefit for clients and the International Enhancement Factor applies equally to SIPPs, QROPS and final salary UK pension schemes that provide income at retirement and are not transferred.
QROPS and the international enhnacement factor related to an increase in the Lifetime Allowance that may save some expats a lot of money
Individuals with a UK pension schemes who;
- did not receive UK tax relief on their pension contributions, or
- did not obtain additional accrual while actively a scheme member while deemed as relevant overseas individual.
An individual is a relevant overseas individual for a tax year if one of the following applies:
- they are not a relevant UK individual
- they are a relevant UK individual only because they have been UK tax resident at some time during the previous 5 tax years and when they became a member of the pension scheme and they are not employed by a UK tax resident employer.
QROPS and the International Enhancement Factor- Eligibility
The Questions to ask yourself-
While living overseas , was I;
- UK resident?
- Making pension contributions that were given UK tax relief?
- Gaining addition benefits from the final salary scheme ?
- Employed by the UK company than runs the pension scheme?
If the answer is “no” then you may wish to apply for the International Enhancement Factor Here . HMRC will then give you a certificate confirming your enhanced lifetime allowance and the enhancement factor, which you then pass onto your UK Pensions provider.
QROPS and the International Enhancement Factor Calculation
There is quite a complex interaction with the various Lifetime Allowance Protections and advice should be taken before moving to a QROPS or taking benefits that could trigger a tax charge that could be avoided.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published 1st December 2016
- The Lifetime Allowance – LTA QROPS and Returning to the UK
- QROPS and the Lifetime Allowance
- UK pension- are you outside the UK?
- Lifetime Allowance 5 Key Facts
- Lifetime Allowance 2015
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