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UK budget: Overseas transfer charge

On the 9 March 2017, the UK Budget introduced with immediate effect an “Overseas Transfer Charge” (OTC) which is a 25% tax charge on transfers to QROPS from UK registered pension schemes unless:

  1. The member is tax-resident in the same jurisdiction as the receiving QROPS. So a transfer from a UK registered scheme to a New Zealand QROPS for a tax-resident of New Zealand is not affected.
  2. The transfer is to a QROPS located in the European Economic Area (EEA – see note at the end) and the member is also tax-resident in an EEA member state.

 
So if you live outside of the EEA and were thinking of transferring your pension to somewhere other than where you live then you need to review the transfer immediately.
 
So who is not effected:

  1. People that have transferred their pensions to QROPS prior 9 March 2017 can onward transfer these pensions to another QROPS without a problem
  2. People who are transferring to a country in which they already live

 
 

Some examples of how people might be effected

Steve lives in New Zealand and was thinking about transferring to Malta
If Steve goes ahead and makes a transfer to Malta while he is living in New Zealand he will have a 25% tax charge on the transfer as it leaves the UK. Therefore, only 75% of the original value of the fund will arrive in Malta. Furthermore, if Steve continues to live, work and the ultimately retire in New Zealand he will be in exactly the same tax position in New Zealand he would have been in if he had left his pension in the UK.
 
Joanne lives in Australia and was thinking about transferring her Gibraltar QROPS fund to New Zealand
Because Joanne transferred her pension to Gibraltar before 9 March 2017 she is allowed to transfer it out of Malta and to New Zealand without incurring a 25% overseas transfer charge. What’s more she will be able to access the pension in full from New Zealand at the age of 55 years old, which she would not be able to do had she left it in Gibraltar. What’s more the payment to her in Australia from the New Zealand would likely be tax free for Joanne.
 
Graham lives in Australia and was thinking about transferring his UK pension fund to New Zealand
Graham already has an Australian superannuation scheme and his large UK pension scheme is leaving him a headache with non-concessional caps tax in Australia. Graham can transfer his UK pension to New Zealand but will pay a 25% tax charge on the transfer, which will be deducted before the pension is transferred to New Zealand. However, the pension transfer will not effect his Australian pension limits or non-concessional caps and therefore he will have no tax to pay in Australia. Again like Joanne above Graham will be able to access the pension in full from New Zealand at the age of 55 years old and the payment will likely be tax free for Graham in Australia.

NZ free phone:0800 102 599 / OZ Free Phone:1800 857 410 / Email:info@qropsnz.com

very stress free

Thank you Cambel for your help and guidance throughout this process in getting my pension transferred (very stress free for me). It is greatly appreciated and I would certainly recommend you and Charter Square to others who are interested in transferring their pension.

David R, New Zealand

You guys rock!

I just wanted to say a great big thank you to you and your team. You are all totally awesome. I received a cheque yesterday from the Prudential to apologise for the ‘recent inconvenience’ that I had experienced. Thank you for doing this for me. You guys rock!

Noelle B, New Zealand

professional, insightful

Charter Square were professional, insightful and a pleasure to work with. They rose to the challenge of consolidating my overseas pensions and bringing them home with minimum fuss for me and maximum effort on their part.

Jens H, New Zealand

thorough, professional and prompt

Very thorough, professional and prompt service from the team at Charter Square. Thanks for making the bewildering world of pension transfers super simple.

Jules T, New Zealand

Best party to deal with

Thank you kindly for keeping in touch with me. For now, I will not be moving my pension. I will however be keeping your details and referring back to you when I wish to pursue. You by far are the best party to deal with, no nonsense, professional and in my opinion genuine. I do sincerely thank you for your advice to date.

GE, New Zealand

Freedom

Securing the freedom to use savings that are actually ours to work with has been stressful in the extreme. While I never planned on giving up there were many times when the current (UK) holder made the whole process seem well beyond my determination and ability. It’s easy to look at the 36 month history of this claim with the benefit of hindsight, but the conclusion is that employing Charter Square in the first instance would have been wise had I been able to anticipate the red-tape that appears to have been deliberately created to stall access.

CP, Auckland
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