British expats face dilemma over QROPs

Published:  21 Feb at 6 PM
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Brit expats living in EU member states are facing a dilemma over their QROPs.

At the present time, there seems to be no stopping the progress of Britain’s divorce from the EU. The due dates are March 31 next year, followed by an all-too-brief transition period ending in December 2020. Both dates present a knife-edge for expats in Europe as regards QROPs, but no-one has any real idea whether Brexit will impact on expats’ pensions.

The popular pension-porting plan was first introduced in April 2006 in an attempt to simplify procedures for expats who move between several EU bloc states, and acts as a kind of freedom of movement for capital. The benefits and features of QROPs include a tax-free lump sum of no more than 30 per cent of the total, payments in a a choice of local currencies and no limit on savings lifetime allowances.

It’s possible the post-Brexit UK government might wish to equalise QROPs benefits, but not by hiking up the UK state pension to the same standards as a QROPs. Another possibility is that the government might bypass changing QROPs rules and concentrate on extending the charge for an overseas transfer to cover the whole of Europe.

At present, those living in the European Economic Area and opting for a QROPs are exempted from the transfer charges, but those outside the EEA are limited to QROPs in the country in which they are based. Failure to do so opens them up to the 25 per cent tax payable to HMRC.

As a result, British expats must make the difficult choice between transferring now in order to avoid damaging changes in post-Brexit rules or not moving whilst hoping for the best. QROPs aren’t expected to be covered in any Brexit deal, but wil almost certainly feature in the first post-Brexit budget due in 2021.
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