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?
• People that have transferred their pensions to QROPS prior 9 March 2017 can onward transfer these pensions to another QROPS without a problem
• People who are transferring to a country in which they already live E.G. New Zealand
This ‘OTC’ remains in place for 5 years after the original transfer from the UK. Therefore if a member transfers a UK Pension to New Zealand for example, and subsequently leaves New Zealand to live in Australia within 5 years of transfer then an ‘OTC’ could apply. Consulting an Adviser and tax professional is important to avoid incurring this charge unnecessarily.