Back to news 21 March 2017
New tax charge on transfers to QROPS
In a policy document, the government explains that it will legislate in the Finance Bill 2017 to apply a 25% tax charge to pension transfers made to QROPS except where limited exemptions apply in order to tackle abuse of foreign pension schemes. This change applies immediately to transfers requested on or after 9 March 2017.
Transfers to QROPS may still be made tax-free where people have “a genuine need to transfer their pension”, including where the individual and the pension scheme are both located within the European Economic Area (EEA), the individual and the scheme are in the same country or the QROPS is provided by the individual’s employer. According to HMRC policy papers, “if the individual’s circumstances change” within five tax years of the transfer, the tax treatment of the transfer “will be reconsidered” (i.e. the tax charge may be imposed retrospectively).
Further information is now contained in new (and quite detailed) HMRC guidance published on 8 March 2017.