What happens to my QROPS when I return to the UK?

Returning to the UK with a QROPS?

Since the introduction of QROPS in April 2006, billions of pounds worth of British pension funds have been transferred to QROPS, the majority of which by expatriate Britons who had done so having planned to remain overseas for the duration of their retirement years.

Despite our best attempts to look forward to the future and how we expect our lives to pan out, the reality is that often even our best laid plans can be subject to change; be that a change of job, ill health, or maybe a longing to return to grey, wet skies and over crowded roads! So if life throws you a surprise or the grass wasn’t actually greener after all, what happens to a QROPS if you move back to the UK?

Here we take a look at some of the most common questions on this subject:

Can I keep my QROPS if I move back to the UK?

Yes you can. Whilst QROPS are mostly used by those who are either planning to leave or have already left the UK, they can still be used by UK residents who have no intention of living abroad. Holding a QROPS and being a UK resident, is in itself, not an issue.

Where will I be liable for income tax from my QROPS if I become UK resident?

This will depend on where your QROPS is held and whether or not the country in which the QROPS is established has a dual taxation agreement (DTA) with the UK. For example, if your QROPS is held in Gibraltar then you will still have to pay income tax in Gibraltar as well as the UK on any income you receive. If the QROPS is in Malta, the income would be paid to you gross; Malta has a DTA with the UK, and you would simply pay UK income tax on the money you drawdown.

What happens if I die holding a QROPS as a UK resident?

If you die before age 75 then the full value of the fund can be passed to your beneficiaries free of tax. However if you die after age 75, then the fund will be taxable at your beneficiary’s marginal rate of income tax. This is exactly the same tax treatment that would be afforded to a UK pension scheme, such as a SIPP for example.

Will my QROPS automatically qualify for Pension Freedom and Flexible Access Drawdown (FAD) when I move back to the UK?

No, this will still depend on where the QROPS is held. If the QROPS is held in a jurisdiction that permits FAD; such as Malta, then this will continue when you move to the UK. It is not permitted simply because you moved back to the UK.

My QROPS provider does not offer FAD; how can I ensure I receive this now I am living in the UK?

There are two options: move to another QROPS provider that does offer FAD, or move to a SIPP; moving to a SIPP will likely be the most sensible and least costly option as SIPPs are generally cheaper to set up and run than QROPS.

How can I transfer from a QROPS to a SIPP?

This is quite straightforward and simply involves making an application to the scheme trustees of your QROPS and requesting permission to transfer to a SIPP. Just be sure to check what, if any, exit fees will be levied by your QROPS provider for exiting the scheme.

Can my existing Financial Adviser still manage my investments if I return to the UK?

This will depend on the regulatory permissions that your adviser has; many advisers operating overseas do not have permission to provide you with advice if you return to live in the UK. If you are in this unfortunate situation please visit First Equitable UK, which provides FCA regulated advice for UK resident clients.

Should I transfer my QROPS to a SIPP when I return to the UK?

Having returned to the UK, it may make little sense for you to remain in a QROPS. Certainly the QROPS is likely to have higher running costs than what you would except to pay in a SIPP. There are other considerations here, and we would highly recommend you speak with an Independent Financial Adviser first, but for many clients this option is favourable.

  • Do you have a question not covered here?
  • Have you returned to the UK or are planning to return to the UK in the near future?
  • Are you worried about how this will impact your pensions and/or your savings and investments?

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