Possible Change in Member Payment Provisions from 5 to 10 years
In the recent late 2016 Autumn statement released by the HMRC, changes were outlined to the way QROPS are designed to work. Whilst not yet law, these changes are expected to be introduced (possibly in a slightly modified form) in April 2017. Some of the main changes include:
– Income from a QROPS being taxed in the same way as for a UK pension (a QROPS has only had 90% of its income payments subject to tax in the UK previously);
– Increasing the member payment provisions from 5 to 10 years, which will hence restrict the way in which QROPS pension holders will be able to access funds (in effect meaning that QROPS pension holders will be tied into the UK rules for 10 successive UK tax years from departing UK tax residency instead of 5). This will affect pension planning via lump sums for many QROPS retirees. Current views in the market seem to expect that if introduced, this would not be retrospective.
These developments could impact on your pension planning and it is important that they are properly understood. Please get in touch to discuss further.