QROPS in Qatar
About QROPS, the advantages of QROPS, and ways of arranging your UK pension payments in Qatar...
QROPS is one of the most misunderstood acronyms in the world of expatriate and international financial planning.
QROPS stands for Qualifying Recognised Overseas Pension Scheme and is simply a set of rules the HMRC has put in place for foreign destination schemes to receive authorised UK pension transfers. Offshore schemes which are not QROPS may be subject to a 55 percent unauthorised payment charge irrespective of which jurisdiction they are transferred to.
A QROP scheme is suitable for anyone who has ever contributed to a UK pension but now lives overseas or plans to leave the UK in the near future.
While a QROPS will comply with HMRC's various requirements (in short, it should be a pension - a vehicle to turn a lump sum into a steady income on retirement), members benefit from certain features that are not available to UK pension holders.
One of the beneficial elements of QROPS is that instead of moving the pension to the country the holder happens to be living in, they can move it to a third jurisdiction chosen for its beneficial rules. Commonly chosen jurisdictions include Gibraltar and Malta and occasionally the Isle of Man.
If a suitable jurisdiction has been chosen, UK Inheritance Tax will no longer apply: QROPS members can leave their full pension pots to their families or other beneficiaries upon their death.
If a pension holder had begun to draw an income from a UK pension, HMRC may charge up to 55 percent of the pension pot upon death. This is not the case with QROPS, and the pension holder may be able to pass more than double the amount of money to their heirs.
In addition, the amount of income a QROPS holder can take is much more flexible. If little income is needed, members can opt to take benefits later and at a lower amount, thus potentially allowing their pension pots to grow with the markets.
On the other hand, if more income is needed, the maximum income per year can be 20 percent higher than in the UK. When this income is taken, it is paid gross. This this leaves the onus on the recipient to pay any applicable income tax in their country of residence.
QROPS allows UK pension holders to consolidate a number of UK pensions and have them invested with tax-free plans that are available offshore without restriction. This ability to see untaxed growth from a properly structured portfolio is one benefit of taking a QROPS.
QROPS are relevant everywhere. As long as the pension was moved in good faith and the holder has been outside the UK for five years, returning to the UK permanently is not a problem. While investments are tax-free in Qatar, QROPS will be advantageous to expatriates considering relocating to a tax-heavy jurisdiction in future.
QROPS jurisdictions are assessed by HMRC according to their various Double Taxation Treaties, applicable tax rates, regulatory rigour and transparency. These are not relevant to Qatar residents since Qatar is a largely tax-free jurisdiction.
There are currently no Qatari pension schemes that are QROPS listed, but there are many alternative localities available. QROPS are placed in the jurisdiction with the most benefit for the pension holder rather than where they happen to be living.
QROPS members can continue paying in to a QROPS scheme while living in Qatar tax-free, or set up another tax free retirement savings plan with fewer legal restrictions than a QROPS.