QROPS facing legislation change

Qualifying Recognised Overseas Pension Schemes (QROPS), a popular legal offshore savings facility, could be set for major reform under a new government bill.

Under the latest draft version of the finance bill 2012 the conditions that allow expats to transfer their pensions abroad could be changed.

This in turn could see many who previously benefitted from an offshore fund like the QROPS face a notable reduction in their ability to reduce their tax charges.

The move comes after HM Revenue & Customs (HMRC) introduced QROPS in 2006 in a bid to help expat savers.

However, HMRC is keen to limit the amount saved by individuals. New requirements will see clients forced to sign an acknowledgement agreeing to face tax charges if any rules are breached.

QROPS providers could also be forced to report any payments made overseas to HMRC for a decade after the initial transfer.

Worse still, clients who live in a different jurisdiction to one of their QROPS could face a reduction in tax relief compared with resident members.