The government has taken steps to ensure Qrops tax rules are more closely aligned with UK pension schemes.
In the Autumn Statement, the government revealed plans for individuals with a Qualifying Recognised Overseas Pension Schemes who do not intend to leave the UK long-term.
HM Revenue & Customs plans to prevent Qrops being misused by anyone looking for a more favourable tax position.
The changes will mean the income from a Qrops will be taxed in the same way as a UK pension for anyone returning to the UK – currently only 90 per cent of income from a Qrops is subject to income tax rather than 100 per cent in a UK pensions scheme.
The Autumn Statement is suggesting the member payment provisions will extend from five to 10 years, which is likely to impact the pension commencement lump-sum, limiting it to 25 per cent of the UK tax relieved funds for 10 years instead of five.
The statement also suggests a further review will be carried out on the eligibility criteria for foreign schemes, suggesting some schemes may lose the ‘recognised’ status by HMRC.
Earlier this month HM Revenue & Customs removed all but three Canadian pension schemes from its list of Recognised Overseas Pension Schemes (Rops).
The tax office offered no explanation as to why it had removed 49 schemes from the list.
A spokesman for HMRC said: "We don’t comment on identifiable jurisdictions."
The sudden move follows a similar cull of Australian Qrops from HMRC's list last year.
emma.hughes@ft.com
