Pensions  

HMRC sets out how to reclaim overseas transfer charge

HMRC sets out how to reclaim overseas transfer charge

HM Revenue & Customs has published details on how to reclaim the overseas pension transfer charge after new regulations came into force last month.

The Pension Schemes (Information Requirements – Repayment of Overseas Transfer Charge) Regulations 2019 detail the conditions and process for reclaiming the charge when it was either paid in error or changing circumstances mean the original transfer has now become exempt.

Savers were always able to reclaim the overseas transfer charge but the latest regulations have formalised this process.

The 25 per cent tax charge occurs on transfers to a qualifying recognised overseas pension scheme. It was introduced as a way to stop people from exploiting tax loopholes when transferring pension funds out of the UK to avoid UK tax.

But scheme members can claim back this charge if circumstances have changed and they are now exempt, for example, if the person transferring the funds becomes a tax resident in the same country that the Qrops is based in.

Other exemptions include if the transfer is to a scheme in the individual's country of residence or if an individual is an employee of an organisation sponsoring an occupational pension which qualifies as a Qrops

The regulation states that a claim for repayment of the tax charge must be in writing using a form issued by HM Revenue & Customs.

For a claim to be successful it must include the name, date of birth and address of the person making the claim as well as their national insurance number.

Other information required includes:

  • the date of the pension transfer;
  • the amount of the transfer;
  • the date the charge was paid to HMRC;
  • the circumstances for exclusion from the charge;
  • the date exclusion from the charge applied from; and
  • the amount in respect of which the claim is made.

If the information submitted is incorrect or some of it is missing then HMRC will not process the claim.

The repayment will be made to either the member, the scheme administrator or scheme manager who paid the charge.

These rules came into force on April 25, 2019 after a statutory instrument was laid before the House of Commons on April 3, 2019.

The overseas transfer charge is effective for transfers requested on or after March 9, 2017 and the extended taxing provisions on payments out of Qrops are effective on and after April, 6 2017.

amy.austin@ft.com