Holiday Lettings news - HMRC backtracking on offshore pension schemes

HMRC backtracking on offshore pension schemes

The British government is reining in offshore pension schemes, having decided they are overly lenient. The move is expected to affect British expatriates and anyone considering an offshore pension scheme is being advised to wait.

HM Revenue and Customs (HMRC) is "going back on its word and reining in offshore pension schemes", according to French Property News.

In 2006 a reform allowed British expatriates to secure their retirement abroad by moving their pension scheme to an HMRC Qualifying Recognised Pension Scheme (QROPS). These pension plans, considered a huge benefit to expatriates, avoid lump sum payments and ensure the continuation of tax relief on contributions made in the UK.

However, HMRC has now decided that these schemes are overly lenient as they provide the potential for millions of pounds worth of tax relief and don't levy inheritance tax on remaining funds.

Anyone considering using an offshore pension scheme is being advised to wait as HMRC still appears undecided as to the future of such schemes.

Expatriates who have settled in France should also be aware that it is not yet certain how the French authorities will tax an offshore QROPS, which could also be subject to wealth tax.

"With time, offshore QROPSs could be suitable for expats in France but it is still too early to assess the offshore and French taxation treatments of these pensions," Martin Stewart of specialist financial advisors Siddalls told the magazine.

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