International investments for non-UK domiciles

For individuals that have, and can claim, non-UK domicile status there are a number of tax planning opportunities that present themselves.

One of the key opportunities relates to HM Revenue and Custom’s (HMRC) provision for workers who intend to retire abroad and the use of QROPS (Qualifying Recognised Overseas Pension Scheme)

There are several regulatory conditions that such schemes must meet, so for example a scheme could be established in the European Economic Area (EEA) and other areas of the world so long as appropriately regulated in the relevant country. Equally the scheme rules must provide for at least 70% of a member’s tax relieved funds - as designated by the scheme manager - to provide an income for life, and that benefits must be payable no earlier than the normal minimum pension age i.e. usually 50-55 years of age.

QROPS significantly are not required to to report back to HMRC after an individual has been non-resident for at least 5 years. This easement is because the individual will become subject to the prevailing tax regime of the current country of residence. This means that benefits potentially could become available before the normal minimum pension age.

This flexibility does have an appeal to individuals who are going to live and retire abroad as well as non-domiciles currently working in the UK. This appeal extends to those who wish to avoid at 75 years of age the choice of a traditional annuity purchase, or an income via an alternative secured pension and potential penal tax charge levied for an unauthorised payment.

This is a very complex legal and technical area and caution should be taken to ensure good specialist advice is taken. Littlejohn is ideally placed to help with our range of pension and tax specialists for both UK and non-UK residents.

Other investment opportunities surround the current income remittance rules - see Tax News