HMRC makes it easier for expats to reclaim QROPS transfer charge

Pedro Gonçalves
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HMRC makes it easier for expats to reclaim QROPS transfer charge

HM Revenue & Customs has published details on how expats who have wrongly paid the QROPS overseas transfer charge can reclaim it.

The Pension Schemes (Information Requirements - Repayment of Overseas Transfer Charge) Regulations 2019 came into force last month. Although the option to reclaim the charge has always been available, the regulations lay out a more formal procedure.

The overseas transfer charge - a 25% tax on the value of a QROPS pension transfer -  comes due when a retirement saver switches a UK or existing QROPS to a QROPS that is not based in the country where they live.

This will enable the right people to make the right claim for overseas transfer charge within the time limits. Without this instrument individuals, pension scheme administrators, pension scheme managers and HMRC would not know the process for claiming or making a repayment"

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.

"These instruments provide the detail that individuals, pension scheme administrators, pension scheme managers and HMRC need for the process of claiming a repayment of overseas transfer charge in certain specified situations, including who should make that claim and how to make the claim and the repayment," said a memo published by HMRC with the draft regulations.

"The first instrument also covers the repayment of overseas transfer charge where it was deducted and paid in error.

"This will enable the right people to make the right claim for overseas transfer charge within the time limits. Without this instrument individuals, pension scheme administrators, pension scheme managers and HMRC would not know the process for claiming or making a repayment."

The overseas transfer charge does not apply in the European Economic Area, where retirement savers can have a QROPS based in any EEA country providing they live within the bloc as well.

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.

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

 

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