London & Colonial welcomes Gibraltar confirmation surrounding the income tax charge applicable to QNUPS
03/03/2014 | Download PDF
“We are not at all surprised that Gibraltar has confirmed a 2.5% tax rate on pension income taken from QNUPS as this is the same rate applied to QROPS.
As some within the industry may already be aware, last April’s decision by the Gibraltar Tax Authorities to change the rate of tax payable on any income derived from a QROPS saw the introduction of a new 2.5% taxation rate. Applicable to both Gibraltar and Non-Gibraltar based residents alike, this new rate would not only be payable on any future QROPS derived income but was also applied retrospectively back as far as 2006. It therefore makes perfect sense that the same rate would be applicable to QNUPS.
London & Colonial had its own QNUPS approved as far back as 2009 and since the introduction of the 2.5% taxation rate on QROPS last April, we have retained a 2.5% deduction on all income payments from our own QNUPS.
For many other Gibraltar providers these recent announcements will be welcome, and with the favourable tax advantages a QNUPS can offer clients we will doubtlessly start to see additional providers attempting to get their own schemes approved by the Gibraltar authorities.
Back in the UK it is also interesting to read reports of a meeting that took place last November between Members of the Association of Member-directed Pension Schemes, Association of British Insurers and National Association of Pension Funds and HMRC. The attendees raised concerns with HMRC that some QROPS were being marketed to UK residents for them to transfer into even where the individual had no intention of leaving the UK.
Thankfully HMRC dispelled this age old myth that clients had to have an intention of leaving the UK before being allowed to transfer to a QROPS – even though this is for some still a very commonly held view. “HMRC confirmed that, in order to comply with European Fundamental Freedoms, this was a feature built into the design when the QROPS regime was put into place.”
The fact that UK providers felt the need to bring this to the attention of HMRC in the first place is interesting in itself as it seems to highlight that they are obviously aware that QROPS are becoming more well known, more main stream and therefore are perhaps concerned about the competition. However, was this not the intention of the founding principles of EU to encourage cross border competition for the ultimate benefit of the consumer?
The QROPS regime was designed specifically by HMRC as their way to comply with EU law. Gibraltar (unlike, Isle of Man, Jersey, Guernsey) benefits from being within the EU and is now very well positioned as being a jurisdiction of choice given its low 2.5% income tax regime for both QROPS and QNUPS.
Perhaps one day we will also see press comments from HMRC that confirms that QNUPS should also fall under the same EU freedom principles as QROPS…”
For more information, please contact:
Matt Godwin London & Colonial 020 3479 5505
Fiona Bond Holt PR 020 8334 8354
Notes to Editors
About London & Colonial
London & Colonial specialises in self-invested products for both UK residents and persons resident overseas.
The London & Colonial Group includes
(1) London & Colonial Holdings Limited – UK parent company
(2) London & Colonial Services Limited which is regulated by the UK Financial Services Authority and operates SIPPs and SSASs
(3) London & Colonial Assurance PLC which is regulated by the Gibraltar Financial Services Commission (matching UK standards) and which offers Open Annuities, QROP Annuities and Open Offshore Bonds
(4) L&C (Administration Services 2) Limited and London & Colonial (Trustee Services) Limited which are both based in Gibraltar and offer the EU SIPP.