The Treasury is closing a loophole to prevent tax avoidance on qualifying recognised overseas pension schemes (Qrops).
The measure, affecting UK residents transferring pensions overseas, will be introduced in the Finance Bill. Previously, tax could have been avoided by moving pension savings to certain overseas countries.
David Gauke, exchequer secretary to the Treasury, said: “The government has set out a clear strategy on preventing tax avoidance. We will not hesitate to take action to stop those who seek to take unfair advantage of unintended tax loopholes.”
HM Revenue and Customs (HMRC) said that the new clause will allow UK income tax to be levied on payments from a Qrop when:
- The payment arises in the other territory.
- It is received by an individual resident of the UK.
- The pension savings in respect of which the pension or other similar remuneration is paid have been transferred to a pension scheme in the other territory.
- The main purpose, or one of the main purposes, of any person concerned with the transfer of pension savings in respect of which the payment is made was to take advantage of the double taxation arrangement in respect of that payment by means of that transfer.
For more articles on overseas pension schemes