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HRMC tax on QROPS transfers

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Hi all,


My wife paid into several pensions in the UK, which we have recently transferred to an Aussie QROPS. The age at which one can normally draw on an Australian super fund without any tax implications is 60, but my wife's date of birth (11/57) means that she reaches what the ATO refer to as her "age of preservation" this year, when she will be 55 (it is later for people born from 1960 onwards). Given her DoB, she is able to access her super from age 55 and will not have to pay any tax in Australia as long as the total withdrawn doesn't exceed 160K AUD before the age of 60. However, I know that super fund providers are legally bound to report withdrawals to HMRC for a period of 10 years following a QROPS transfer, and I'm aware of the possibility of HMRC charging tax on withdrawals from Aussie super funds if the money came from the UK.


Moving forward a couple of months... my wife will reach her age of preservation and she will have tax-free access to her super as far as the ATO is concerned. If she were to start drawing on her super - which is comprised purely of funds that came over from the UK in 2012 - might she be liable for tax to HMRC?


(BTW: I've already asked this question to HMRC. They said that can't comment on "an individual's circumstances"!)




Edited by Tarby777

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Hi Tarby


There are a number of factors here that fall into play.


Firstly, how long since you're Wife was a UK tax payer;


Secondly, I assume that when you are talking about $160,000 tax free that this is the low rate cap amount you are referring too?


In actual fact UK Pension transfers are treated as tax free components within Super (other than the assessable growth amount declared if applicable) therefore any monies drawn from a tax free component are tax free at any time even if over $175,000 (current 12/13 low rate cap threshold amount) http://www.ato.gov.au/super/content.aspx?menuid=0&doc=/content/60489.htm&page=7&H7



Thirdly, Is your Wife retired from the workforce?


Reaching Preservation age does not in itself mean that someone can access their Super Fund, reaching preservation age is not a full condition of release and means that up to only 10% maximum per annum can be accessed and this would be from a non-commutable Account Based Pension and not Super.


To meet a full condition of release your Wife would have to be over preservation age and retired from the workforce.



Finally, in relation to accessing these funds, there most definitely is the potential of having to pay HMRC tax in the event of drawing funds that are classed as unauthorised withdrawals and this charge can be between 40% - 55%.


There is a period of time whereby any withdrawals that are made are to be reported by the QROPS Super Fund to HMRC. If these withdrawals are not in line with HMRC rulings then a breach occurs and a charge is likely to made.







Edited by Andrew from Vista Financial

Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177


Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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