Manxhaven Posted January 11, 2015 Share Posted January 11, 2015 Hi, I was born in December 1943. My wife and I took up our permanent residence visas in Oz in October 2011. I had a small 'opted out' UK pension fund which I have never touched and had it moved to a QROPS fund. The funds eventually arrived in September 2012 despite the forms being submitted in the March 2012. The actual amount received was some $28,667 less some $562 fees. I am now 71 years old (wife 70) and not liable to pay tax on our income. I find that some 15% tax is paid by the/my fund on its income. It was suggested that I am entitled to cash in on the fund and invest the money in my own name thus saving the 15% superfund tax. Obviously I do not wish to be met with any penalty tax bill from the UK authorities if I surrender the same. Can I cash in the funds without any tax penalty or do I have to wait for the ten years from the transfer thus taking me to 79 years of age before I can utilise the monies. Any advice/comments will be welcomed. Many thanks in anticipation. Kind regards Colin ps The firm which transferred the monies to the QROPS fund on my behalf has now ceased trading. Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted January 13, 2015 Share Posted January 13, 2015 Hi Colin So there are two systems at play here being Australia and UK. In relation to the Australian system to be able to access superannuation a person must meet a condition of release, being over age 65 gives a person a full condition of release ie the ability to access up to 100% if they wish. Generally when people retire in Oz they roll their Super to an Account Based Pension (ABP), which is ultimately an income stream. An ABP has a 0% earnings tax environment and withdrawals are tax free for people over age 60. The condition of an Account Based Pension is that it must pay out a minimum annual amount based upon the balance and a person’s age: https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/income-from-super/account-based-pensions. Regards HMRC there are two time periods that apply to QROPS, the first being the reporting period, this is 10 years from when the money arrives and the receiving scheme must report to HMRC all movements of the money ie withdrawals/transfers etc. The second is the breach period, this is a period of 5 full tax years from ceasing to be a UK tax resident. Essentially a breach occurs if the money is accessed / used to do something that would not have otherwise been allowed had the pension been in the UK. Being age 71 means that you have already reached the retirement age for when a UK pension can be accessed. However it must be accessed in the same manner as it could be accessed had it remained without breaching, although there a big changes to the UK system coming into effect from April 2015. The following link gives some detail around access/options for personal pensions at retirement now and post April 6 2015: https://www.standardlife.co.uk/c1/guides-and-calculators/pensions-are-changing.page Hope this helps, Regards Andy Link to comment Share on other sites More sharing options...
Manxhaven Posted January 13, 2015 Author Share Posted January 13, 2015 Hi Andy, thank you for your guidance. I get the impression that it will be better for me to leave the fund alone till after 6th April next, ie the new UK tax year when the amendments come into force. In the meanwhile I have asked the super fund holding company about them having to notify HMRC. Regards Colin Link to comment Share on other sites More sharing options...
Manxhaven Posted January 23, 2016 Author Share Posted January 23, 2016 Hi Andy,thank you for your guidance. I get the impression that it will be better for me to leave the fund alone till after 6th April next, ie the new UK tax year when the amendments come into force. In the meanwhile I have asked the super fund holding company about them having to notify HMRC. Regards Colin Hi Andy, I have left the funds untouched to date. I asked the fund holding company about them having to inform HMRC but they seemed uncertain and I could not get a definate answer. In view of the fact that a year has passed since I asked the original question has the situation become any clearer as to whether or not I can withdraw the funds and place them on a bank deposit in my own name without having to pay any tax to HMRC. I am now 72 years of age and have never had any benefit from these funds. Regards Colin Link to comment Share on other sites More sharing options...
Ken Posted January 26, 2016 Share Posted January 26, 2016 Hi Andy,I have left the funds untouched to date. I asked the fund holding company about them having to inform HMRC but they seemed uncertain and I could not get a definate answer. In view of the fact that a year has passed since I asked the original question has the situation become any clearer as to whether or not I can withdraw the funds and place them on a bank deposit in my own name without having to pay any tax to HMRC. I am now 72 years of age and have never had any benefit from these funds. Regards Colin The reporting responsibility lies with the fund not with yourself. The only circumstance you could be taxed is if you accessed the funds before you're entitled. As you are over retirement age I can't see how there can be any issue with you accessing the funds - but if you want to be ultra cautious and certain that you are only accessing it in line with UK tax rules you could restrict yourself to taking just 25% of the fund (which you can take for any purpose under UK tax rules) until a full 5 tax years have passed since you ceased to be UK resident (6th April 2017 based on the dates you've given). Link to comment Share on other sites More sharing options...
Manxhaven Posted February 10, 2016 Author Share Posted February 10, 2016 Hi Andy, many thanks for your informative reply. As I am in no desperate need for the monies I think I will leave things as they are until 6th April 2017 and then withdraw the amount in full. My apologies for the delay but I have just returned from a 2 week cruise and my emails were not a priority as much as relaxing. Kind Regards Colin Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted February 10, 2016 Share Posted February 10, 2016 Hi Colin I hope you enjoyed your cruise. In actual fact the reply you received was from Ken not myself. I agree with Ken on the after 6 April 2017 it seems there should be no tax implications on withdrawal (if this is 5 full years on non UK tax residence for you) and that before then there is a tax free 25% lump sum allowable. However with regards to tax on lump sums within 5 full tax years over and above 25%.........that is the burning question, this has been a topic of discussion for me lately and this has been passed on to me by an Australian and UK Barrister specialising in this area: "On the taxation of the money if it is withdrawn. A withdrawal after the age of 60 will be free of Australian tax. The question arises whether any withdrawal of UK sourced money is chargeable to UK tax. Certainly, where the member has been continuously non-UK resident for five clear UK tax years then withdrawals are no longer covered by the UK rules. Until that time, there is a difference between pension withdrawals and lump sum withdrawals. Pension withdrawals would not be subject to UK tax anyway under Article 17 of the Double Taxation Agreement. Lump sum withdrawals made since 6 April 2015 however, may be caught by the new UK 25%/75% tax free/taxable regime. [TABLE] [TR] [TD][/TD] [TD]This seems to be the result of adding sections 636A(1A) and (1B) of the Income Tax (Earnings and Pensions) Act 2003 (which contains the 25% tax free - 75% taxable provisions) to the "member payment provisions" in Schedule 34 of the Finance Act 2004."[/TD] [/TR] [/TABLE] Kind regards Andy Link to comment Share on other sites More sharing options...
Manxhaven Posted February 10, 2016 Author Share Posted February 10, 2016 My sincere apologies Ken and my belated thanks. Andy I must have had second sight when I wrote my earlier email thanking you. Many thanks to the two of you. Kind regards Colin Link to comment Share on other sites More sharing options...
Manxhaven Posted March 16, 2017 Author Share Posted March 16, 2017 Hi Andy & Ken, further to the above I am now intending to submit the necessary forms for the complete withdrawal of the fund after 5th April 2017. I will be obliged if you will confirm that, in your current opinion, there has been no change to your previous views re the withdrawal and that there should not be any tax penalties for doing so. Many thanks for your help. Kind regards, Colin Link to comment Share on other sites More sharing options...
Ken Posted March 16, 2017 Share Posted March 16, 2017 Hi Andy & Ken,further to the above I am now intending to submit the necessary forms for the complete withdrawal of the fund after 5th April 2017. I will be obliged if you will confirm that, in your current opinion, there has been no change to your previous views re the withdrawal and that there should not be any tax penalties for doing so. Many thanks for your help. Kind regards, Colin Hi Colin, HMRC have brought out new rules with effect from 6th April 2017 : https://www.gov.uk/government/public...e-on-transfers The gist of it is to confirm that payments out of funds transferred to a QROPS on or after 6 April 2017 are subject to UK tax rules for five tax years after the date of transfer (and that this is regardless of where the individual is resident). The risk to you of making a withdrawal in April 2017 is that despite you requesting the transfer to the QROPS in March 2012, HMRC may view the transfer as having taken place in September 2012 so the 5 year period won't be up until September 2017 and so if the withdrawal breaches UK pension withdrawal rules you should be taxed on it. Interestingly enforcement action seems to pivot around whether or not the QROPS fund is still a registered QROPS fund. If they've decided not to remain one it's likely HMRC won't even be told of the withdrawal. Personally I'd wait until September 2017 to be sure (while looking at what I could withdrawal under UK rules in the meantime). Link to comment Share on other sites More sharing options...
Manxhaven Posted September 3, 2017 Author Share Posted September 3, 2017 Hi Ken, further to the above advice I propose to submit the withdrawal forms on 19th September. This will make 5 years and 1 day from the date the funds were received into the QROPS. Can you please confirm that there has been no change to your previous opinion and that as far as you are aware the complete withdrawal will be clear of UK taxation. Many thanks for your help & advice in this matter. Kind regards Colin Link to comment Share on other sites More sharing options...
Ken Posted September 3, 2017 Share Posted September 3, 2017 Hi Manxhaven, I have to qualify this my saying that I have no personal experience of either myself or a client making such a withdrawal, but I am confident that because you have been outside of the UK for 5 full tax years and your QROPS was transferred over 5 full tax years ago that whatever you do with your Super is outside the scope of UK taxation. Ken Link to comment Share on other sites More sharing options...
Manxhaven Posted September 5, 2017 Author Share Posted September 5, 2017 Hi Ken, thank you for your reply. I will close the fund, just under $30k, on the proposed date and will let you know the outcome. Regards Colin Link to comment Share on other sites More sharing options...
Manxhaven Posted September 5, 2017 Author Share Posted September 5, 2017 Hi Ken, thank you for your reply. I will close the fund, just under $30k, on the proposed date and will let you know the outcome. Regards Colin Link to comment Share on other sites More sharing options...
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