any legal way to get UK pension tax free?

[bolus]

Hi, does anyone know a way to get all of a UK pension tax free in one lump sum please? Even if it involves transferring the pension to a qualifying offshore scheme for five years, then moving to zero-tax country for a year? I'm 51 if that affects it.

Thanks, bola.

[bolus]

Oh yeah, I should say... been living in Aus for 4 years. 189 visa but haven't taken citizenship.

[Nemesis]

1 hour ago, bolus said:

Oh yeah, I should say... been living in Aus for 4 years. 189 visa but haven't taken citizenship.

Are you talking about a private/company pension or state pension?

[bolus]

54 minutes ago, Nemesis said:

Are you talking about a private/company pension or state pension?

..something else I should have posted Private SIPP

[Ken]

6 hours ago, bolus said:

Hi, does anyone know a way to get all of a UK pension tax free in one lump sum please? Even if it involves transferring the pension to a qualifying offshore scheme for five years, then moving to zero-tax country for a year? I'm 51 if that affects it.

Thanks, bola.

If at the time you receive the lump sum you are living in a zero-tax country and have ceased to be tax-resident in Australia, then yes the sum would be tax free. You might however want to take a closer look at how much this will cost compared to the amount of tax you will save. You can't cease to be Australian tax resident if you've kept your home in Australia. Business interests and other investments can also keep you tied to Australia and so would also need to be disposed of (even evidence of an intention to spend just one year away and then return could be used as grounds for you not having ceased to be tax resident) so you really do have to pull up sticks.

For anyone who wants to reduce their Australian tax bill at any cost I can offer a strategy that is 100% effective. I give you a bill. You pay it. You can then claim it as a tax deduction. Yeah, you've saved tax!

[Alan Collett]

On 12/10/2019 at 02:19, bolus said:

Hi, does anyone know a way to get all of a UK pension tax free in one lump sum please? Even if it involves transferring the pension to a qualifying offshore scheme for five years, then moving to zero-tax country for a year? I'm 51 if that affects it.

Thanks, bola.

This is potentially do-able by leveraging the Tax Treaty provisions - though you might have to reconcile yourself to your super fund in Australia paying tax at 15% on the applicable fund earnings (AFEs) component of the sum that is transferred to Australia from your UK pension fund.

To be discussed with an informed financial planner, such as Andy at Vista.

Best regards.

[Andrew from Vista Financial]

Thanks Alan.

Hi Bolus

SIPP rules allow monies to be accessed from age 55 and this would now also be the minimum age for all QROPS otherwise they would not be able to be a QROPS under the 'Pensions Age Test' introduced by HMRC in 2015.

I am not across the tax rules of pensions/super outside of the UK and Australia (also Gibraltar, Malta and to a certain extent New Zealand for Australian residents) so cannot comment on (pension) tax regimes of other countries.

However one major factor that's likely to work against what you are considering is the new tax charge that HMRC introduced in 2017 for QROPS transfers, being the 'Overseas Transfer Charge', this essentially means if a person transfers a UK pension into a QROPS and the QROPS destination is not the country that the person resides in, it will attract a 25% tax charge on the whole pot of money (some exceptions apply, for instance living in the EEA and the QROPS being in the EEA), see here: https://www.gov.uk/government/publications/qualifying-recognised-overseas-pension-schemes-charge-on-transfers/the-overseas-transfer-charge-guidance#eel-chapt2

Of course a lot of this will come down to where you want to retire but assuming it is Australia then a very real opportunity exists in transferring a SIPP to an Australian Super Fund which would then allow tax free withdrawals form age 60+, as Alan points out however there are some Australian tax implications to consider when transferring foreign super funds (UK Pension) to Australia but typically any tax can be paid concessionally at 15% (and it is generally only on the growth of the pot since arrival).

Regards

Andy