If you are thinking of moving or retiring to Canada it would be worthwhile to consider transferring your UK pension into a Qualifying Recognised Overseas Pension Scheme (QROPS) either in Canada or a third country jurisdiction.
The advantages of a QROPS include;
- Low to Zero Inheritance Tax
- Low to Zero Capital Gains Tax
- No currency fluctuation on income
- Greater investment choice
- Greater investment protection
If you decide to move to Canada and if you hold an UK occupational pension (company pension) you are legally allowed to transfer your funds into a Canadian Registered Retirement Savings Plan (RRSP). You will only be able to transfer your pension into an RRSP that has been authorised as a QROPS by the HMRC.
The RRSP has a number of advantages to you including;
- No inheritance tax paid on death (55% in the UK)
- Able to take a lump sum of 30% rather than only 25% in the UK
- Not be effected by currency instability as you will hold your funds in Canadian Dollars
However if you hold a private pension plan you will be unable to transfer your funds into a RRSP. What you can do however is transfer either your occupational or private pension into a third country jurisdiction such as the Isle of Man or Malta.
This has the advantage of;
- No inheritance tax
- No income tax
- No dividend tax
However, because they have a double taxation agreement with Canada you are still likely to be liable for income tax if you are a Canadian tax resident. Which is defined as spending more than 183 days in a year in Canada.
Make sure if you are transferring into a QROPS that you intend to be out of the UK for at least 10 years and you adhere to all the rules laid down by the HMRC.
QROPS in Canada
For more information about QROPS in Canada speak to one of our qualified QROPS specialists here or fill in the form below.