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IoM 50C Pension Scheme Falls Foul Of New QROPS Rules

Monday, April 16, 2012

The Isle of Man government has responded to the recent update to UK rules regarding Qualifying Recognised Overseas Pension Scheme (QROPS), which now excludes transfers to structures under Section 50C of the Income Tax Act 1970, known as 50C pensions.

The UK's QROPS regime provides tax-free treatment on the transfer of a UK pension scheme to qualifying schemes overseas, to simplify the tax affairs of UK residents wishing to permanently reside elsewhere. However, HMRC announced last December that it would revise the regime's rules in particular to counter tax avoidance, where pensions could be transferred to an overseas territory and a 100% lump sum paid out free of tax.

It was anticipated that the change would require schemes to offer equal treatment to both residents and non-residents in order to qualify as a QROPS. However, HMRC has now indicated that only QROPS offered to 'residents only' will be recognised as qualifying schemes, requiring the Scheme to be offered within the territory in which the expatriate is newly resident.

Following the change in rules on March 12, 2012, the UK tax authority, HM Revenue and Customs on April 12, 2012, published an updated list dictating which schemes meet the new criteria.

Of the three types of Isle of Man pension scheme that were compliant under the UK's previous QROPS regime, the Isle of Man government has confirmed that just 50C pension schemes no longer meet UK QROPS rules, and have been removed from the UK tax authority's list. Other schemes, established under the Income Tax (Retirement Benefits Schemes) Act 1978, and Part I of the Income Tax Act 1989, have however been approved.

HMRC has also clarified that: “If a pension scheme that is a QROPS on April 5, 2012, no longer meets the conditions to be a QROPS on April 6, 2012, members of that pension scheme who have already transferred their pension savings will be able to remain as members and receive a pension paid from the sums transferred without incurring additional tax charges.”

In a stoic response from the Isle of Man, Treasury Minister, Eddie Teare stated:

“The UK has made clear that it wishes a QROPS to be broadly similar to a UK registered pension scheme. Although I am disappointed that our 50C schemes can no longer be QROPS, the Isle of Man retains a powerful international pension management offering through having both occupational and personal pension schemes which can be approved as QROPS. We can move on from this point to further consolidate our position as a key pension management jurisdiction and continue both to grow and diversify our economy.”

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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