HMRC Review Drawdown Transfers Rules - The Effect On QROPS
Posted by Paul Davies on 06/07/11 14:48
For those pension members that reached age 50 (or more) by 5th April 2010, benefits could come into payment and remain in payment (providing payments started before 6th April 2010).
However, if you were drawing benefits pre 6th April 2010, in the form of USP (unsecured pension) and between the ages of over 50 but less than 55, transferring to another pension provider post 6th April 2010 – whether the scheme is another UK scheme or a QROPS – meant that an unauthorized payment charge would occur on the transfer amount.
HMRC subsequently relaxed the interpretation of the rules and announced that a transfer in USP, between the ages of 50 and 55, from one UK provider to another UK provider (or a QROPS) would not receive an unauthorized payment charge but any continuing drawdown or annuity income paid to the member, from the new provider, would be subject to an unauthorized payment charge.
In a note, published last Friday 2nd July 2010, HMRC has stated that it intends to bring forward regulations to remove the unauthorized payment charge admitting that it was an unintentional consequence of the change in retirement age rules.
Furthermore, HMRC plans to backdate the regulations to cover transfers made on or after 6th April 2010.
This is good news for UK expat pension members, who are in the affected age bracket, who are in USP and looking to transfer to QROPS.