As you're not a resident of a country within the European Economic Area (EEA), and there are no generally available QROPS in Argentina, it is highly unlikely a pension transfer to a qualifying recognised overseas pension scheme (QROPS) will be in your best interests, because of the 25% overseas transfer charge that would apply.
However, there are a few cases where the OTC will not apply even outside the EEA, as explored below, and before you take any decision that will affect your financial position, seek qualified personalised advice.
Depending on the size of your pension, how close you are to your lifetime allowance, and the way your British pension scheme is currently structured, you may benefit from transferring to a self-invested personal pension (SIPP) in the UK.
As an expat in Argentina, you will find an overview of your options on this page...
...and, don't hesitate to contact us if you have any questions or require advice: we'll do all we can to help.
Our team of chartered financial planners includes Financial Conduct Authority authorised pension transfer specialists.
Since March 2017 any transfer of a pension out of the UK is subject to an overseas transfer charge (or OTC) of 25% on the value of the pension transfer, unless it falls in one of the exceptions.
The overseas transfer charge was introduced to deter people from transferring pensions out of the UK purely for UK tax avoidance reasons.
The OTC is designed to ensure generally that if a QROPS goes ahead, any potential lost tax revenue is recouped by the government when the transfer is made.
If you transferred a UK pension to a QROPS before 9 March 2017, you are not affected by the OTC. But if you have any concerns, contact us and we will advise you.
The main point to be aware of is that, when making a transfer one must ensure that the QROPS member (i.e. you), is tax-resident in the same jurisdiction as that in which the QROPS receiving the transfer is established (the EEA being treated as one jurisdiction for this purpose).
In the vast majority of cases, unless you're a resident of an EEA country and the QROPS you're transferring your pension to is within another EEA country, the OTC charge will apply, and you will lose 25% of your pension. Therefore, you should examine your alternative options.
Please contact us for full, personalised advice from an FCA authorised pension transfer specialist.
As you're likely to be affected by the overseas transfer charge, it's highly unlikely to be in your best interests to transfer your pension out of the UK into a QROPS.
You would face a loss of 25% of your pension's value if you were subject to this charge.
There are potential exceptions to this rule of thumb, as explained in the following section.
For the majority of expatriates living inArgentina and contemplating a pension transfer to a QROPS the OTC will apply.
However, if any of the following criteria apply in your case, the 25% overseas transfer charge may not be applicable if you make a pension transfer overseas:
If in doubt, tread with caution and assume the OTC will apply - and seek personalised advice.
Under the DTA between the UK and Argentina, generally pensions and other similar remuneration paid in consideration of past employment and annuities paid to a resident of Argentina shall only be taxable in Argentina.
If the pension is not paid in consideration of past employment then it may be taxed under the Other Income Article of the DTA. This also states that such income will be taxable only in the country of residence, i.e. Argentina.
Claims by residents of agreement countries to exemption from UK tax are made to HMRC. It will authorise non-deduction of UK tax if a claim is accepted.
But the good news is, your pension income may not be taxed in Angola, because foreign pension income and any pension lump-sums or annuities are outside the scope of Angolan tax.
Legislation in April 2015 affects UK taxation on defined contribution scheme benefits.
For instance, taxes on benefits are now influenced by whether the pension scheme member dies before or after reaching 75 years of age.
Passing pensions onto beneficiaries is now, in general, less costly. Marginal tax rates are still up to 45%.
Non-UK residents with a QROPS can, in some circumstances, pass on benefits at a lower tax rate when they die.
Residence is not defined in Angolan tax law, as individuals are taxed on Angolan-source income only, irrespective of their residency.
Taxable income includes business, employment, investments, and property. Angolan pension income is not included.
Tax rates vary up to 17%.
Therefore, foreign pension income and any pension lump-sums or annuities are outside the scope of Angolan tax.
Therefore, there should be no Angolan tax:
Net wealth and net worth taxes are not imposed in Angola.
Stamp duty only applies to gratuitous transfers of property located in Angola by a resident.
A SIPP is a self-invested personal pension, and in many cases SIPPs can offer a great deal of increased flexibility. This increase in flexible benefits can be of use to those living abroad, or planning to retire abroad.
As it is possible to consolidate multiple pensions into a single SIPP, this can be of benefit to those who want ease of ongoing investment management and reporting.
SIPPs can provide flexible draw down, may be more cost effective and can certainly offer increased investment options.
Whether you should transfer your defined benefit or defined contribution scheme to a SIPP or other vehicle is a decision that has to be made on an individual basis, and where the ceding scheme is a defined benefit scheme, the trustees can only permit the transfer if you have received advice from an adviser with the appropriate FCA authorisation.
The potential tax advantages of qualifying overseas pension schemes are heavily marketed and over sold.
And, even if a pension transfer was best advice in your case, which is very unlikely because of the OTC, it is even less likely to be the case that you can take advantage of the often-promoted tax benefits of a pension transfer.
Your pension and retirement options should form part of a detailed, goal orientated financial plan.
Do not be swayed into making any decision that will affect your wealth by the sometimes sensationalist speak common among expatriate facing financial salespeople.
They may talk about you needing to remove a pension from 'bankrupt Britain', or out of the UK where you cannot be sure how future legislation will affect you.
In reality, retaining your pension in a well-regulated nation, thereby avoiding a 25% overseas transfer charge, not to mention the fees and charges associated with a transfer, could be your best options.
The most important thing to do is to get qualified advice. The Financial Conduct Authority is clear about what you should expect from anyone you seek advice from regarding your pension and transfer options.
You have 3 main options:
1) Leave the Pension in the UK:
If the pension remains in the UK, UK tax on the payments (up to 45%) would be due.
No tax should be payable in Angola.
2) Transfer to a QROPS:
Because of the overseas transfer charge of 25%, it is almost certainly not in your best interests to transfer to a QROPS.
3) Transfer to a SIPP:
Depending on various considerations including but not limited to any defined benefits, overall costs, and underlying investment choice of your current pension/s you may benefit from a transfer to a SIPP.
The benefits you may gain could include greater flexibility, lower costs and the potential for improved growth.
You are best advised to seek personalised advice from a qualified and regulated pension transfer specialist.
We believe the above taxation information is accurate, however tax rates and rules can change, and we are NOT tax experts. Therefore, please do not rely exclusively on the information to determine your liability for tax.
Speak to a local tax expert for personalised advice, or consult an international taxation consultancy.
If you'd like our help with regard to your pension options or pension transfer choices, please get in touch and we will do all we can to help. Our team includes FCA authorised pension transfer specialists, from whom you can receive qualified advice.
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