Do you have a UK registered pension and are you a tax resident in Norway?

If so, and your pension remains in the UK, you should be aware of your possible UK tax obligations. Furthermore, benefits could be available should you transfer these pension funds out of the UK to other secure jurisdictions under HMRC’s favourable Qualifying Recognised Overseas Pension Scheme (QROPS) regime.

Tax Options

Leave the Pension in the UK

Leave the Pension in the UK

If the pension remains in the UK, UK tax may be due under the DTA on the UK payments (at up to 45%) with tax also payable (at up to 39%) in Norway for residents, and potential Norwegian social security contributions. A UK lump-sum shall only be taxed in the UK (i.e. no tax up to 25%). A foreign tax credit would be available to alleviate any double taxation so tax exposure of up to 45%. Furthermore, the fund remains exposed to the UK death benefit charges.

Gibraltar QROPS

Transfer to a Gibraltar QROPS

Transferring to a Gibraltar QROPS for non-UK residents can alleviate UK tax (at up to 45%) with 2.5% tax in Gibraltar being due on payments and tax in Norway for residents at up to 39% and potential Norwegian social security contributions. A foreign tax credit may be available to alleviate any double taxation so tax exposure of up to 39%. Furthermore, the QROPS can protect from the UK death benefit charges if non-UK resident (5 years +) and there is no Gibraltar IHT.

Malta QROPS

Transfer to a Malta QROPS

Transferring to a Maltese QROPS for non-UK residents can alleviate UK tax (at up to 45%) with 15% tax in Malta due on payments under the DTA and tax payable in Norway for residents (at up to 39%) and potential Norwegian social security contributions. A foreign tax credit may be available to alleviate any double taxation so tax exposure of up to 39%. Furthermore, the QROPS can protect from the UK death benefit charges if non-UK resident (5 years +) and there is no Maltese IHT.

If you leave your pension in the UK

If you leave your pension in the UK

From 6 April 2006 a single set of rules came into effect. Under this system, the tax treatment for all types of approved schemes, including occupational schemes, small self-administered schemes, personal pensions, self-invested pension plans and retirement annuity contracts have been amalgamated into the rules for Registered Pension Schemes. These can be either Defined Benefit or Defined Contribution (DC) Schemes.

DTA between the UK and Argentina

DTA between the UK and Norway

There is a new DTA between the UK and Norway, which states that pensions arising in the UK and paid to a resident of Norway may be taxed in the UK. It may also be taxed in Norway. In addition, a lump-sum payment from a UK pension scheme to a resident of Norway shall only be taxable in the UK.

There is separate provision for Government Service Pensions.

Gibraltar QROPS

Gibraltar QROPS

Gibraltar has no DTA with Norway, therefore the QROPS pension payments to you would be taxable in Gibraltar, currently at a rate of 2.5%.

No UK income tax if non-UK resident (for 5 tax years + or total withdrawals are below £100,000).

No Gibraltar Inheritance Tax.

Protection from UK IHT.

Protection from UK death benefit charges, if non-UK resident (and non-UK resident for last 5 years + before payment).

Malta QROPS

Malta QROPS

Malta has a DTA with Norway, this provides that pensions and annuities arising in Malta and paid to a resident of Norway, may be taxed in Malta, but the tax charged shall not exceed 15%. Therefore the QROPS payments may be taxable in Malta, at 15%. They may also be taxable in Norway.

No UK income tax if non-UK resident (for 5 tax years + or total withdrawals are below £100,000).

No Maltese Inheritance Tax.

Protection from UK IHT.

Protection from UK death benefit charges, if non-UK resident (and non-UK resident for last 5 years + before payment).

Pension benefits

Pension Death Benefits Payment – UK Tax

From 6 April 2015, the UK tax treatment of benefits from DC schemes on death depends, amongst other things, on the age of the member at the time of death (i.e. pre or post 75). From this date, generally, there should be a lower UK tax cost on passing pension value to heirs on death. However, that said there is still a possible current tax rate of up to 45%.

For those that are non-UK resident and have a QROPS the UK tax cost on succession can be less.

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This general information has been provided on the basis of our understanding of the current legislation in the UK, Gibraltar & Malta as of April 2015. Should any of the information provided be inaccurate, incomplete or misleading, we take no responsibility for any reliance placed on it. We recommend that individuals always seek specialist multi-jurisdictional (where relevant) tax advice so that their individual circumstances can be fully considered.