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

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, the DTA would not be satisfied as the pension would not be subject to tax in Oman. Therefore, UK tax should be due on UK payments (at 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 (5 years +) can alleviate UK tax on payments (at up to 45%) with 2.5% tax due on payments in Gibraltar with no tax in Oman. Furthermore, the fund is protected from the UK death benefit charges if non-UK resident for 5 years + and there is no Gibraltar IHT.

Malta QROPS

Transfer to a Malta QROPS

Transferring to a Malta QROPS for non-UK residents (5 years +) can alleviate UK tax on payments (at up to 45%) with up to 35% tax due on payments in Malta with no tax in Oman. Furthermore, the fund is protected from the UK death benefit charges if non-UK resident for 5 years + and there is no Malta 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 Oman

There is a DTA between the UK and Oman. Under this pensions and other similar remuneration paid in consideration of past employment and any annuity paid to an individual who is a resident of Oman, and is subject to tax in respect thereof in Oman, shall be taxable only in Oman. It is important that the DTA definition of residency is satisfied for this purpose.

This is defined as “any person who, under the law of that State is liable to tax therein by reason of his domicile, residence or any other criterion of a similar nature.”

Therefore if resident in Oman (per the DTA definition) the pension needs to be subject to tax in Oman to alleviate UK tax withholding. Oman would not tax the income and therefore UK tax would remain due.

There are separate provisions for Government pensions.

Gibraltar QROPS

Gibraltar QROPS

Gibraltar has no DTA with Oman, 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 the last 5 years before payment).

Malta QROPS

Malta QROPS

Malta has no DTA with Oman, therefore the QROPS income payments to you would be taxable in Malta, at rates up to 35%.

No UK income tax if non-UK resident (for 5 tax years + or total withdrawals in non-resident period are below £100,000 from April 2015).

No Maltese Inheritance Tax.

Protection from UK IHT.

Protection from UK death benefit charges, if non-UK resident (and non-UK resident for the 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.