HMRC Closes All UK Pension Transfers to Australian Supers

UK Pension Transfers to Australian QROPS Officially Closed for Business

HMRC were investigating roughly half of Australian Supers as not qualifying to be a QROPS, but now they have decided that all UK pension transfers to Australian Supers are closed for business, except for transfers to the Australian local government scheme. Not even Aussie SMSF’s qualify according to the list. The Inland Revenue has decided that Australian superannuation funds are no longer “recognized” and no longer suitable to accept Qualifying Recognised Overseas Pension Transfers as they break the rules concerning age related benefits.


Australian QROPS Pension Boomerangs Back

Any pension transfers after the sixth of April this year face many charges. They could face up to 55% tax charge for the pension member in total, plus between 15% and 40% for the ceding UK pension scheme! Anyone in the process of transferring a UK pension to an Australian Superannuation scheme should stop the transfer right now or be faced with these high tax charges.

Malta QROPS is Now the Destination for British Expats in Australia

You need to contact a QROPS specialist straight away. Ideally, you need to halt the pension transfer and instead re-write the paperwork and transfer your pension to a QROPS in Malta instead. Malta has a Double Taxation Agreement with Australia which means your pension would only be taxed in Australia, not in Malta or the UK. Your pension will be free from UK taxes and Maltese taxes. You would only pay tax in Australia at drawdown. By that time in retirement, there should be more Aussie pension schemes and SMSF’s which are QROPS compliant set up to accept pension transfers.

Malta QROPS is Now the Default Option for Brits Resident in Australia

For British expats in Australia, a pension transfer to Malta has now become the default option. You can then transfer to the Local Government Australian Pension Scheme in retirement when you get past 60 years old or keep it in Malta and pay Australian income tax on it.

Furthermore, if you are uncertain where your final retirement or old age destination will be, a Malta QROPS offers you more flexibility. An Australian pension locks you into Australia tax and pension rules. You cannot transfer out of an Australian super offshore at a later date, whereas under a QROPS, you can still transfer back to the UK if you wish although there are tax advantages of keeping a QROPS and returning to the UK.

Association of Superannuation Funds of Australia Reacts

ASFA (the Aussie Supers Authority) said Australian funds should now tell HMRC how many transfers they completed after the sixth of April, so that the Revenue and the Australian Treasury can start organising how the relief process could work.

As we mentioned in previous emails, it was unlikely that HMRC would allow the Australian to dictate rules to UK pension regulations and no exception was made for either the Kiwisaver schemes nor the Aussie Super schemes nor Aussie SMSF’s.

We’ve also noticed more problems in some HK and NZ QROPS which are still on the list. It will be interesting to see the QROPS list update.

According to the list on July 1st, only the Local Government Superannuation Scheme of Australia is the only Australian QROPS which makes the list. Not even one Australian SMSF makes the list.

If you are in the midst of transferring your UK pension to an Australian Superannuation scheme, please contact a QROPS specialist straight away to halt the transfer and re-evaluate whether your pension should be left in the UK or transferred to a QROPS in Malta