HMRC Attacks UK Pension Transfers to NZ Kiwisaver QROPS and Aussie Super QROPS
HMRC may close most NZ Kwiksaver QROPS and Australian Super QROPS and trigger a 55% unauthorised tax charge for many Brits who have retired abroad in New Zealand and Australia. HMRC can expect a big backlash on this one.
We found out yesterday, that HMRC are urging Australian superannuation funds which are QROPS to amend their regulations to suit HMRC. Now, New Zealand Kiwisaver pension schemes which were thought to be suitable under past QROPS regulation are also in the firing line.
Australian law allows can access before the age of 55 in certain circumstances. NZ pension schemes are in the same barrel. Both NZ Kwiksaver superannuation schemes and Australian super pension schemes allow early access if the member falls on financial hardship. HMRC will not allow it.
This means UK pension transfers to NZ QROPS which are Kiwisaver schemes and UK pension transfers to Aussie super QROPS are both under threat.
This means anyone who has transferred to such pension schemes after April 6, 2015 may face a 55% unauthorized tax charge on their pension.
There appears to have been no consultation with Australian or New Zealand pension regulations before the new restriction was introduced barring access to a pension before the age of 55.
For those stuck in these types of schemes, British pensioners will have to transfer out to QROPS friendly schemes in NZ or Australia, if they are allowed, or face a tax consequence.
This is a major problem. In Australia, there may be a smaller pension scheme who may change their rules and allow the transfer. In New Zealand, this may not be the case. There simply aren’t as many different types of schemes. So, expats may be hit by the tax charge.
Seeing as HMRC have already lost a court case, this may lead to future legal action and headaches for honest British pensioners who just wanted their pension to follow them to their new country of abode.
It is still unknown whether transfers prior to 2015 will be “grandfathered” into the old QROPS rules or whether HMRC have intentionally targeted NZ QROPS. HMRC for sure meant to target Australian QROPS as they sent them a letter on April the 17th, 11 days after the new budget.
Kiwisaver Schemes in NZ Closed to British Expats
As it stands, under current rules, New Zealand Kiwisaver schemes have had to close their doors to new potential British pension pot holders resident in New Zealand until there is some clarity from HMRC.
British expats in New Zealand who had planned to transfer to a Kiwisaver pension scheme in New Zealand to buy a home here have had their plans destroyed.
There will be a backlash from angry British residents living abroad and from schemes who have spent thousands on marketing.
The Death of NZ Kiwisaver QROPS and Aussie Super QROPS
This is the death knell for NZ Kiwisaver QROPS and Aussie Super QROPS. For those wishing to move to New Zealand, you will need to transfer to an HMRC approved NZ QROPS such as the Brooklands Superannuation scheme which was written with QROPS in mind.
For those retiring in Australia, you will need to find an Aussie SMSF (Small Managed Super Fund) or some other arrangement which ticks HMRC’s boxes of not being able to take a pension under any circumstances prior to 55.
It may even be beneficial to transfer to a Malta QROPS which has a Double Taxation Agreement with both Australia and New Zealand. There are tax issues though. But, the benefit of a Malta QROPS is it is much more flexible which would also allow you to retire elsewhere whereas you cannot transfer our of Aussie Super or NZ Kwiksaver schemes.
Malta has just found itself a major new source of business! Please email us to find out which QROPS would suit you if you are considering moving abroad.