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Offshore Matters - Tax and Pension notes from the UK Government

Canned and processed fruit exports set to grow in South Africa

Offshore Matters - Tax and Pension notes from the UK Government

Budget 2010 -
UK Property Tax Changes

- Budget 2010 announced that first time buyers won’t pay Stamp Duty on residential properties under 250,000. This Stamp Duty ‘holiday’ started on 25th March 2010 for two years.

- The Chancellor also announced a new 5% Stamp Duty rate for properties over ฃ1 million from April 2011.

- The Inheritance Tax threshold (the level above which you’ll need to pay tax) has been frozen at 325,000 until 2014.

- A new 50% tax rate on incomes above 150,000 from April 2010.

Changes to the UK State Pension in 2010

The UK Government State Pension changed in April 2010 and more people now qualify for a full basic State Pension. To get a full basic State Pension, you only need 30 qualifying years of National Insurance contributions (in the past, men normally needed 44 years and women 39 years) and once you have built up a single qualifying year of National Insurance you qualify for at least some basic State Pension.

Changes to the State Pension age

State Pension age is the earliest age at which you can claim a State Pension and that age will increase between 2010 and 2046. The State Pension age is 65 for men born before 6 April 1959. For women born on or before 5 April 1950, State Pension age is 60. From 6 April 2020 the State Pension age will be 65 for both men and women. The State Pension age for women born on or after 6 April 1950 is increasing to age 65 between 2010 and 2020.

State Pension for Britons living abroad

If you are living abroad when you retire, you’ll still be able to claim your State Pension. If you work and settle in another country before reaching State Pension age, you’ll also be able to get your State Pension when you retire and claim it. Even though you can claim your State Pension if you live outside the UK, you will only receive the yearly index-linked increases if you live in the European Economic Area (EEA) or Switzerland or in a country with which the UK has a social security agreement that includes state pensions. If you live outside those areas (including in Thailand) you won’t be entitled to the yearly index-linked increases. However, if you return to live in the UK later, your State Pension will be increased to current levels.

If you are already living abroad then your State Pension can either be paid directly into a bank in the country in which you live, or a bank or building society in the UK. From October 2009 Thailand has been included in the list of countries where payment can be made directly and in local currency, with no charges applied for the service.

QROPS Updates: Overseas UK Pension Transfers in 2010

- The retirement age (the date at which drawdown from a QROPS pension can commence) is set to change from age 50 to age 55 in April 2010.

- It is generally accepted now amongst pension trustees that administer QROPS for expatriates, that using accumulated pension money to acquire residential property is no longer acceptable under HMRC guidelines.

- It is often touted that one off lump sums in excess of the 25% allowance and indeed the whole amount can be taken out. This is NOT the case and great care should be taken to avoid depletion of the Pension.

- Lump sums exceeding 25% are seen by HMRC to be ‘unauthorised payments / chargeable events’ and as such could face punitive tax charges of 55% minimum.

It should be quite clear to all in the industry now that moves made by Her Majesty’s Revenue and Customs Office last year show that it is closely monitoring QROPS claims by promoters, trustees, providers and advisers. Those in breach of QROPS regulations can potentially place their clients in jeopardy of very significant and unnecessary tax liabilities. In can take 35 years or more of hard work to build a pension pot but it takes no time at all to lose it by following incorrect advice.

The above not withstanding, however, QROPS schemes are probably the best financial planning opportunity expatriates have had in a very long time. Not only do they maximise potential benefits but they also increase flexibility when compared to a UK Scheme. There is no forced annuity purchase at age 75 and QROPS benefits can be left to nominated beneficiaries with no UK inheritance tax liability whatsoever.

Even if an individual’s pension is held in a Defined Benefits Scheme, as long as the member receives professional advice and is in a position to be able to weigh up the pros and cons of the proposed transfer, a QROPS may still be worthy of consideration.

Also worth noting is that individuals of any nationality who have previously worked in the UK and accumulated pension rights can benefit from this change in legislation.

This article was contributed by the partners of QROPS Pension Centre and IFA International Group. For more information see www.qropspensioncentre.com or email [email protected] centre.com


Canned and processed fruit exports set to grow in South Africa

Thailand’s exports of canned and processed fruits to South Africa are set to increase this year due to the changing behavior of consumers, negotiations for positioning Thai fruits, and the hosting of the 2010 FIFA World Cup competition by the country, according to Kasikorn Research Center.

The leading think tank projected the overall exports of canned and processed fruits from Thailand to the South African market this year would grow at least 55 percent.

Fruits with growth potential and export competitiveness in the market are tropical ones including canned pineapple, pineapple juice, canned longan, and canned rambutan.

China is considered Thailand’s primary competitor for the canned and processed fruit exports to South Africa, but since China still experiences problems with poor product quality, it is a good opportunity for Thailand to expand fruit exports to the country.

Although Thai fruits could not compete with those of China in terms of prices, they have an advantage for the product quality.

KRC suggested Thai producers and exporters give an importance to upgrading the product quality to meet the international standard if they want to boost competitiveness of their products in the world market. (TNA)