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
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
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
State Pension for Britons
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
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
- 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
- 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