Pension transfers – UK tax implications

UK pension transfer regulations (April 6, 2006 & 2012) allow the UK tax-free transfer of funds from UK registered pension schemes to overseas qualifying schemes (known as QROPS).

The local NZ scheme is required to comply with UK QROPS regulations to avoid any unauthorised withdrawals and attract potential UK tax liabilities of up to 55%. Once pensions are transferred out of the UK withdrawals made before reaching normal minimum retirement age may incur UK tax charges.

Britannia is well versed in the new regulations (both 2006 & 2012).

The Britannia Superannuation Scheme 2012 is fully authorised by Her Majesty’s Revenue & Customs (HMRC) to receive transfers from UK schemes. This means that transfers to the Scheme attract no penalty or UK exit taxes.

Pension transfers - NZ tax implications

Legislation taxes pension transfers on a sliding scale commencing at zero for the first 4 years of residency and increasing yearly until the full transfer is taxed at your marginal tax rate at around year 30. Click here to download a PDF from the IRD detailing the percentage of your pension that will be subject to taxation at your marginal rate if you transfer your pension to New Zealand. All gains made on the invested transfer in the Scheme are taxed at source meaning that future pension payments, whether in the form of a lump sum or a regular income pension payment, are paid gross - as tax has already been paid.

Britannia Financial Services Limited (settlor and promoter of the Scheme)

Transferring pensions since 1998. Over 15,000 individual transfers completed.