QROPS have been used by many Financial Advisers as a way to mitigate Lifetime Allowance charges.
This is because a transfer to QROPS is a Benefit Crystallisation Event and once the funds have been tested on transfer, there are no further tests and therefore no further charges within QROPS.
As of Thursday, 6th April 2023, there will be no Lifetime Allowance Charges. The Lifetime Allowance limit is not scheduled to be abolished in legislation until 6th April 2024.
The abolishment of the Lifetime Allowance should ultimately negate the need for Lifetime Allowance planning, and QROPS will only be beneficial for clients that intend to retire overseas.
However, Labour have pledged to reverse what they say is a ‘tax cut for the rich’ if they win the next UK general election. This has raised the question for many advisers:
“Should my client crystallise their pension now (from 6 April 2023) whilst there is certainty that Lifetime Allowance Charges will not apply?”
One way that this can be achieved is by transfer to QROPS (even for UK residents). QROPS Specialists are supporting advisers with this planning for clients with significant UK pension benefits and who do not wish to take the risk of a future Labour government reversing the Lifetime Allowance abolishment.
We are doing so via a QROPS Suitability Report, which provides advisers with a comprehensive recommendation of a suitable QROPS jurisdiction, provider and product, along with detailed Due Diligence, and Tax Advice from a chartered UK adviser.