HM Revenue & Customs has published new rules on Qrops which confirm that schemes must provide the same tax benefits to residents as non-residents.
Final rules published by HMRC last week include req-uirements previously known as Condition 4, which mean Qrops providers must treat non-residents and residents of a jurisdiction in the same way for tax purposes.
The rules, which come into force on April 6, also impose a requirement on Qrops to report all benefits paid out for 10 years after a member joins a scheme, unless the member is resident in the UK for all or some of the year in which the payment is made.
After five years of non-residence in the UK, scheme members can choose for their pension to operate under local rules.
The rules will continue to allow investors to take tax-free lump sums as long as schemes ringfence 70 per cent of the value of funds transferred into them for retirement income.
Monfort International managing director Geraint Davies says: “With some procedures being marketed around the world, intentionally or otherwise to bypass UK limits, the resounding message being delivered by HMRC is do it our way or do not do it at all.”
The Isle of Man’s Association of Pension Scheme Providers is looking to make changes to the island’s 50c schemes, which include Qrops.
The schemes fall foul of the new rules because they pay benefits to non-residents tax-free while residents are taxed.
Manx provider Boal & Co managing director Gary Boal says the APSP is considering a number of options, including exempting residents from tax on benefits.