QROPS overseas transfer tax revenue 'dramatically lower' than govt expectations - Canada Life

There were 13 overseas transfer charges paid to HMRC in 2019/20 from pension transfers to Qualifying Recognised Overseas Pension Schemes (QROPS), a 46% fall compared to 2018/19, a freedom of information request from Canada Life has revealed.

This equated to £1,001,876 in charges in 2019/20, which Canada Life emphasised was “dramatically lower” than the £60m the government expected to raise each year by 2021/22 when it introduced the charge in 2017.

However, the firm clarified that whilst the number of transfers has steadily fallen since 2017, the value of these overseas charges had risen compared to the previous year due to the size of the transfers made.

In 2019/20 for instance, there was a 32% increase in the total value of charges levied compared to 2018/19, when 24 transfers attracted charges totalling just £780,846.

The 25% transfer charge was originally introduced in the Budget of March 2017 and applies to certain pension transfers to QROPS.

Broadly speaking, the transfer charge applies unless the member is resident in the same country in which the QROPS is established, or the member is resident in a country within the European Economic Area (EEA) and the QROPS is established in a country within the EEA.

According to the HMRC data, the number of pension transfers to QROPS peaked in 2014/15, with 20,100 transfers valued at £1.76bn, reducing “considerably” over the following years, with just 4,400 transfers worth £550m recorded in 2019/20.

Commenting on the data, Canada Life technical director, Andrew Tully, stated: “The charges levied on certain pension transfers overseas has effectively done the job in limiting the appetite for moving pensions outside the UK to destinations other than the EEA.

“We’ve witnessed a steady fall in QROPS transfer activity since the peak of 2014/15 and this has only accelerated following pension freedoms and the introduction of the transfer charge.

“Despite the number of pension transfers attracting a charge being very small, and therefore the amount of tax raised as a result very low, Treasury will be pleased another tax loophole has effectively been closed and further tax leakage prevented.”

This article was first published on our sister title PensionsAge. HMRC has been contacted by Pensions Age for comment.

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.