A freedom of information (FOI) request submitted by Canada Life revealed that 30 overseas transfer charges were paid to HM Revenue & Customers (HMRC) worth £1.4m in the 2017/18 tax year.
The request highlighted the impact of the introduction of the overseas transfer charge applied to certain pension transfers to Qualifying Recognised Overseas Pension Schemes (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.
Commenting on the figure, Canada Life pensions technical director Andrew Tully said: “Going by the low number of transfers where a charge has been applied, it would appear many people have had second thoughts about moving their pension overseas. The pension freedoms may also have had an impact on the general decline in the number of transfers to QROPS as there is much greater flexibility in how people can access their benefits in the UK.
“Although the number of transfers attracting a charge is very small, and the resulting tax raised very low compared to the Government’s own assumptions, HM Treasury will be pleased another tax loophole has effectively been closed and further tax leakage prevented.”
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