How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4074
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I am currently non-resident in the UK, living in the UAE.

Customer Question

I am currently non-resident in the UK, living in the UAE. I am planning to transfer UK based defined contribution pensions (2 of) to QROPS and then take a lump sum (I am over 55 years of age). I retain a property in the UK. I do intend to return to the UK, eventually. What, if anything would be my liability to UK tax if I took a lump sum and then returned to the UK? Would there be any kind of timeline associated with any such liability - say if I returned within 12 months my liability would be x% but if I didn't return within 5 years the liability would be Y%. I have been working and living abroad, this time, for almost 2 years. Prior to that I had almost 3 years in the UK and prior to that 8 years overseas.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
Firstly, before you do anything, have a look at this HMRC web site:
'Transferring your pension savings into an overseas pension scheme'
and you will see just how complicated the matter it can be.
However, let us get down to basics. I trust that when you left the UK for the UAE you notified your tax office by means of Form P85. HMRC will then make you non resident for tax purposes. If you did not do this you should do that now, you can do it on line. Any income you receive from your property in the UK will, of course, remain a UK tax liability. the general consensus of opinion amongst experts is that you should never spend more than 90 days in the UK during any tax year. In theory this can be averaged out over 4 years, but...
What you do with your pension under QROPS will be a matter for the rules of the fund and the tax rules within the UAE. However you may still not escape tax free as:
'UK tax charges on payments made from a QROPS
Some UK tax charges can still apply to payments made from the overseas scheme if you:
Are UK resident when the payment is made
Were UK resident earlier in that tax year or in any of the five previous tax years
UK tax charges will apply to:
Any unauthorised payments made by the overseas scheme
Payment of a lump sum that would be taxed if paid from a UK registered pension scheme
If an unauthorised payment occurs because the QROPS invests in'taxable property' you'll be charged tax even if you haven't been a UK resident for more than six years before the investment was made.
The scheme manager of the QROPS should tell HMRC when they make a payment that would be taxable.'
As a general rule the only lump sums which can be withdrawn from an UK pension fund is the 25% on maturity. However the new rules coming in allow access to the pension pot, but the sums transferred are taxed at the marginal rate. Clearly you will have to tread very carefully in this matter which it would appear can only be in a few years hence anyway.
I do hope I have helped you with your question. No account has been taken of UAE tax law, this being essentially a UK based taxation site. Iy may be adviseable to retain a trusted, local UK professional to advise on this matter and negotiate with HMRC if necessary.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your excellent support.

Slight amendment, penultimate line; delete 'Iy,' insert 'It.' Does not alter the price of cheese as my old boss was wont to say, but better put the record straight!