Autumn Statement - Can You Cash-in Your UK Pension
Cashing in Your UK Pension
Under the new flexible rules, you can now cash-in your UK pension. Many are considering buying a house, some land, property or just spending it.
The new Pension Freedom rules are in and went as expected. Nothing unexpected came up.
We were waiting to see if expats were top have thier personal allowance axed. Well, luckily for expats, that has been shelved until 2017. With 1 in 10 Brits now expats, that could help tilt an election, so if the Tories are back in, expect this to go through in 2017.
If you leave your pension in the UK and you have a DC scheme:
- you still pay UK tax on your pension at 20% - 45% even as an expat living abroad
- you still pay a 45% tax on death on any lump sums on your pension if you die after 75. Average life expectancy is 83 for men and higher for women
- if you have ISAs you still pay IHT on death
- good news is personal allowance has jumped up 600 quid
- Basic rate and higher rate thresholds have both increased.
Now lets look at a QROPS, a transfer of your UK pension offshore which is designed for expats.
- you avoid all UK taxes and even no tax on death in most circumstances even if you return to the UK by drawing a lot of your pension offshore
- you can move ISAs in and avoid tax on death
- income tax would then be reduced depending on where you live. Often it is reduced to 2.5% or 0%
- You can invest in the currency you want. This is especially useful if you are moving to countries which are pegged to the US Dollar or if you are going to Europe and want to move your pension to EUR
- You get a higher tax-free lump sum
Obviously every one will need to seek QROPS specialists' advice. Everyone's circumstances will be very different and it will depend on where you will receive income in retirement, your visa status, what sort of income you want and when your want your pension.
Read more about the Autumn Statement here.