Q. I have been told that I can access my pension fund in full by transferring it to an overseas scheme. Can you tell me more?
A. In certain circumstances it is possible to transfer your fund to an overseas scheme and draw benefits under the rules applicable to the tax regime of the country in which the scheme is based. These schemes, known as Qualifying Recognised Overseas Pension Schemes (QROPS), are intended for people who have moved abroad, and HMRC keeps a list of those schemes it has approved. However, unless you have been non-UK resident for at least 5 years, there would be a substantial tax penalty on benefits drawn other than as prescribed under the UK’s rules. Unfortunately there are a number of people promoting such schemes and often misrepresenting their benefits, usually for very high fees. This can lead to people giving up perfectly good pension arrangements and suffering tax charges at a later date, by which time the person promoting the scheme is long gone. My advice is to always ensure that your pension adviser is properly regulated by the Financial Conduct Authority, and preferably someone who is a Chartered Financial Planner, and holds advanced pensions qualifications. If you are moving abroad permanently and want to take your pension fund with you, it is also a good idea to take advice in the place you are going, to find out how any benefits will be taxed in that jurisdiction.
Q. I am setting up a company with some colleagues and would like some advice as to what we need to consider in the event of one of the directors dying. What would you suggest?
A. This is in fact a very complex area and the implications of getting it wrong can be catastrophic, so you need good advice. Fundamentally, however, there are four ingredients. Firstly you need to have wills in place that deal with the shares upon death. Secondly, there then needs to be an appropriate well drafted agreement for the sale and purchase of the shares in the event of any of the directors death. Thirdly, life assurance is likely to be required to ensure that there is money available for the surviving shareholders to purchase the deceased’s shares. Finally there needs to be a trust arrangement for the life insurance to ensure that the money goes to the appropriate people and is outside of the deceased’s estate for inheritance tax purposes.
You will need to be guided through this by an independent financial adviser who specialises in corporate work, as getting it wrong can lead to significant inheritance tax for the deceased’s estate and for the potential of the surviving directors to end up sharing a seat on the board with the beneficiary of the deceased’s estate.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
0191 217 3340
