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Isle of Man as your QROPS Jurisdiction

isle-of-manThe Isle of Man (IOM) would be an optimal QROPS jurisdiction, as they offer tax efficiency, flexibility, strong investor principles are are denominated in a strong currency.

The Isle of Man is a low tax haven with the following features:

  • no capital gains tax,
  • no wealth tax,
  • no stamp duty,
  • no inheritance tax
  • income tax max rate of 18% (with a tax-cap if this goes over certain thresholds).

Questions on Isle of Man as your QROPS Jurisdiction

  1. Is Income Drawdown Available?

    • Yes.
    • Subject to UK GAD rates, both USP and ASP.
    • Income will be paid less 18% tax.
    • First £2,120 (tax year 2009/10) per annum of income is paid gross (for non-IOM resident).

  2. What is the Maximum amount of lump sum available at normal retirement age?

    • 25% Without penalty but increases to 30% after 5 full years of non-UK residency.
    • Subject to trustee discretion.

  3. How is the pension payable calculated?

    • Using either UK Government Actuary tables as per UK’s Unsecured/Alternatively Secured Pensions.
    • Actuarially certified by scheme provider.

  4. What happens if the client dies before retirement (during the first 5 years of non-UK residency)?

    • 100% return of fund to deceased’s estate/nomination with 0% tax charge or a spouse’s/dependant’s pension could be paid.
    • Subject to tax at applicable rates.

  5. What happens if the client dies before retirement (after 5 years of non-UK residency)?

    Post retirement pre 75

    • Return of fund less 35% tax charge.
    • Or a spouse’s/dependant’s pension could be paid.

    Post retirement post 75

    • Return of fund less tax charge up to 82%. Alternatively, in both cases,
    • Or a spouse’s/dependant’s pension could be paid.

  6. What happens if the client dies after retirement (after 5 years of non-UK residency)?

    Post retirement pre and post 75

    • Return of fund less 7.5% tax charge.
    • Or a spouse’s/dependant’s pension could be paid.

  7. What are the tax rates on taking a pension if the client is resident in the same jurisdiction as the QROPS?

    • Single Personal allowance is £9,200 (tax year 2009/10).
    • 10% band on income up to £10,500.
    • Balance at 18%.

  8. What are the tax rates on taking a pension if the client is resident outside of the jurisdiction of the QROPS?

    • Single personal allowance of £2,120 (tax year 2009/10).
    • Balance is subject to 18%.
    • May be subject to double taxation if country of residence taxes pension income.