Friday, 3 June 2011

UK Pension, 100% Cash (Section 615)

Financial Pages in Spain – Readers’ Favourites Week

Day five

QROPS and QNUPS are relatively new having come from Statutory Instruments (SI) from 2006 and 2010 respectively. The idea I am bringing here is based on the Income and Corporation Taxes Act (ICTA) 1988. In other words it’s tried and trusted.

  • UK approval by HMRC

  • Benefits can be 100% cash

  • Residency, Domicile and Nationality are not relevant

First of all the Technical point;

An International Pension Scheme can be arranged pursuant to Section 615(6) of the Income and Corporation Taxes Act 1988. This has been accepted by HMRC. The Section applicable is this weblink

For this article I shall be referring to this scheme by its popular name ‘Section 615’.

I telephoned a number of UK Financial Advisers, operating here in Spain, and asked them if they could advise me about a Section 615. Not one of them could tell me! If as a result of this post, you want to talk to an adviser who does know and has advised others, please email me.

There are a number of categories of people who I believe can benefit from Section 615.

  • Employees of UK companies whose duties are conducted wholly outside UK. So you could be resident in another country (such as Spain) but employed, or become employed, by a UK company
  • Employees of multi-national employers where an overseas parent company has a UK presence
  • Employees of UK companies, who are UK resident, but who undertake duties inside and outside the UK

Whilst these categories relate to ‘employees’, there is no reason why a self employed person or a partnership could not establish a company in the UK for the purposes of becoming employees and benefitting from these schemes. For advice please email me.

The Benefits

For the employer

  • Contributions are allowable against corporation tax in the UK
  • There is no UK National Insurance to pay on the contribution
  • No minimum contribution
  • Employee benefit at reasonable cost. I can take employer enquiries

For the employee

  • There is no tax liability on the contributions
  • Death benefits can be paid to nominated beneficiaries
  • Inheritance Tax efficient
  • All of the fund can be paid as cash on leaving the service of the company or deferred to normal retirement age
  • There is no local tax on these contributions as there is no income
  • Even though employed by a UK company there is no National Insurance cost
  • Member directives on investment are allowed

A wide range of permitted investments, which include;

  • Insurance policies
  • Cash and money funds
  • Equities
  • Fixed interest securities and gilts
  • Property or property shares

This is only an outline of Section 615 but each time I think about it, more groups of people seem to be potential beneficiaries of the Scheme. If you think you might benefit, or just want more information, please email me.

Many UK citizens working abroad can benefit from this arrangement, yet it is not widely offered or available.

Important point to note: I am aware that some schemes can be contentious and the queries are often raised by companies who do not have access to them. Section 615 (6) of the Income & Corporations Tax 1988 is completely non-contentious. Each scheme will be individually approved by the UK tax authorities (HMRC)

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You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email

Any personal information that you give me will be treated with the utmost confidentiality and care. Your details will only be passed to a third party with your written authority.