Income tax hike boosts expat pension enquires – RBC

The number of Brits looking into fleeing the UK as a result of the 50% income tax rate hike has jumped, with individuals scrambling to make pension arrangements, according to RBC.

RBC Wealth Management has seen an increasing number of enquires from would-be British expats into Qualifying Recognised Overseas Pension Schemes (QROPS) since the 50% income tax rate announced in the last Budget.

Louise Somerset, tax director at RBC Wealth Management, says the new rate for high net worth individuals is worrying many clients.

"They are increasingly keen to discuss the possibility of becoming non-UK resident, and taking their wealth and skills overseas in the process," she says.

Apart from Belgium and the Netherlands, the UK will be the only European country to impose a tax of 50% plus. The effective rate on UK employment income will be 51.5% from April 2011 onwards.

Due to the number of people considering becoming expats, Lindsey Doud, director & head of business development for RBC cees, believes QROPS is particularly pertinent in the current environment.

The firm has launched two QROPS, which accept accrued UK benefits for non-UK residents or for those leaving the UK, through its Guernsey offices.

The Fermain QROPS and Havelet QROPS are designed for individuals but RBC also provides trustee and administration services for corporates wishing to establish their own QROPS offshore pension arrangements.

RBC says this move enables individuals to consolidate their UK pensions, providing them with investment flexibility, member loans, flexible receipt of benefits, plus giving them an opportunity to take a quarter tax free lump sum on retirement.