The Overseas Transfer Charge is an opportunistic tax on expats who have no one to speak up for them when the British government decides to demand extra money from their offshore pensions.
Expats suffer financially because they have no collective voice in government and no representation in Parliament.
British expats outnumber the number of voters in the average Parliamentary constituency by far.
But the Treasury and HM Revenue & Customs, who run the Qualifying Recognised Overseas Pension Scheme (QROPS) know changes will be met with little protest or clamour in the media.
That’s why protestors led by William Wilson are stirring up support for a petition complaining that the transfer charge is an unfair tax on expats.
“The tax is discriminatory,” says Wilson.
Not everyone has to pay
“Not every expat pays and the transfer charge depends on where you live and where you have your QROPS pension, not on comparable factors for each expat.”
HMRC says since April 2006, the average QROPS transfer has been £93,087.
If an expat lives in Europe and has a QROPS somewhere in the European Economic Area or is resident in one of 13 countries outside Europe and has a QROPS based in one of those countries, they are exempt from the transfer charge.
The charge does not apply to workplace pensions – just those to QROPS held privately.
Taking the HMRC average transfer value, expats subject to the transfer charge pay £23,272 for switching their pensions offshore at a rate of 25% of the total amount transferred overseas or between QROPS.
Attack on ordinary investors
“It seems HMRC is just making pension saving unnecessarily difficult for expats outside Europe,” said Wilson.
“Everyone can understand there need to be rules and that anyone using QROPS for tax evasion should be dealt with, but this does not apply to the tens of thousands of ordinary investors who simply want to save their money.”
According to HMRC, more than 105,000 UK expats have switched their money from an onshore pension to a QROPS since the scheme started in April 2006.
QROPS are specialist pensions for expats or foreign workers who have retirement savings in the UK.