Money

Britain’s economy may be in recession but its currency is flying high. The Pound has strengthened against a basket of international currencies, according to figures compiled by foreign exchange specialists, Moneycorp, meaning British buyers of overseas property can get much more bang for their buck. Well, Pound anyway.

Sterling’s solid performance against the Euro has grabbed most of the headlines – it’s up 8.6% on this time last year. But that’s small beer compared to the Pound’s extraordinary 18% appreciation against the Indian Rupee, or its 17.7% increase against the Brazilian Real.

Other countries are also offering substantially better value thanks to the soaring Pound. Anyone relocating to South Africa will see their Pounds go 14.1% further against the Rand, while Brits buying in Sri Lanka can enjoy an exchange rate that’s 15.1% better than it was in May 2011.

Meanwhile, anyone looking for a pied-à-terre in Poland or Prague will see their Pound buy 15.9% more Polish Zloty and 12.6% more Czech Koruna respectively than it did this time last year.

The following table shows the top countries where your Pound will currently stretch further compared to 12 months ago:

* 2012 rate taken at 9.50am on 8/5/2012

** 2011 currency rate – taken as average during period 9/5/11 to 14/5/11

But it’s not all one-way traffic. Moneycorp data shows that the Pound has weakened 4% against the Chinese Yuan and 3.8% against the Kenyan Shilling relative to this time last year. And for anyone buying in the US, the Pound is worth 1.2% less against the US Dollar than May 2011.

Alex Lawson, senior broker at Moneycorp, commented: ”Everyone’s talking about how the Pound is soaring against the Euro and that’s understandable given the continuing question marks over the single currency’s future.

“While the EU is by far the most popular place for Brits to buy a second home, Sterling’s strength has made a purchase far more attractive in other countries, too.

“17.7% on the Brazilian Real and just over 14% on the Rand gives anyone buying in those countries significantly more purchasing power.”

If you own a property overseas, always keep up-to-date with changes in legislation

Trevor Leggett, Chief Executive of Leggett Immobilier, one of the leading international estate agencies in France says: “The amendment is primarily aimed at providing relief to French ex-pats but could benefit hundreds, if not thousands, of UK owners of French houses who had been reluctant to put their properties on the market. “You must have owned the house for at least five years and you can’t have owned a ‘principal residence’ for at least two years. In cases of divorce the absent partner can still consider the marital home the principal residence. Parliament has said that the new rule will come into force on 1 February 2012, to coincide with other property tax reforms. However, I’m not yet sure that they have nailed this down and expect further twists and turns ahead”.

Currently, residents of France are subject to fixed rates of capital gains tax of 19 per cent as well as paying social charges. Non-residents, from outside the EU, pay 33.33 per cent with no social charges.

Those non-residents who come from within the EU pay tax on French property gains at 19 percent and do not pay social charges.

The capital gain is calculated as the proceeds from the sale less cost of purchase. A deduction of 7.5 percent of the acquisition price can also be made in lieu of actual costs, or the costs themselves (if you have proof) can be deducted, as well as any costs of sale such as estate agency and legal fees, transfer tax and Notaire’s fees.

Parliament has previously said that from 1 February 2012, a new CGT relief will apply:

Years 1 to 5 – no relief

Years 6 to 17 – 2 percent relief per annum

Years 18 to 24 – 4 percent relief per annum

Years 25 to 30 – 8 percent relief per annum

To keep up to date with any property related tax changes you should regularly visit the website www.frenchestateagents.com. Do always remember to seek specialist professional advice.

French property and lifestyle is continuing to be popular among Britons

The latest report from the FNAIM shows house prices rising for the 5th consecutive quarter. The report covers the second quarter of 2011 (April – June) and is available on www.fnaim.fr.

Prices of properties sold by FNAIM members saw an average rise of 3.3% over the previous quarter with a strong rise (4.3%) in properties outside of Paris.

Trevor Leggett, Chief Executive of Leggett Immobilier, comments: “Further headlines of house price rises need to be treated with caution. We know that the average price of property sold in France by FNAIM members has increased by 6.8% overall this year but it’s important that vendors expectation levels remain realistic.”

Sensible pricing will mean that transaction levels remain consistent and both buyers and sellers will benefit. As previously reported, Leggett Immobilier are certainly seeing an increase in enquiry levels from both local and international buyers – particularly at the top end of the market.

The new wealth tax rules coming into place are making France one of the most attractive destinations in Europe, as the threshold for this tax (ISF) is increasing from €800,000 to €1.3 million. Households with assets of between €1.3 million and €3 million will be subject to a tax of 0.25 percent and for assets over €3 million the tax will be 0.5 percent.

There has also been one recent change to the law on Capital Gains Tax: Previously, a reduction of 10% per year, beyond the fifth year of ownership, has been applied to the gain calculated. Therefore, sales made beyond the 15th year of holding the property had been fully exempt from CGT and social security contributions.

Now though, the tax due on the sale of these ‘non primary’ residences will be calculated in accordance with the Indice du Coût de la Construction (rate of building inflation) at the time of the sale – taking into account the year you bought the property. In essence this ensures that the natural evolution of price rises is not taxable which appears a sensible move.

This new regime will apply to sales after the 24th August 2011.

Non-residents may well have to pay for an independent fiscal representative to ensure the CGT calculation is correct.

The Government are overseeing some radical tax changes to French property ownership and Leggett Immobilier aim to keep you abreast of the implications of these changes through regular updates on our website www.frenchestateagents.com.

William Poole, FX Strategist at FC Exchange

With all the market turmoil we have witnessed over the past two weeks, we have seen somewhere in the region of $8 trillion wiped from global equity markets as a crisis of confidence takes hold. This is reminiscent of 2008.

Really, we have seen the crisis morph from one triggered by the private sector, which has slowly filtered through to the governments of every major western economy. The complicated situation in the eurozone and fears of the wider repercussions following the US downgrade, have left investors running for cover.

The issue we face from here is that there is no common response on how to deal with what we are currently trying to resolve. Interest rates can no longer be a tool for central banks to utilise, quantitative easing (QE) has proved vastly ineffective, and any fiscal plans seem to lack credibility.

Don’t forget that less than a month ago, momentum was growing on how to exit from such accommodative policies – reflective of growing optimism surrounding the global economic recovery.

This has since been ‘blown out of the water’, with the European Central Bank’s (ECB) interest rate hikes seeming premature, and the end of QE2 in the States quickly being replaced by speculation of more easing and current cash rates until 2013.

As a result we have seen a series of extraordinary responses in attempts to quell the erratic price swings that accompany the current fears in the markets. The ECB has taken the unprecedented action of supporting the bond markets, by providing demand for Italian and Spanish debt.

Which currencies will be the winners in 2011?

In addition, Japan has directly intervened in the currency markets the old fashioned way, by directly selling billions of Yen, while the Swiss National Bank has scrambled to formulate any form of plan to stem the Swiss franc’s meteoric rise, ranging from a peg to the euro or even negative interest rates. Quite simply, there is no one coordinated response for policy makers to adopt. The ‘bullets’ seem to have run out.

Fiscal prudence is the new precursor of financial health, with bodged austerity, similar to what Greece used to enter the Economic & Monetary Union (EMU),  no longer acceptable.

Moving forward, the markets will look for two things in particular. The first, that the US will need to put credible spending cuts in place, and the markets need to believe that a ‘fractured’ Washington has the ability to implement them successfully.

Secondly, the ECB’s buying up of bonds may well see them through until September. However, the market will also demand clarity over the ever present, true underlying issue – whether to dismantle the EMU or create a full-scale fiscal federation.

The private sector will eventually recover; however, it will certainly be a long and painful wait for governments to co-ordinate an adequate response that helps us to avoid another recession.

For more information, contact: www.fcexchange.co.uk

Brazil is attracting growing interest for property investors

At the end of 2010, more than 9.1 million Brazilian families announced their intention to purchase a new home within the next year. Brazil cannot keep up with this demand and has a current deficit of six to seven million homes that experts say will take 10 to 15 years to meet.

uv10’s Property Fund takes advantage of this deficit and provides experienced, asset-rich developers with the finance they need in exchange for massive returns.

Samantha Gore, Sales Manager at uv10, comments: “The vast majority of Brazilians could once only dream of becoming a homeowner, but now with a sharp rise in credit, increased incomes, a vastly reduced unemployment rate of just 6.7% and the purchase terms offered under the Minha Casa, Minha Vida (My House, My Life) programme, that’s all changed.

The bulk of its efforts

Literally millions of Brazilians are now eligible for property purchasing and have made it their main short-term goal. The problem they have is that availability is chronically low. A PriceWaterhouseCoopers spokesperson recently said of the market in Brazil: “You can build housing forever and people will want it, and importantly, this demand comes from consumers, not speculators.”

The northeast of Brazil, where the uv10 Property Fund will be focussing the bulk of its efforts, is currently playing catch-up to the rest of the country having been historically far poorer and suffering over 50% of the national housing shortage – some four million homes. This region is enjoying a proportionally faster growth rate than elsewhere, with average salaries in Rio Grande do Norte increasing by 77% from 2002 to 2009 alone.

Typical affordable entry level property in Brazil (uv10.com)

Samantha continues: “Serious developers operating in Brazil’s key markets, in particular the northeast, do not have access to, or prefer not to use traditional forms of funding available in Brazil as they are both expensive and heavily bureaucratic.

“By working with the uv10 Property Fund, these carefully selected, successful, ‘hungry’ and reliable developers can turn around their construction projects very quickly and reinvest the capital early into the next opportunity – rewarding Fund investors as they do so. It really is one of the most profitable investment opportunities available in the world today.”

To maintain Brazilian social and economic growth, the Government has made it a priority to give higher mortgage subsidies to the population on the lowest incomes. Introduced in 2008, Minha Casa, Minha Vida attracted an initial Government investment of 64 billion Reais (28 billion euros) and will see the completion of one million new homes by the end of 2011. Phase Two has now been approved with a further 72 billion Reais (31.5 billion euros) pledged to the programme between 2011 to 2014, funding the construction and purchase of a further two million homes.

The maximum value of houses

It operates through a subsidy to buyers and developers, reduced mortgage rates, lower taxes and other legal expenses as well as a workers’ guarantee fund to mitigate delinquency risk for the banks involved. In February 2011 the Government raised the maximum value of houses eligible for the programme from 100,000 Reais (43,700 euros) to 150,000 Reais (65,500 euros) in order to further reduce the deficit (these figures vary region by region).

Entry level for investments in this lucrative sector tends to be prohibitively high for individual investors and comes with some challenging bureaucracy and the need for high levels of expertise. The uv10 Property Fund is designed to bridge this gap for foreign investors, offering them an opportunity for exposure to this growth area within an independently administered Fund

The Fund is targeting a minimum return on investment of 119%, after fees and expenses, at the end of a fixed three-year investment period and values are accurately reported to investors as the Fund is legally obliged to file annual audited accounts.

Risk is spread over a number of projects and a professional team with a solid track record in Brazilian real estate and development is in place to manage all decisions. Although past performance can never guarantee future success, uv10 is confident of being able to achieve its objectives within this Fund and surpass investor expectations.

As this is an Experienced Investor Fund, the legal minimum entry level is 100,000 euros. The Fund is closed ended and will run for three years. The subscription period is time-limited to just three months so to take part in this Brazil Property Fund or for any other queries with regard to investing in Brazilian real estate, contact uv10 on info@uv10.com.

Alternatively, visit www.uv10.com or telephone UK local rate +44 (0)845 643 1036, Brazil office +55 21 395 808 25 or USA +1 888 839 7009. Skype: uv10-brazil.

"There is an obligation on UK suppliers of electricity to source an increasing proportion of their electricity from renewable rather than from conventional sources"

Savills has been operating within the Renewables and Conventional energy sectors for over 15 years, and during that time has been both an adviser to the industry and a developer in its own right.

Savills Energy has been formed to build on this extensive, practical experience, providing a focussed service for its property and energy industry clients. Savills’ focus on the sector is illustrated by a number of recent successes:

RWE npower – Cotton Farm Wind Farm, Huntingdonshire

Following a public inquiry in 2010, planning permission has been granted for RWE npower’s Cotton Farm wind farm in Huntingdonshire. The wind farm will comprise eight turbines and will have a generating capacity of up to 24 MW.

Planning director Peter Dixon, Savills Leeds office, gave expert planning evidence at the public inquiry in support of the scheme. He commented: “This decision shows that despite the uncertainties surrounding RSS and the role of regional energy targets in the planning process, the Government remains willing to support properly conceived and properly presented wind energy schemes.”

Enviroparks, Hirwaun

Savills has secured full planning permission for the Enviroparks energy and waste resource recovery plant at Hirwaun in South Wales. This 21-acre development will convert 240,000 tonnes per year of waste into recyclable materials whilst recovering sufficient energy to support 20MW of electricity generation and the supply of heat to new factory units on the same site.

The environmental impact assessment and planning application were prepared by the Wimborne planning team, with the Southampton office’s landscape architects undertaking the visual assessment. According to planning director Karl Cradick, Savills Wimborne office: “We are delighted to have secured planning permission for what will be Europe’s most advanced energy-from-waste facility. This is the latest in a series of cutting-edge, energy-from-waste projects in which Savills has been involved.”

Embrace energy

Property companies, developers and occupiers alike are being heavily incentivised to embrace energy in order to meet increasingly onerous standards and targets, whether through their own Corporate & Social Responsibility (CSR) policies or driven by statutory pressures, through the CRC Energy Efficiency Scheme and the planning system. These factors aside, the sector can also represent an important additional source of revenue and value creation for these companies, whether through the Feed in Tariff (FiT), the Renewable Heat Incentive (RHI) or the end-user market.

Energy companies are aggressively expanding their operations to take advantage of the incentives available in the renewables arena, whether FiTs or Renewables Obligation (RO), which places an obligation on UK suppliers of electricity to source an increasing proportion of their electricity from renewable rather than from conventional sources.

Miles Thomas

In both cases, a looming gap in the UK’s generating capacity and increasingly stringent demands on existing and new plants in the context of an evolving locally focussed planning and consenting regime is pointing to a need for sophisticated advice that has its roots in both the property and energy markets, which Savills Energy provides.

Miles Thomas, Head of Operations for Savills Energy said: “The energy market has, and will continue to experience, huge growth in what is a changing regulatory environment. Integrated advice at the earliest possible opportunity is therefore imperative in ensuring a project’s viability, whatever its scale and application – Savills Energy brings together sector-leading property expertise with a practical understanding of the energy market to deliver this. We are delighted with these early successes and look forward to continuing to perform for our clients.”

For more information, go online at: www.savills.co.uk

The recent property price fall means that homes in Atlanta are now at their cheapest since prices peaked in 2006

Atlanta may not be the automatic first choice for those seeking to buy an investment property, but there’s more to Atlanta than meets the eye and with Forbes Magazine recently ranking Atlanta as the number one rental market in the US and CNN Money quoted as saying Atlanta is the 4^th best city in America to invest in, it may be time to take a closer look.

The story of the Atlanta property market really begins back in 2005 when a record number of properties were built during the boom years. During these rewarding investment years all was well, but as the economic downturn began to bite, prices started to decline rapidly due to an oversupply of properties.

This was further exacerbated by job losses and many were forced to cut prices on their homes in order to sell them quickly. Most foreclosures in the area are related directly to job losses, but high unemployment levels here are thought to only be temporary as Atlanta’s economy is fully expected to support growth compared to other areas which have suffered major declines in property prices.

Loxley McKenzie, managing director of www.colordarcy.com said: “The recent property price fall means that homes in Atlanta are now at their cheapest since prices peaked in 2006. This and the fact that many people were ousted from the property market due to recession have meant that there has been an increased need for rental accommodation.”

Rental occupancy in Atlanta is now at it’s highest since 2008 and is running at over 90 per cent. This has had a knock-on effect in increasing rental rates, with the biggest expansion being in those members of the population who are older or who have low incomes.

Downtown Atlanta, Georgia

Furthermore, demolition of inner city areas combined with decreased housing construction has resulted in Atlanta now attracting many young people who are seeking work in the city. The future of the Atlanta property market is now looking rather more attractive and has been buoyed by many large household name companies in the region seeing their stocks rise significantly in 2010 with many posting double digit returns as their industries have grown. These companies are now beginning to invest in new equipment, staff and software in order to deal with the expected recovery in the economy.”

These factors present good opportunities for overseas investors who are looking for long-term capital gains whilst reaping the rewards of a burgeoning rental market.

River Station Townhouses are a prime example of one of the attractive investment opportunities for overseas buyers today. Coming to the market at just £44,000 these three-bedroom fully equipped ‘turnkey’ properties are ideally located. Situated just south of Atlanta Airport they offer direct access to downtown Atlanta which is just 12 miles away.

These are currently discounted by $20,000 on the US open market-price and come to the investor with tenants in situ. Each property is managed on the owner’s behalf and provides a 12-month guaranteed rental income. After all outgoings have been calculated, each property will provide the investor with a monthly income of £445. That is a net yield of 12 per cent.

For more information, go to www.colordarcy.com

Owning a home in France can transform your way of life

Knightsbridge-based international mortgage broker, Baydonhill is claiming UK-based investors are missing opportunities in the French property market because of poor information and common misconceptions.

The weak pound has led many to believe they cannot secure a French euro-based mortgage without transferring sterling. The company also states that UK investors are also not fully aware of the drop in prices relative to the UK, with values having fallen from 2008 levels by as much as 30 per cent in some areas.

Through the downturn French banks have maintained consistent lending policies compared to their UK counterparts.

Tom Foster, specialist mortgage consultant at Baydonhill explains: “UK residents looking to buy and move to France without selling their UK home have the option of securing a French euro-based mortgage rather than transferring sterling at a time when the pound remains relatively weak. This approach suits those unwilling or unable to sell their UK property in the currently weak market. Instead they have the option of taking a UK rental income.

“On application, buyers can classify up to 100 per cent of their UK rental income as ‘ongoing monthly income’, when applying for a French loan. Making monthly sterling payments will spread the exchange rate risk compared to converting a large lump sum sterling payment into euros at a poor exchange rate. Those looking to let their French property can use the euro rental income to service the French mortgage. Selecting a product with no early redemption penalty means that when the UK market eventually recovers and they sell in the UK, clients can pay off their French mortgage in full without penalty.”

Why not shop in your local market followed by lunch in your local bar?

French banks are keen to lend to foreign investors provided they meet local lending criteria. This is a more logical and consistent approach than has been seen in the tight UK market. French banks use a standard debt to income ratio of 33 per cent to assess applicants. These ratios are calculated by comparing current overall income against existing long-term commitments. However, certain lenders are more flexible in their assessments, especially when dealing with high net worth clients.

Applicants will find that higher loan to value mortgages are available. French lenders typically offer 85 per cent loans to value as standard to anyone who qualifies. Therefore applicants are required to provide a 15 per cent deposit plus fund their legal fees which can range between 6-10 per cent of the purchase price. Some lenders will offer up to 100 per cent loans to borrowers securing a minimum loan of €300,000 if they are able to prove earnings of at least €90,000.

“We want to dispel the misconceptions that lead to missed opportunities in French property,” continues Foster. “There are some tremendous prospects in 2011 and we want to ensure that UK-based investors are aware of the different investment options available to them.”

About Baydonhill International Mortgages:

The multi-lingual Baydonhill team has more than twenty years experience in the mortgage industry. They offer a complete international mortgage broking service for clients seeking to purchase property in key European markets such as France, Italy, Spain and Portugal. Baydonhill has strong relationships with key banking partners in Europe which enables them to offer clients timely decisions and competitive rates on their mortgage applications.

For more information visit: www.baydonhillfx.com

It's essential for owners of properties abroad to understand currency movements and fluctuations

“In this first part we will recapitulate the main themes that drove FX movements throughout the last year. It is particularly important to do so because none of these issues have resolved themselves yet, and we therefore expect that trading in 2011 will continue to be driven by events and policy decisions around these axes. Our expectations as regards to the FX market in the upcoming year will be summarized in the second part.”

The net result

“First of all, of course, we must refer to the Eurozone crisis. Few would have predicted a year ago that financial markets – and FX markets in particular – would be driven by the blow-up of sovereign credit in peripheral Europe, and that the future of the common currency would be called into question. Greece and Ireland have already been bailed out in return for the socialization of all domestic senior bank debt and draconian austerity packages.

“Portugal seems likely to follow this path, while Spain’s ability to roll over its private and public debt in the markets is very much an open question. The net result is that the euro ended the year well below where it began. It lost about 7% against the dollar, and nearly 10% in trade-weighted terms.

“This is the more remarkable given the generalized depreciation of the greenback against other currencies and the very strong macroeconomic performance logged in by Core Europe in the second half of the year.”

Immediate effect

“The second driver in 2010 FX markets was the decision by the Federal Reserve to start another round of Large Scale Asset Purchases to supplement the operations carried out in 2009. The decision announced in early November to purchase about USD75 billion worth of medium-term Treasuries every month had been widely signalled by Fed officials in prior weeks.

“Beyond the immediate effect on markets of these additional purchases, this step highlighted major divide across the Atlantic. US authorities are very concerned about the sustainability of the economic recovery, and are willing to pull out all monetary and (to a lesser extent) fiscal stops to help it along.

“European officials, by contrast, insist on fiscal and monetary austerity, and have only been reluctantly forced into purchases of peripheral bonds and bailouts by repeated blow ups in those markets.

“Another significant effect of additional Fed easing in 2010 has been to slow down the pace of monetary tightening in the smaller countries with healthy economies where near-zero rates are increasingly inappropriate, such as Canada, Switzerland, and Scandinavia.

Moving currency from your home country, whether on a regular basis or as a one-off, can be much less expensive if you use the services of a Forex company

“A third factor was the need for and process of global macroeconomic rebalancing. By rebalancing one means, in essence, the need for a lower US trade deficit and a correspondingly lower trade surplus by the world’s saver economies, primarily those of the Pacific Rim.

“After a significant improvement in the US trade balance during the 2008 crisis and its aftermath, the US returned to form during 2010 and the trade deficit increased again. In fact, US consumption indices are, once again, rising faster than its production indicators, in spite of the depreciation of the trade-weighted US dollar.”

Economic activity

“Another critical issue that is not getting the attention we feel it deserves is fiscal payback in developed markets. It seems to have been nearly forgotten that the horrifying drop in production and trades from late 2008 and early 2009 was stopped primarily through worldwide fiscal stimuli through 2009 and 2010.

“This impulse to economic activity is now fading, and is in fact being replaced in many countries (particularly the United Kingdom and peripheral Europe) by draconian public austerity packages. The assumption behind this mindset appears to be that private demand, helped along by continued easy monetary policy, will be enough to pick up the slack. We remain unconvinced.

“To repeat, the most notable feature of the global financial landscape remains the absence of resolution in any of these critical issues. The lack of any sense of global coordination (so critical in stopping the downward slide in 2009) adds more uncertainty to the mix, and makes it even less likely that any of these problems will be resolved without a high degree of volatility.

“We therefore expect 2011 to be a tumultuous year, one in which at least some of the global contradictions described above will be resolved for better or for worse. Our best guesses as to the developments an FX investor can expect in each of these defining themes for 2011 will follow in the second part of this series.”

Ebury Partners can be contacted directly on 0845 519 1009 or at www.eburypartners.co.uk

David Franks, Chief Executive, Blevins Franks: A QROPS can help you structure your pension funds to suit your expatriate status.

Whenever you take any wealth management decisions, whether it’s investment, tax planning or pensions, they should be based on your personal circumstances and objectives.  If you’ve moved abroad I recommend that you review your wealth management arrangements to make sure they are suitable for your position as a tax resident in your new country of residence and that they are the most effective they can be.

If you’ve moved from the UK your currency situation has obviously changed.  You may now have different requirements for income and growth, and your tax planning definitely needs to be reviewed since your income and assets are now taxed under a different tax regime.  You should also consider what tax planning opportunities your new country or your expatriate status has to offer.

While in the past UK pensions remained under the UK rules even if you had permanently moved overseas, this has changed since the introduction of QROPS in 2006.

Qualifying Recognised Overseas Pension Schemes (QROPS) are offshore pension schemes into which HM Revenue & Customs allows UK pensions to be transferred. The provider must meet a number of HMRC rules relating to how and when benefits can be taken and while they must comply with HMRC reporting requirements, this is only for the first five complete UK tax years.

Currency

Unlike UK pension schemes, the assets held within a QROPS and the income paid out can be in any major currency.  This is a significant benefit for British expatriates living in the Eurozone as they can match their pension income to the currency they are spending and therefore remove both exchange rate and exchange costs issues.

Many funds allow you to change the currency after the fund is set up so, for example, you could set up the fund in Sterling and change to Euros at a later date. If in the future you return to the UK you can convert back to Sterling.

Investment and income

Wherever you live, do make sure you take professional advice for your pension

When it comes to setting up your pension fund for your income and capital growth objectives, a QROPS may provide greater discretion over investment choice compared to that of UK-approved pension schemes. QROPS provide considerable flexibility to invest in a wide variety of diversified funds such as equities, bonds and real estate, as well as guaranteed investments to lower investment risk.

There is no requirement to buy an annuity with a QROPS (though you can do so if you wish), so you can leave your pension fund invested as long as you like.

QROPS also provide ability to vary your pension income (within limits) around your lifestyle and financial requirements.

If you have not yet taken your pension commencement lump sum you can still do so after you have transferred into a QROPS, though typically 70% of the fund must be used to provide an income for life.

If you have more than one pension fund you can consolidate them all into one QROPS. This makes it simpler for you to manage the investment assets and could also potentially reduce costs.

Tax benefits

A QROPS can provide significant tax benefits.  It is outside of UK PAYE and while income will be taxed in your country of residence with professional advice you can often set your QROPS up to provide various tax savings. This means you have more income to spend.

If you have been non-UK resident for the five complete and consecutive UK tax years leading up to your death, your fund is exempt from all UK taxes on death. From the 6 April 2011, the 82% tax on income drawdown if you are over 75 years is to be abolished, but at the same time the tax rate on those under 75 will increase from 35% to 55%. A QROPS will therefore help you leave your heirs a much larger inheritance when compared to UK schemes.

Once you are in a QROPS, there will be no further ‘benefit crystallisation events’ that occur so your fund can grow without limit. As a rule there will be no further UK tax charges arising; however certain holdings within a QROPS may still expose you to UK tax charges.

QROPS also avoid succession laws.

All things considered, QROPS can be a very attractive wealth management and tax planning opportunity for British expatriates.

While many private pensions can be transferred you cannot do so if you have already purchased an annuity or if you have begun taking benefits from a final salary scheme. UK state pensions also do not qualify.

You should always seek professional advice from a firm which is authorised to conduct UK pensions business, such as Blevins Franks Financial Management Limited, to ensure that a QROPS would be appropriate for your pension funds and your objectives and for advice on selecting which QROPS to use. An adviser will also explain exactly what benefits you and your family will receive.

Blevins Franks Financial Management Limited is authorised and regulated by the UK Financial Services Authority for the conduct of investment and pension business.

Contact details: To contact Blevins Franks for additional information go to www.blevinsfranks.com  or call them on 0044 (0)20 7336 1116 or email taxadvisoryservices@blevinsfranks.com