Changes to pension tax laws

24 August 2016 |

On 21 August 2015, the BILLET D’ÉTAT XVI 2015 (the “Billet”) published the long-awaited proposals to amend Guernsey pensions legislation in reaction to the new “flexibilities” introduced in April 2015 to the UK pensions regime. In this note we have set out more detail on how the changes work and some practical implications.

In a nutshell, the proposals are that:

RATS with funds transferred in from overseas pension schemes meeting certain criteria

  • If separately identifiable, these funds may retain benefit rights of pre-transfer jurisdiction
  • Lump sums derived from overseas schemes of up to 30% are tax free

RATS with funds transferred in from unapproved section 40(o) schemes

  • If separately identifiable, these funds may retain benefit rights of rules of transferor scheme

Guernsey residents with benefits in a “relevant overseas scheme”

  • Commutation lump sums from “relevant overseas schemes” will now be subject to Guernsey income tax, except that lump sums up to 30% are exempted
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