28 October 2016
Amendment of the pension provisions in Guernsey's Income Tax Law
The Guernsey Association of Pension Providers (GAPP) welcomes the publication of proposals by Guernsey's Treasury and Resources Department (T&R) to amend the pension provisions in Guernsey's Income Tax Law to enable Pan Island occupational pension schemes to receive transfer payments from UK registered pension schemes. The proposals are to be considered by the States of Guernsey at its December 2013 Meeting.
From April 2012 Guernsey occupational pension schemes have not been able to receive transfer payments from UK registered pension schemes if they had members outside Guernsey, since Her Majesty's Revenue and Customs ("HMRC") removed such pension schemes from the Qualifying Recognised Overseas Pension Scheme ("QROPS") list which is published on their website as a result of HMRC changes in the transfer requirements in April 2012. The changes now proposed by T&R remove the differential in tax treatment between Guernsey residents and non residents and should enable occupational pension schemes with members in more than one Island ("Pan Island Schemes") to regain QROPS status with HMRC and be able to receive transfer payments from UK registered pension schemes, thus facilitating pension transfers when a new employee moves to the Island from the UK.
The amendment in the Income Tax Law's pension provisions removes the current exemption from Guernsey income tax on pension payments where all the services to which the pension relates were performed outside Guernsey. However, the existence of Double Taxation Agreements between Guernsey and Jersey and the Isle of Man means that Jersey and Isle of Man members of a Pan Island Scheme should continue to be exempt from liability to Guernsey income tax.
President of GAPP, Stephen Ainsworth, said “This is a positive move to enable Pan Island Schemes to regain QROPS status and hence enable employees moving from the UK to bring their pension rights with them. It supports businesses with pension schemes which operate across the Islands. However, there will be issues for any Guernsey occupational pension schemes with members beyond the Islands and the UK. Employers sponsoring such schemes should be taking action now in order to avoid any unintended consequences of these proposed changes.”
The Guernsey Association of Pension Providers is an association of pension providers, pension trustees and others with an interest in pensions established to foster and promote pension arrangements in Guernsey.
The States of Guernsey is a self governing dependency of the British Crown. Further details of the December Billet for the States of Guernsey are available from its website at http://www.gov.gg/article/109435/2013-December-11th-Billet-XXIV.