Latest EFRBS News
STM Group delivers market leading no entry cost QROPS product with Prudential International
Tuesday 10 May 2011
Following its recent success in resolving the Gibraltar QROPS crisis, STM has selected Prudential International's range of funds to offer a lite QROPS. This is the first product to offer clients a transfer to a QROPS without entry cost. When coupled with STMs commitment to no exit penalties (as with all STM QROPS schemes), this provides a truly unique offering in what is becoming a crowded market place.
Read the full article about the STM & Prudential QROPS
STM Group resolves the Gibraltar QROPS crisis
For the last two years Gibraltar has had a voluntary suspension on accepting UK pension transfers due to negotiations with HMRC over local tax rates. Clients and providers alike have found this to be a very frustrating time with millions of pounds of pension transfers being held up, potentially lost to other jurisdictions.
David Erhardt, Pensions Director of STM Group has designed a new Gibraltar QROPS scheme which we are pleased to announce has been approved by the Commissioner of Income Tax in Gibraltar and recognised by HMRC in the UK as a Qualifying Recognised Overseas Pension Scheme (QROPS).
Whilst full details of the new scheme are being kept confidential for obvious reasons, it is the expertise on QROPS and the detailed knowledge of the Gibraltar taxation system that has allowed STM to lead the way in resolving the Gibraltar QROPS crisis.
Whilst existing schemes remain in a state of suspension, STM is the only provider currently able to transfer pensions from the UK to a Gibraltar QROPS. Due to its geographical location, Gibraltar is within close proximity to a large number of expats who are able to visit their pension trustees for a face to face meeting. A Gibraltar QROPS also offers some unique advantages over other jurisdictions and therefore is a welcome addition to the STM Group multijurisdictional QROPS Wrap and follows hot on the heels of the launch of the STM Malta QROPS.
For a confidential discussion about your pension, please contact David Erhardt on the details below:
E: david.erhardt@stmfidecs.gi
T: +350 200 52476
or visit www.stm-qrops.com to read more about STM Group QROPS
and download your free QROPS guide.
Employment Income Through Third Parties (Finance Bill draft, released 09/12/10)
Prior to the draft legislation, transfers into EFRBS and EBT were not taxable as benefit to employees; however income tax would apply whenever an employee received benefit from the EFRBS or EBT. The draft legislation changes the taxable event from “receiving benefit” to “earmarking benefit”. To fall within the terms of the draft, earmarking must be carried out by third parties (e.g. trustees), not employers.
The draft legislation currently appears to have some opportunities that could mean a good future for carefully implemented and drafted arrangements (EBTs and EFRBS).
New ERBS and EBTs should not be executed until after the final wording of the Finance Bill is released in March 2011. However, it will be prudent for action to be taken in two cases:
- Where an existing EBT or EFRBS has outstanding loans to beneficiaries, a review is required to ensure that anti-forestalling will not apply.
- Where there is a wish to establish ad EBT or EFRBS prior to 5th April 2011, the establishment process and due diligence should be completed in the next few weeks, so that there will be time to make the investment and execute the deed, following the March release of the final wording, unless that wording entirely prohibits such trusts.
The STM EFRBS was developed with EFRBs specialist advisors Castellan, following difficulties experienced in the initial launch of EFRBS products and taking full consideration of the stance being developed at HMRC. The draft legislation largely reinforces the prudent and conservative stance we have always taken with regard to loans, corporation tax relief, sub-trusts etc. We feel well positioned to provide EBTs, EFRBs and other similar structures in the future. The provision of any such structures will need to be implemented carefully and with full consideration of the facts.
UK budget touches on EFRBS
The UK government announced in the 2010 budget that it will be introducing anti-avoidance legislation to combat the use of employee trusts and other vehicles in remuneration arrangements.
It released a statement which says, "The Government will be taking action to prevent efforts to avoid tax and National Insurance Contributions (NICs) on earnings provided through the use of trusts and other vehicles.
"Employers and employees are entering into arrangements using trusts and other vehicles that seek to avoid, defer or reduce liabilities to income tax and NICs on earnings or that seek to avoid restrictions on pensions tax relief."
"Arrangements in some cases seek to rely on the use of complex intermediary structures, some of which may be offshore.
"The Government is considering options for tackling these arrangements, including those which seek to avoid the restrictions on tax relief for pension schemes, and intends to introduce legislation in due course to take effect from 6 April 2011."
No further details are given, but Ian Jones, founder of EFRBS specialist Castellan, believes the Government is likely to include the use of sub-trusts, where close companies give monies to trusts which are then allocated so they are restricted for the benefit of individuals and families. Alternatively, benefits are provided tax-free after the end of employment.
Since it appears the measures will be preventing or deterring arrangements to disguise payments of remuneration, it is assumed that the employee would receive some sort of benefit, for example a loan. To disguise payments would infer that it is a non-commercial arrangement.
For many months, Castellan has been advocating strongly that any loan made to a member must be made by the trustees on a commercial basis.
STM Life Director, David Erhardt, commented, "Our view is that with our conservative approach and robust structure we will survive any attack."
We believe that EFRBS will be maintained as a long-term planning solution that can efficiently accumulate funds outside of an individual’s estate for inheritance tax, due to the way that the trust deed has been structured and the benefits it provides.
In particular we have always advocated that loans may be restricted, especially where the loans are not of a commercial nature. It may be that in future companies decide to take the most prudent route and remove the loans to members altogether.
STM Fidecs Pension Trustees Limited is regulated by the Gibraltar Financial Services Commission - License Number: FSC00845B
STM Fidecs Life, Health & Pensions Limited is regulated by the Gibraltar Financial Services Commission - License Number: FSC00996B
