London & Colonial are poised to launch a Qualifying Recognised Overseas Pension Scheme (QROPS) in Gibraltar, following reports of an end to a tax dispute in the territory.
The UK Treasury has been locked in a 10-month battle with authorities in Gibraltar over the tax status of QROPS, and the British Overseas Territory's 0% income tax charge on pension income for the over 60s.
HMRC says pension income from a QROPS must be taxed and a 0% rate was inconsistent with a ‘progressive' tax system.
Adam Wrench, product development manager at London & Colonial, says: "Sources close to the situation are telling us a deal has been done. The two parties have agreed the principles. All that remains is for the words to be written."
While no official announcement has been made by either HMRC or the Gibraltar authorities, Wrench says Gibraltar will likely wait to reveal the changes as part of its Finances Act, due for passing in April.
He adds: "We have been waiting 10 months for movement on this, so to have an end date is a huge step forward."
Since the beginning of the dispute, trustees of QROPS in Gibraltar had voluntarily suspended pension transfers from the UK pending resolution of the issues until clarification from HMRC, fearing clients could be hit with a tax charge of up to 55% if the Treasury decided to remove Gibraltar's QROPS status.
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