Latest Financial 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.
UK Capital Gains Tax rises 10 per cent from midnight
22 June 2010(updated 28 June 2010)
UK Chancellor George Osborne has announced a 10% increase in Capital Gains Tax (CGT) for higher rate taxpayers in his emergency budget.
Changes to the CGT rate will take place from midnight today.
The new 28% rate is significantly lower than the estimates of 40-50% campaigned for by the Liberal Democrats and mentioned in the coalitionís agreement, which said CGT would reach "rates similar or close to those applied to income."
The lower CGT rate of 18% still applies to basic rate taxpayers but income and gains are taken together to determine the tax rate that applies.
Only gains within the unused balance of the basic rate band will be subject to the 18% rate.
By raising CGT, the chancellor aims to bring in £1billion per year.
In his budget, he also increased VAT from 17.5% to 20% from 4 Jan 2011 as widely forecast and raised the income tax-free threshold by £1,000 to £7,475 for those on lower incomes.
There was good news for UK business, as Mr Osborne reduced the headline corporation tax rate by 1% a year for four years, to 24%.
The small companies' tax rate will be reduced to 20% from 21% from April 2011.
For more information on the implications of the budget and how to minimise your CGT liabilities, please contact us.
Budget 2010 - The offshore bond solution to your CGT liabilities
The new UK coalition government's emergency budget will be delivered on 22 June and Capital Gains Tax (CGT) is likely to feature high up in the list of tax policy changes.
CGT is expected to rise significantly from its current rate of 18% to align more closely with income tax rates, potentially between 40% and 50%.
Simultaneously, the annual allowance before CGT becomes payable could drop from £10,100 to £2,000, further increasing the tax burden.
Investors have a unique but short window of possible opportunity between now and 22 June to minimise CGT by selling assets at the current rate ñ saving up to 32% should the new rates reach 50%.
Heading offshore
One of the most tax-efficient methods of minimising and deferring this liability is by investing in offshore bonds. Among the key features of these bonds is that they:
- allow investments to be bought and sold while held within the bond without attracting income tax or CGT
- can be cashed in later in life (e.g. retirement) when income is in a lower tax bracket
- can be assigned to someone in a lower tax bracket (e.g. a family member) to reduce the liability
- may be tax-free if cashed in when the policyholder is not a UK resident.
Act now for significant savings
The benefits of investing in offshore bonds before the likely tax changes are obvious. David Cameron, Managing Director of Gibraltar-based STM Life, explains how it works in practice: ìIf an investor crystallises an asset by selling it now, it will be subject to Capital Gains Tax at 18%.
"By investing the proceeds in an offshore bond they can use them to purchase other assets (or even use it to buy the same asset back) ñ but any future income received from the assets, or gains made when the asset is sold, is no longer subject to income tax or CGT.
"In contrast, if the investor waits until after 22 June, itís likely theyíll be hit with a tax of 40% plus. Itís vital to make the most of what I believe is a key window of opportunity for major tax planning."
A matter of time
Of course, there is still plenty of uncertainty surrounding the proposals. The exact rate is not known, nor is the date when the proposals will be enforced.
It is possible the increase could apply from budget day or, although unlikely, it may be backdated to 6 April 2010 or even 11 May when the new government came into power.
Next steps
The CGT changes will need to be further considered once the detailed proposals are announced. But if they go as experts are predicting, vendors of non-business assets should consider crystallising disposals sooner rather than later to third parties, life bonds or by disposals to trusts.
Alternatively, taxpayers could consider leaving the UK and becoming non-UK resident.
In any case, seek professional tax advice before taking action. Discuss purchasing offshore bonds with your IFA, stockbroker, or direct with STM Life, who will be happy to help.
Discover more about STM Group Plc.
STM Life Assurance PCC Plc is regulated by the Gibraltar Financial Services Commission
