Britons retire tax free abroad

Under new rules Britons who emigrate permanently can transportation their stallion retirement economy, which have been topic to tax alleviation, to a foreign pension plan and not pay a penny in tax.

The money has to be moved to an approved scheme in an approved country for at least five years but after that there is no demand to pay back the tax alleviation.

While the move is expensive - finance companies complaint high fees to transportation funds - it is progressively seen as worthwhile for those with huge pension pots.

After the five year time period it is also possible under some strategy to convert the funds into cash. The growth number of wealthy pensioners pickings up the strategy is proving embarrassing to the authorities as it is also probably to lose the treasury millions of lb in gross.

The authorities admitted it had approved hundreds of applications from financial advisers to take their client's retirement funds offshore under the strategy known as the modification Recognised oversea Pensions strategy (QROPS), first introduced in April 2006.

Pension plans in the Isle of Man, Guernsey and t-shirt appear on an approved list of destinations for UK pension transfers, aboard Switzerland, Commonwealth of Australia and New Seeland.

Ros Altmann, an mugwump pensions adviser, said that the pension rule alteration at first appeared to have limited impact on the treasury, but it was quickly becoming widespread and possibly costing 1000000 of lb in lost taxes.

She said heritage tax gross could also be hit."The loss of tax to wealthy non-domiciles will seem like a sideshow compared to the tax losses on rich peoples' pensions," she said.

MPs accused the government of allowing rich retirees to enjoy extra benefits at a time when most workers face a "pensions crisis" and are preparing for steep falls in income when they reach retirement.

Lord Oakeshott, Liberal Democrat Treasury spokesman, said: "The Treasury must stamp out this now. When you have pumped up your pension pot with top-rate tax relief you can't then cheat the taxpayer by sailing off into a tax haven sunset to draw your pension."

A spokesman said HM Revenue & Customs (HMRC) would monitor foreign jurisdictions to make sure they complied with basic UK pension rules and were no more attractive, from a tax position, than remaining in the UK.

It is estimated that there will be 12.2 million pensioners in the UK by 2010, with 9.8% retiring overseas.

The total number of pensioners will rise to 17.5 million by 2050, with 3.3 million or 19% set to retire abroad.