If you’re new to the Isle of Man or thinking of making a move, you may be wondering how your pensions and investments will work.
Here are seven things that might help you:
1 – State pension
If you’re already receiving your UK state pension:
-your state pension will continue to be paid by the UK Government
-the UK Government will not deduct UK tax from it, but it will be subject to tax in the Isle of Man.
If you’re yet to retire, you will receive a UK state pension based on the number of state pension qualifying years you’ve accrued in the UK.
And, if you work in the IOM, you will also accrue IOM state pension entitlement.
You can get a UK state pension forecast here.
Request a State Pension forecast online if you are thinking about moving from the UK to the Isle of Man. Click To Tweet2 – Other pension income from the UK
Income from other UK pensions, such as occupational pension schemes, is generally paid after UK tax has been deducted. This taxation is the default position if you do nothing.
You can, however, complete this form so that no UK tax is initially deducted:
3 – UK personal pensions and tax-free lump sums
A UK personal pension (or Self Invested Personal Pension, SIPP) does not carry automatic entitlement to a 25% tax-free lump sum for IOM residents. It is subject to IOM income tax.
Transferring to particular Isle of Man schemes can provide this lump sum entitlement; however, it can enhance it to 30% in certain situations.
Seek professional advice first!
4 – Tax relief
One of the main benefits of saving into a pension is the tax relief you receive on your contributions.
Rules exist that limit tax relief if you continue contributing to a UK scheme as an IOM resident.
Depending on your circumstances, you may need to reduce or stop these contributions. Setting up an IOM scheme may also be an option to make the most of pension tax relief available to you here.
Depending on your circumstances, you may need to reduce or stop pension contributions when you move to the Isle of Man. Speak to us first! Click To Tweet5 – Investment Bonds
If you have an Investment Bond issued by one of the major insurance companies, you may have been taking regular withdrawals in the UK to help meet living and other costs.
A different regime exists in the IOM for such Bonds. It’s not generally advisable to continue to take regular withdrawals from such products.
6 – UK assets and inheritance tax
You may be aware that there is no inheritance tax in the IOM.
Just because you have moved from the UK does not mean you have extracted yourself from the UK inheritance tax net. It’s not that simple!
Several steps need to be taken to get to this point, which could eventually save your estate 40% inheritance tax.
No inheritance tax is one attraction for those moving from the UK to the Isle of Man. But make sure you have followed the right process! Click To Tweet7 – Investment portfolios and overexposure to UK assets
We sometimes see people from the UK with overexposure to the UK stock market within their investments and pensions. Global diversification is vital.
It may be worth checking that your investments have a global outlook.
Please get in touch if you require help with any of these issues.
All of this can be planned for and taken care of to allow you to enjoy everything the Island has to offer.
