Our Services

Our Services

Trusts

Lutea’s primary activity is to act as Trustee of International Trusts and administer those trusts and underlying assets in accordance with the terms of the Trust, the trust law of the particular jurisdiction with the guidance of the Settlor via a Letter of Wishes.

We can provide trusteeship in Hong Kong, Jersey, Anguilla and the UK.

Lutea’s Trustee services include the following:

  • Maintenance of trustee minutes
  • Regular monitoring of trust assets
  • Maintenance of accounting records
  • Production of annual accounts
  • Preparation of Trust tax returns (for UK only)
  • Provision of relevant information to Settlors, Beneficiaries or their advisers for taxation purposes
  • Regular meetings with the Settlor or Principal Beneficiaries of the Trust

All trust assets are registered in the name of the trustees.

Quoted securities will normally be held by a broker or bank and Cash will be deposited with a bank of repute on interest bearing accounts.

All trust assets are registered in the name of the trustee.

Quoted securities will normally be held by a broker or bank and Cash will be deposited with a bank of repute on interest bearing accounts.

Costs

We will agree a fee with our client to establish a private trust to include reviewing any documentation, drafting of relevant documentation and execution of the trust and procurement of the Trust Fund.

Lutea charges an annual trustee fee agreed with the Settlor dependent upon the size, nature, activity, responsibility, risk and the time required to administer the Trust Fund.

Trusts

Lutea’s primary activity is to act as Trustee of International Trusts and administer those trusts and underlying assets in accordance with the terms of the Trust, the trust law of the particular jurisdiction with the guidance of the Settlor via a Letter of Wishes.

We can provide trusteeship in Hong Kong, Jersey, Anguilla and the UK.

Lutea’s Trustee services include the following:

  • Maintenance of trustee minutes
  • Regular monitoring of trust assets
  • Maintenance of accounting records
  • Production of annual accounts
  • Preparation of Trust tax returns (for UK only)
  • Provision of relevant information to Settlors, Beneficiaries or their advisers for taxation purposes
  • Regular meetings with the Settlor or Principal Beneficiaries of the Trust

All trust assets are registered in the name of the trustees.

Quoted securities will normally be held by a broker or bank and Cash will be deposited with a bank of repute on interest bearing accounts.

All trust assets are registered in the name of the trustee.

Quoted securities will normally be held by a broker or bank and Cash will be deposited with a bank of repute on interest bearing accounts.

Costs

We will agree a fee with our client to establish a private trust to include reviewing any documentation, drafting of relevant documentation and execution of the trust and procurement of the Trust Fund.

Lutea charges an annual trustee fee agreed with the Settlor dependent upon the size, nature, activity, responsibility, risk and the time required to administer the Trust Fund.

Company Formation & Administration

Lutea incorporates private companies in Hong Kong and Singapore and can administer them providing corporate secretary, registered office, directorship, book keeping and accounting services as required.

These services include:

  • Maintenance of corporate minutes;
  • Regular monitoring of company assets;
  • Maintenance of accounting records;
  • Production of annual accounts;
  • Optionally, production of financial statements on a quarterly basis;
  • Preparation of tax returns;
  • Provision of relevant information to the Owner or his or her adviser for taxation purposes;
  • Regular board meetings;
  • Lutea may provide the Directors to such companies at its discretion.

Costs

Lutea has a table of fixed fees available upon request for company formation, acting as Company Secretary and Registered Office, providing individual or corporate directors and corporate nominee shareholder.  

For Administration and accountancy we generally charge on a time basis and not by reference to the value of the company’s assets and prefer wherever possible to agree in writing a fixed fee with the owner, invoiced annually in advance in January each year.

Because changes in investment policy or unforeseen occurrences may arise from time to time which incur greater time costs than anticipated, Lutea will reserve the right to charge a higher fee if the time costs should exceed the fixed fee. This will usually be done after discussion with our client.

Online Registration Click here to go to our online company formation site and click the “Company Formation” button to see if your desired company name is available and then follow the online instructions. We will receive a notification once you have submitted the information and then contact you via email.

Company Formation & Administration

Lutea incorporates private companies in Hong Kong and Singapore and can administer them providing corporate secretary, registered office, directorship, book keeping and accounting services as required.

These services include:

  • Maintenance of corporate minutes;
  • Regular monitoring of company assets;
  • Maintenance of accounting records;
  • Production of annual accounts;
  • Optionally, production of financial statements on a quarterly basis;
  • Preparation of tax returns;
  • Provision of relevant information to the Owner or his or her adviser for taxation purposes;
  • Regular board meetings;
  • Lutea may provide the Directors to such companies at its discretion.

Costs

Lutea has a table of fixed fees available upon request for company formation, acting as Company Secretary and Registered Office, providing individual or corporate directors and corporate nominee shareholder.  

For Administration and accountancy we generally charge on a time basis and not by reference to the value of the company’s assets and prefer wherever possible to agree in writing a fixed fee with the owner, invoiced annually in advance in January each year.

Because changes in investment policy or unforeseen occurrences may arise from time to time which incur greater time costs than anticipated, Lutea will reserve the right to charge a higher fee if the time costs should exceed the fixed fee. This will usually be done after discussion with our client.

Online Registration Click here to go to our online company formation site and click the “Company Formation” button to see if your desired company name is available and then follow the online instructions. We will receive a notification once you have submitted the information and then contact you via email.

Foundations

A Foundation is a legal entity, consisting of a Council of Members, a Guardian, and Beneficiaries. It is formally registered like a Company and comes into existence when an individual or other legal entity (known as the Founder) endows it with assets (of almost any nature) by transfer of legal or beneficial ownership.

The drafting of the constitution of the Foundation requires considerable care when considering tax issues.

Lutea can advise its Asia clients via offices in Hong Kong and Singapore on the establishment of Family and Charitable Foundations and has sister companies which are registered statutory Council Members of and can establish and administer Foundations in Jersey and Anguilla.

Services

Lutea will provide initial advice, establish, act as Council member and administer Foundations including the following:

  • Maintenance of Council minutes;
  • Regular monitoring of assets;
  • Maintenance of accounting records;
  • Production of annual accounts;
  • Preparation of Tax returns;
  • Provision of relevant information to the Founder or Beneficiary or his or her adviser for taxation purposes;
  • Regular meetings with the Founder or Principal Beneficiaries.

Costs

We agree a fee for the establishment of the Foundation to incorporate initial advice and drafting of relevant documentation, or reviewing relevant initial advice and drafted documentation and execution of the Foundation documents and procurement of the Initial Endowment and registration of the Foundation as the Statutory Council Member.

We agree an annual fiduciary and administration fee which will depend upon the size, nature and variety of asset type of the Fund, the amount of activity of the Fund and the time taken to administer it.  If preferred this can be on an ad-valorem basis, subject to a minimum fee. 

Foundations

A Foundation is a legal entity, consisting of a Council of Members, a Guardian, and Beneficiaries. It is formally registered like a Company and comes into existence when an individual or other legal entity (known as the Founder) endows it with assets (of almost any nature) by transfer of legal or beneficial ownership.

The drafting of the constitution of the Foundation requires considerable care when considering tax issues.

Lutea can advise its Asia clients via offices in Hong Kong and Singapore on the establishment of Family and Charitable Foundations and has sister companies which are registered statutory Council Members of and can establish and administer Foundations in Jersey and Anguilla.

Services

Lutea will provide initial advice, establish, act as Council member and administer Foundations including the following:

  • Maintenance of Council minutes;
  • Regular monitoring of assets;
  • Maintenance of accounting records;
  • Production of annual accounts;
  • Preparation of Tax returns;
  • Provision of relevant information to the Founder or Beneficiary or his or her adviser for taxation purposes;
  • Regular meetings with the Founder or Principal Beneficiaries.

Costs

We agree a fee for the establishment of the Foundation to incorporate initial advice and drafting of relevant documentation, or reviewing relevant initial advice and drafted documentation and execution of the Foundation documents and procurement of the Initial Endowment and registration of the Foundation as the Statutory Council Member.

We agree an annual fiduciary and administration fee which will depend upon the size, nature and variety of asset type of the Fund, the amount of activity of the Fund and the time taken to administer it.  If preferred this can be on an ad-valorem basis, subject to a minimum fee. 

Pension (Providing for Retirement)

The provision of pension arrangements will increasingly become the responsibility of the individual.

Lutea can establish and administer Private International Personal and Company Pension Schemes in Hong Kong recognised as bone fide pension scheme across the globe, to allow flexible contributions (derived from past or present employment or self-employment) and provide income in retirement, for internationally mobile clients and for scheme members, wherever resident. Through our Hong Kong Office we offer bespoke pension and retirement planning, operating trust-based Pension Schemes, recognised for tax purposes in accordance with long established laws and pension regulations in Hong Kong, and act as trustee of Occupational Pension Schemes, registered with the pension regulator, the Mandatory Provident Fund Schemes Authority of Hong Kong (“MPFA”) under the Occupational Retirement Schemes Ordinance (“ORSO”).

Hong Kong has signed numerous Double Taxation Treaties with other countries which can lead to beneficial tax treatment for the member who draw retirement benefits from their Hong Kong pension in participating countries. Lutea can advise on the tax issues of contributions to and benefits withdrawn from the relevant Pension Scheme.

An ORSO scheme is a Hong Kong occupational pension established by an employer in respect of its employee(s), registered with and regulated by the Mandatory Provident Fund Schemes Authority(“MPFA”) in Hong Kong.

There must be an employer/employee relationship for an ORSO scheme to exist.

The minimum benefit age for an ORSO scheme is generally age 50, although it is commonplace for scheme benefits to be distributed to members upon ceasing employment before that age, subject to vesting rules.

As tax relief is not given in Hong Kong on contributions paid by a member to the Scheme (i.e. they are made from tax paid income), the entire fund can be withdrawn as a lump sum free of tax in Hong Kong upon retirement, as is the norm with Hong Kong employees.

Full tax relief is available to the employer on contributions of up to 15% of the employee’s total pensionable emoluments which includes benefits and bonuses. Tax relief is also available on extraordinary contributions made by the employer which are amortised at 20% per year over a five-year period rather than being relived in the year of contribution.

For owner managed businesses in Hong Kong it would be tax efficient for the company to establish an ORSO scheme and to pay an amount equivalent to 15% of the owner’s gross emoluments to the Scheme as a tax deductible expense of the business, and provide for a pension which can be withdrawn as a lump sum after age 50 and upon sale of, or retirement from, the business.

Membership of an ORSO scheme can be a useful staff attraction and retention benefit. There is no tax in Hong Kong on the accumulation of benefits within an ORSO Scheme.

There are strict regulations to follow under ORSO where the Scheme is a registered scheme, such as an annual return and statement of particulars of the Scheme to the MPFA and to file statutory audited accounts within the permitted time limits. For years ending after 30 June 2020 Employers are now required to submit an annual written statement to MPFA together with forms A & B signed off by the employer’s auditor confirming the Members Salaries and contributions for the relevant year.

Historically, where less than 50% of the members of a scheme are not Hong Kong Permanent Identity Card holders, an “ORSO Exempt” scheme could be operated to which apply less onerous regulatory obligations as set out under the Occupational Retirement Schemes Ordinance of Hong Kong. Note however that as of June 2020 this type of scheme is being phased out under new regulations enacted to curb abuse of the system.

If you are an employer/business owner in Hong Kong and you would like to explore providing pension benefits to your employees, or you and want to maximise the tax benefits of your business, or if you are on secondment to Hong Kong and your employer will agree to contribute for you, or for you to sacrifice up to 15% of your gross emoluments towards a pension, then you should consider establishing or participating in an ORSO pension scheme.

For Schemes with members that have UK connections it may be beneficial to structure your ORSO scheme as a QNUPS and if there are UK frozen pensions available to consolidate the Scheme can be registered with HMRC in the UK as a QROPS.

 

 

Costs

Lutea will agree an Establishment fee with its client to include the drafting of all relevant documentation, obtaining Solicitor’s Certification of the Scheme and registration of the scheme with MPFA in Hong Kong. A separate fee is payable for onboarding and opening of an investment account for each member.

Annual trustee fees are generally for a pension scheme on an ad-valorem basis payable quarterly in arrears.

Trustee fees for a Scheme of this type can be paid by the employer (and be tax deductible for the business) or the employee member fund.

A QNUPS is a non-UK pension plan which meets certain criteria laid down by HMRC in the UK to be treated for UK tax purposes as a qualifying overseas plan comprising benefits accumulated from contributions made in respect of employment or self-employment income.

The term Qualifying Non UK Pension Scheme came into being on 15 February 2010 by the enactment of UK Statutory Instrument 2010/51, designed to ensure that accumulated pension benefits of a Qualifying Recognised Overseas Pension Scheme (QROPS:- broadly an HMRC registered non-UK pension plan containing a UK tax relieved contributions) are not subject to UK Inheritance Tax on the death of the member, meaning that the value of the fund is outside of their estate on death.

A non-UK pension plan which meets the QNUPS conditions does not need to be registered with HMRC as a QROPS because it does not contain UK tax relieved contributions.

A QNUPS must be available to residents as well as non-residents of the country in which it is established, be recognised for tax purposes in that country, be regulated if there is a regulatory body that regulates that type of pension scheme in that country but if not, provide that not less than 70% of the relevant fund is used to provide an income for life for the member or otherwise be in a jurisdiction which has a Double Taxation and Exchange of Information Agreement with the UK.

For UK residents, UK tax relief is not available on contributions to a QNUPS (ie: it is funded from tax paid income). For cash contributions there is generally no UK tax issue but for assets transferred to the Plan, a capital gains tax charge may arise on the transfer to the plan if the member is resident in the UK. UK income tax and Capital Gains Tax is not payable by the trustees of a QNUPS, unless the underlying assets of the fund are situated within the UK; in which case the trustees could be subject to UK tax depending on the asset and the structure of ownership. Death benefits of a QNUPS are free of UK Inheritance Tax on the death of the Member. There is no UK HMRC reporting requirement for a QNUPS (unless it owns UK situated assets and therefore has a UK tax liability) as it does not contain UK tax relieved contributions. From a UK tax perspective a QNUPS is an “unapproved scheme”.

 


Hong Kong – UK Double Tax Agreement

 
Significant UK tax benefits are available to a UK resident Contributor drawing a pension income from the plan having accumulated pension benefits while working in Hong Kong through the Plan, from Hong Kong derived earnings, before returning to the UK to spend his or her retirement there. The same applies to ex-Hong Kong Government workers who have retired to the UK.


In such cases salaries tax may be but is not always payable in Hong Kong on the pension income in retirement (at a top rate of 17%) and is not taxable in the UK where a claim is made under Article 17 of the UK/Hong Kong Double Tax Treaty, and tax is paid in Hong Kong.


A certificate of tax paid in Hong Kong can be obtained and presented to HMRC annually. This can save in certain cases save tax on the pension altogether or where tax is payable in Hong Kong, save up to 28% UK income tax for someone who is subject to UK tax at the top rate of 45% and worked and saved for retirement in Hong Kong and retires to the UK, or another double tax treaty jurisdiction, to draw their Hong Kong pension.


If you have left the UK and are seeking to establish your own Retirement Plan to provide benefits in retirement for you, and/or your spouse, and your circumstances are such that an ORSO pension scheme would be fitting, then you should consider the benefits of a Qualifying Non-UK Pension Scheme as a flexible and tax efficient retirement option. If you are a Hong Kong resident and plan to retire to the UK then you should also consider this option.

A QROPS is a non-UK pension scheme which meets certain conditions laid down by Her Majesty’s Revenue & Customs of the UK (“HMRC”) to enable an individual resident anywhere in the world to transfer his or her frozen UK pension benefits overseas, to provide pension benefits to the individual in retirement, under the terms of that scheme and in accordance with the law of the country where the scheme is established.


Generally significant tax and practical benefits can arise to those who no longer live in the UK and who do not plan to return to live there permanently by transferring their accumulated UK pension benefits overseas.


When these UK pension transfer rules came into force on 6 April 2006 any value under the stated “Lifetime Allowance (“LTA”) of £1,800,000, or where pension pots were over that value on 6 April 2006 and Enhanced Protection was granted higher amounts, could be transferred overseas to any qualifying jurisdiction without a UK tax charge.


If the value being transferred was over the LTA then there was a 25% income tax charge on the excess which was deducted from the money transferred by the UK scheme and paid over to HMRC.


Since then, the LTA has gradually been eroded to its current level of £1,073,100 as at 6 April 2020. It is still possible to lodge a claim for Fixed or Individual Protection 2016 to raise this limit of protection to the lower of the value of your pension on 5 April 2016 and £1,250,000.


Flexible drawdown regulations were enacted in the UK from 6 April 2015 enabling a member to withdraw more than the amount previously permitted, where the member was age 55 or over, subject to the trustee’s approval. This sought to further increase the tax on pensions in the UK. From 6 April 2017 flexible drawdown was extended to QROPS.


Due to the phenomenal take up of QROPS transfers, HMRC has been increasingly keen to maximise the tax take before the money leaves the UK by reducing the LTA and with effect from 6 April 2017 imposed further restrictions on QROPS transfers such that if the pension is not transferred to the jurisdiction where the individual is tax resident, or to an occupational scheme provided by the member’s employer, the entire value is subject to a 25% income tax charge in the UK, to be withheld by the UK registered pension scheme before sending the funds overseas.


A list of QROPS that have notified HMRC of their existence and status where the trustee has agreed to be publicly listed can be seen on their website here.


Some of the Hong Kong pension Schemes of which Lutea acts as trustee are registered with HMRC as QROPS, because one or more Members of the Scheme, who are employees of the sponsoring employer, have requested that the trustee accept the transfer of their UK pension to Hong Kong to consolidate their pension benefits.


An Occupational Scheme in Hong Kong must be registered under the Occupational Retirement Schemes Ordinance (“ORSO”) with the Governing Pension Body of Hong Kong (“MPFA”).


The advantage for individuals living and working in Hong Kong is that the only type of registered and regulated pension scheme in Hong Kong is an employer sponsored ORSO scheme which means that the transfer of their UK pension benefits to the ORSO Scheme will qualify under the 6 April 2017 rules as both a transfer to a scheme in the place of residence and a scheme operated by the individual’s employer, although only one of these conditions needs to be satisfied.


Lutea can establish private ORSO schemes which are open to members admitted by the relevant employer of the scheme resident and not-resident, in Hong Kong.


Hong Kong is unique because it is one of the few countries which operate a territorial basis of taxation. There is no tax relief in Hong Kong on contributions paid to the Plan and both residents, and non-residents of Hong Kong, are subject to taxation in Hong Kong in the same manner. Salaries tax is payable in Hong Kong on that part of any resulting pension income which is derived from employment or self-employment in Hong Kong. Pension income which is derived from non-Hong Kong employment or self-employment is not subject to tax in Hong Kong. Lump sum pension benefits are not subject to tax in Hong Kong.


There is a 10-year reporting period under QROPS whereby the trustees of a QROPS undertake to notify HMRC of member payments beginning with the later of the date that the UK tax relieved benefits were transferred overseas, and 6 April 2012. Unauthorised payments from a QROPS will be subject to a combined 55% Member Payment and Scheme Sanction Charge, which can also apply to death benefits if the member dies resident in the UK.


Lutea as trustee has discretion as to how the fund is invested and how benefits are provided in retirement for the Contributor. Benefits must begin to be taken by the Contributor’s 75th birthday.

 

 

If you have left the UK, own a business in Hong Kong or a have a flexible Hong Kong employer pension as well as a frozen UK pension and do not plan to return permanently to the UK, then there is probably benefit in you considering whether you should transfer your UK pension to Hong Kong by setting up or registering an ORSO scheme with HMRC as a QROPS.

 

An ORSO scheme is a Hong Kong occupational pension established by an employer in respect of its employee(s), registered with and regulated by the Mandatory Provident Fund Schemes Authority(“MPFA”) in Hong Kong.

There must be an employer/employee relationship for an ORSO scheme to exist.

The minimum benefit age for an ORSO scheme is generally age 50, although it is commonplace for scheme benefits to be distributed to members upon ceasing employment before that age, subject to vesting rules.

As tax relief is not given in Hong Kong on contributions paid by a member to the Scheme (i.e. they are made from tax paid income), the entire fund can be withdrawn as a lump sum free of tax in Hong Kong upon retirement, as is the norm with Hong Kong employees.

Full tax relief is available to the employer on contributions of up to 15% of the employee’s total pensionable emoluments which includes benefits and bonuses. Tax relief is also available on extraordinary contributions made by the employer which are amortised at 20% per year over a five-year period rather than being relived in the year of contribution.

For owner managed businesses in Hong Kong it would be tax efficient for the company to establish an ORSO scheme and to pay an amount equivalent to 15% of the owner’s gross emoluments to the Scheme as a tax deductible expense of the business, and provide for a pension which can be withdrawn as a lump sum after age 50 and upon sale of, or retirement from, the business.

Membership of an ORSO scheme can be a useful staff attraction and retention benefit. There is no tax in Hong Kong on the accumulation of benefits within an ORSO Scheme.

There are strict regulations to follow under ORSO where the Scheme is a registered scheme, such as an annual return and statement of particulars of the Scheme to the MPFA and to file statutory audited accounts within the permitted time limits. For years ending after 30 June 2020 Employers are now required to submit an annual written statement to MPFA together with forms A & B signed off by the employer’s auditor confirming the Members Salaries and contributions for the relevant year.

Historically, where less than 50% of the members of a scheme are not Hong Kong Permanent Identity Card holders, an “ORSO Exempt” scheme could be operated to which apply less onerous regulatory obligations as set out under the Occupational Retirement Schemes Ordinance of Hong Kong. Note however that as of June 2020 this type of scheme is being phased out under new regulations enacted to curb abuse of the system.

If you are an employer/business owner in Hong Kong and you would like to explore providing pension benefits to your employees, or you and want to maximise the tax benefits of your business, or if you are on secondment to Hong Kong and your employer will agree to contribute for you, or for you to sacrifice up to 15% of your gross emoluments towards a pension, then you should consider establishing or participating in an ORSO pension scheme.

For Schemes with members that have UK connections it may be beneficial to structure your ORSO scheme as a QNUPS and if there are UK frozen pensions available to consolidate the Scheme can be registered with HMRC in the UK as a QROPS.

 

 

Costs

Lutea will agree an Establishment fee with its client to include the drafting of all relevant documentation, obtaining Solicitor’s Certification of the Scheme and registration of the scheme with MPFA in Hong Kong. A separate fee is payable for onboarding and opening of an investment account for each member.

Annual trustee fees are generally for a pension scheme on an ad-valorem basis payable quarterly in arrears.

Trustee fees for a Scheme of this type can be paid by the employer (and be tax deductible for the business) or the employee member fund.

A QNUPS is a non-UK pension plan which meets certain criteria laid down by HMRC in the UK to be treated for UK tax purposes as a qualifying overseas plan comprising benefits accumulated from contributions made in respect of employment or self-employment income.

The term Qualifying Non UK Pension Scheme came into being on 15 February 2010 by the enactment of UK Statutory Instrument 2010/51, designed to ensure that accumulated pension benefits of a Qualifying Recognised Overseas Pension Scheme (QROPS:- broadly an HMRC registered non-UK pension plan containing a UK tax relieved contributions) are not subject to UK Inheritance Tax on the death of the member, meaning that the value of the fund is outside of their estate on death.

A non-UK pension plan which meets the QNUPS conditions does not need to be registered with HMRC as a QROPS because it does not contain UK tax relieved contributions.

A QNUPS must be available to residents as well as non-residents of the country in which it is established, be recognised for tax purposes in that country, be regulated if there is a regulatory body that regulates that type of pension scheme in that country but if not, provide that not less than 70% of the relevant fund is used to provide an income for life for the member or otherwise be in a jurisdiction which has a Double Taxation and Exchange of Information Agreement with the UK.

For UK residents, UK tax relief is not available on contributions to a QNUPS (ie: it is funded from tax paid income). For cash contributions there is generally no UK tax issue but for assets transferred to the Plan, a capital gains tax charge may arise on the transfer to the plan if the member is resident in the UK. UK income tax and Capital Gains Tax is not payable by the trustees of a QNUPS, unless the underlying assets of the fund are situated within the UK; in which case the trustees could be subject to UK tax depending on the asset and the structure of ownership. Death benefits of a QNUPS are free of UK Inheritance Tax on the death of the Member. There is no UK HMRC reporting requirement for a QNUPS (unless it owns UK situated assets and therefore has a UK tax liability) as it does not contain UK tax relieved contributions. From a UK tax perspective a QNUPS is an “unapproved scheme”.

 


Hong Kong – UK Double Tax Agreement

 
Significant UK tax benefits are available to a UK resident Contributor drawing a pension income from the plan having accumulated pension benefits while working in Hong Kong through the Plan, from Hong Kong derived earnings, before returning to the UK to spend his or her retirement there. The same applies to ex-Hong Kong Government workers who have retired to the UK.


In such cases salaries tax may be but is not always payable in Hong Kong on the pension income in retirement (at a top rate of 17%) and is not taxable in the UK where a claim is made under Article 17 of the UK/Hong Kong Double Tax Treaty, and tax is paid in Hong Kong.


A certificate of tax paid in Hong Kong can be obtained and presented to HMRC annually. This can save in certain cases save tax on the pension altogether or where tax is payable in Hong Kong, save up to 28% UK income tax for someone who is subject to UK tax at the top rate of 45% and worked and saved for retirement in Hong Kong and retires to the UK, or another double tax treaty jurisdiction, to draw their Hong Kong pension.


If you have left the UK and are seeking to establish your own Retirement Plan to provide benefits in retirement for you, and/or your spouse, and your circumstances are such that an ORSO pension scheme would be fitting, then you should consider the benefits of a Qualifying Non-UK Pension Scheme as a flexible and tax efficient retirement option. If you are a Hong Kong resident and plan to retire to the UK then you should also consider this option.

A QROPS is a non-UK pension scheme which meets certain conditions laid down by Her Majesty’s Revenue & Customs of the UK (“HMRC”) to enable an individual resident anywhere in the world to transfer his or her frozen UK pension benefits overseas, to provide pension benefits to the individual in retirement, under the terms of that scheme and in accordance with the law of the country where the scheme is established.


Generally significant tax and practical benefits can arise to those who no longer live in the UK and who do not plan to return to live there permanently by transferring their accumulated UK pension benefits overseas.


When these UK pension transfer rules came into force on 6 April 2006 any value under the stated “Lifetime Allowance (“LTA”) of £1,800,000, or where pension pots were over that value on 6 April 2006 and Enhanced Protection was granted higher amounts, could be transferred overseas to any qualifying jurisdiction without a UK tax charge.


If the value being transferred was over the LTA then there was a 25% income tax charge on the excess which was deducted from the money transferred by the UK scheme and paid over to HMRC.


Since then, the LTA has gradually been eroded to its current level of £1,073,100 as at 6 April 2020. It is still possible to lodge a claim for Fixed or Individual Protection 2016 to raise this limit of protection to the lower of the value of your pension on 5 April 2016 and £1,250,000.


Flexible drawdown regulations were enacted in the UK from 6 April 2015 enabling a member to withdraw more than the amount previously permitted, where the member was age 55 or over, subject to the trustee’s approval. This sought to further increase the tax on pensions in the UK. From 6 April 2017 flexible drawdown was extended to QROPS.


Due to the phenomenal take up of QROPS transfers, HMRC has been increasingly keen to maximise the tax take before the money leaves the UK by reducing the LTA and with effect from 6 April 2017 imposed further restrictions on QROPS transfers such that if the pension is not transferred to the jurisdiction where the individual is tax resident, or to an occupational scheme provided by the member’s employer, the entire value is subject to a 25% income tax charge in the UK, to be withheld by the UK registered pension scheme before sending the funds overseas.


A list of QROPS that have notified HMRC of their existence and status where the trustee has agreed to be publicly listed can be seen on their website here.


Some of the Hong Kong pension Schemes of which Lutea acts as trustee are registered with HMRC as QROPS, because one or more Members of the Scheme, who are employees of the sponsoring employer, have requested that the trustee accept the transfer of their UK pension to Hong Kong to consolidate their pension benefits.


An Occupational Scheme in Hong Kong must be registered under the Occupational Retirement Schemes Ordinance (“ORSO”) with the Governing Pension Body of Hong Kong (“MPFA”).


The advantage for individuals living and working in Hong Kong is that the only type of registered and regulated pension scheme in Hong Kong is an employer sponsored ORSO scheme which means that the transfer of their UK pension benefits to the ORSO Scheme will qualify under the 6 April 2017 rules as both a transfer to a scheme in the place of residence and a scheme operated by the individual’s employer, although only one of these conditions needs to be satisfied.


Lutea can establish private ORSO schemes which are open to members admitted by the relevant employer of the scheme resident and not-resident, in Hong Kong.


Hong Kong is unique because it is one of the few countries which operate a territorial basis of taxation. There is no tax relief in Hong Kong on contributions paid to the Plan and both residents, and non-residents of Hong Kong, are subject to taxation in Hong Kong in the same manner. Salaries tax is payable in Hong Kong on that part of any resulting pension income which is derived from employment or self-employment in Hong Kong. Pension income which is derived from non-Hong Kong employment or self-employment is not subject to tax in Hong Kong. Lump sum pension benefits are not subject to tax in Hong Kong.


There is a 10-year reporting period under QROPS whereby the trustees of a QROPS undertake to notify HMRC of member payments beginning with the later of the date that the UK tax relieved benefits were transferred overseas, and 6 April 2012. Unauthorised payments from a QROPS will be subject to a combined 55% Member Payment and Scheme Sanction Charge, which can also apply to death benefits if the member dies resident in the UK.


Lutea as trustee has discretion as to how the fund is invested and how benefits are provided in retirement for the Contributor. Benefits must begin to be taken by the Contributor’s 75th birthday.

 

 

If you have left the UK, own a business in Hong Kong or a have a flexible Hong Kong employer pension as well as a frozen UK pension and do not plan to return permanently to the UK, then there is probably benefit in you considering whether you should transfer your UK pension to Hong Kong by setting up or registering an ORSO scheme with HMRC as a QROPS.

 

Wills, Probate & Estate Administration

A staggering proportion of people die each year without having written a Will, resulting with incorrect succession, unnecessary tax liabilities and an inevitably lengthy and complicated probate and estate administration process.

Writing a Will is one of the most important tasks an individual should undertake in his or her lifetime but too often it is overlooked.

Objectives

  • Educate our clients on the law of domicile and succession;
  • Listen to our clients wishes and objectives;
  • Advise on the different options, and
  • Implement the most suitable solution given the clients circumstances, plans, the extent and nature of the estate and the circumstances of the intended beneficiaries, endeavouring at all times to keep things as simple and economical as possible.

Costs

Estate Planning and Wills:

Fees are agreed on a per client basis depending upon the complexity of the task and the amount of time required to undertake the work.  Once we are appraised of the circumstances we provide a recommendation and quotation.


Probate/Estates:

To administer an Estate and obtain probate can be a lengthy and time consuming exercise. We charge for these services on a time/cost basis and provide the Executors with a written quotation once the extent and nature of the Estate and the amount of work required is clear.

Estate and death duty or inheritance tax planning is often a vital part of the process of drafting of a Will and through our qualified team of professionals we are able to provide relevant advice resulting in an educated client with the most appropriate planning in place and a tax efficient Will.

Lutea can administer deceased Estates and manage international Probates, accounting for the assets, following the distribution under the Will and undertaking the necessary tax reporting.

We can also provide advice to beneficiaries on the Tax consequences of their inheritance.

Wills, Probate & Estate Administration

A staggering proportion of people die each year without having written a Will, resulting with incorrect succession, unnecessary tax liabilities and an inevitably lengthy and complicated probate and estate administration process.

Writing a Will is one of the most important tasks an individual should undertake in his or her lifetime but too often it is overlooked.

Objectives

  • Educate our clients on the law of domicile and succession;
  • Listen to our clients wishes and objectives;
  • Advise on the different options, and
  • Implement the most suitable solution given the clients circumstances, plans, the extent and nature of the estate and the circumstances of the intended beneficiaries, endeavouring at all times to keep things as simple and economical as possible.

Costs

Estate Planning and Wills:

Fees are agreed on a per client basis depending upon the complexity of the task and the amount of time required to undertake the work.  Once we are appraised of the circumstances we provide a recommendation and quotation.


Probate/Estates:

To administer an Estate and obtain probate can be a lengthy and time consuming exercise. We charge for these services on a time/cost basis and provide the Executors with a written quotation once the extent and nature of the Estate and the amount of work required is clear.

Estate and death duty or inheritance tax planning is often a vital part of the process of drafting of a Will and through our qualified team of professionals we are able to provide relevant advice resulting in an educated client with the most appropriate planning in place and a tax efficient Will.

Lutea can administer deceased Estates and manage international Probates, accounting for the assets, following the distribution under the Will and undertaking the necessary tax reporting.

We can also provide advice to beneficiaries on the Tax consequences of their inheritance.

Accountancy Services

Our bookkeeping and accounts team draws on a wealth of professional experience in dealing with business and trust accounting, providing financial recording and reporting in accordance with internationally accepted accounting standards.

Whether you require a Trust, a Company, a Foundation or a Pension Scheme, the assets, liabilities and financial transactions of the entity need to be accounted for accurately and in a timely fashion in order to produce a comprehensive set of financial statements, at least annually, in order to enable you, the client, and the trustees or directors of the board, to efficiently manage the wealth and plan appropriately for distributions, dividends, future investments, restructuring, tax reporting or payments and regular monitoring.

All of our entities are accounted for centrally on one globally accessible, state of the art accounting system, which is maintained across all administration locations. We have the capacity to deal with incomplete records and to reconstruct financial histories and prepare comprehensive financial statement for complex structures across multi jurisdictions.

We also prepare accounts for UK companies including preparation of corporate tax returns.

Accountancy Services

Our bookkeeping and accounts team draws on a wealth of professional experience in dealing with business and trust accounting, providing financial recording and reporting in accordance with internationally accepted accounting standards.

Whether you require a Trust, a Company, a Foundation or a Pension Scheme, the assets, liabilities and financial transactions of the entity need to be accounted for accurately and in a timely fashion in order to produce a comprehensive set of financial statements, at least annually, in order to enable you, the client, and the trustees or directors of the board, to efficiently manage the wealth and plan appropriately for distributions, dividends, future investments, restructuring, tax reporting or payments and regular monitoring.

All of our entities are accounted for centrally on one globally accessible, state of the art accounting system, which is maintained across all administration locations. We have the capacity to deal with incomplete records and to reconstruct financial histories and prepare comprehensive financial statement for complex structures across multi jurisdictions.

We also prepare accounts for UK companies including preparation of corporate tax returns.

Tax Advisory, Compliance and Succession Planning

Lutea’s Tax Advisory, Compliance and succession planning team comprises Private Client Lawyers, Chartered Tax Advisers, Taxation Technicians, Chartered Accountants and Trust & Estate Practitioners professionally qualified and experienced in providing advice and support in respect of Tax, Accounting, International Trusts, Companies and individual estate planning for clients in Hong Kong, Singapore and the surrounding Asia region.

For clients with UK connections or assets Lutea can assist with advice on Residence, Domicile, Inheritance Tax, Capital Gains Tax and Income Tax issues.

Examples of the type of services provided are as follows:

  • UK arrival/departure planning, what to do, how to do it, what to avoid, specifically focussed on the taxation treatment;
  • Domicile advice, proving a change of domicile and related tax consequences and considerations;
  • Remittance basis planning for individuals resident but not domiciled in the UK;
  • Inheritance Tax and succession planning for families; how to pass wealth to the next generation in a tax efficient, practical and sensible manner and maintain it, avoiding family conflict;
  • Hong Kong / UK Double Taxation Treaty advice covering matters  between Hong Kong and the UK;
  • UK tax compliance services including the completion of Self-Assessment tax returns and compliance for individuals, companies and Trustees;
  • Tax efficient property ownership, High Value Residential Property Tax planning;
  • International retirement planning;
  • Death Estate Planning.

Costs

Lutea charges fees for consultancy and advice on a time/cost basis.  An initial meeting is generally offered without charge in order to ascertain the position and gather information after which he will follow up with an attendance note, recommendations and fee quote for the work via email.

Tax Advisory, Compliance and Succession Planning

Lutea’s Tax Advisory, Compliance and succession planning team comprises Private Client Lawyers, Chartered Tax Advisers, Taxation Technicians, Chartered Accountants and Trust & Estate Practitioners professionally qualified and experienced in providing advice and support in respect of Tax, Accounting, International Trusts, Companies and individual estate planning for clients in Hong Kong, Singapore and the surrounding Asia region.

For clients with UK connections or assets Lutea can assist with advice on Residence, Domicile, Inheritance Tax, Capital Gains Tax and Income Tax issues.

Examples of the type of services provided are as follows:

  • UK arrival/departure planning, what to do, how to do it, what to avoid, specifically focussed on the taxation treatment;
  • Domicile advice, proving a change of domicile and related tax consequences and considerations;
  • Remittance basis planning for individuals resident but not domiciled in the UK;
  • Inheritance Tax and succession planning for families; how to pass wealth to the next generation in a tax efficient, practical and sensible manner and maintain it, avoiding family conflict;
  • Hong Kong / UK Double Taxation Treaty advice covering matters  between Hong Kong and the UK;
  • UK tax compliance services including the completion of Self-Assessment tax returns and compliance for individuals, companies and Trustees;
  • Tax efficient property ownership, High Value Residential Property Tax planning;
  • International retirement planning;
  • Death Estate Planning.

Costs

Lutea charges fees for consultancy and advice on a time/cost basis.  An initial meeting is generally offered without charge in order to ascertain the position and gather information after which he will follow up with an attendance note, recommendations and fee quote for the work via email.

Connect with us for a discussion and to learn more.

Lutea