Following the introduction of a 25% tax charge on transfers into QROPS based outside of the EEA, in its annual results for 2016, published this morning, STM Group said the ‘worst case scenario’ would see it receive £1.1 million less than expected in revenue this year.

‘This worst case scenario still represents double digit revenue growth from 2016 to 2017 and does not yet reflect changes in the Group’s cost base which management will focus on, where appropriate, to ensure that margins can be maintained,’ STM said.

STM believe the government change will ‘stagnate some of the QROPS market in Gibraltar and Malta’ which will lead to opportunities to make acquisitions.

STM had been reviewing ways to enter the UK SIPP market for some time to complement their existing international pensions business and provide a solution for those expatriates returning to the UK. In October 2016, STM saw the realisation of an important strategic objective by way of the acquisition of the SIPP provider, London & Colonial Holdings Limited (“LCH”). In its annual results, STM said it expected this SIPP business to be used as an alternative by advisers and clients who would have chosen a QROPS transfer before the introduction of the 25% tax charge.

Commenting on the results and prospects for STM, Alan Kentish, Chief Executive Officer, said that despite the Budget changes he expected the company to post a higher profit in 2017 than in 2016, when it posted a pre-tax profit of £2.8 million.

‘The 2017 spring Budget certainly has thrown a curve ball into our expectations for new QROPS business. However, our business model is based on a robust recurring revenue stream and thus, while profits for 2017 will have been impacted, we still expect a growth in profit compared to 2016,’ he said.