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Safeguarding your Pension and Assets

IHT can be mitigated by giving away assets at least seven years before death. This is not an attractive option, as a person rarely know when they are going to die, and will seldom be content to rely on their relatives to maintain them, so this is generally a non-starter.

But there is another option, and one which is finding increasing favour; the qualifying non-UK pension scheme (QNUPS). A QNUPS is exempt from UK IHT on the member’s death.

There can be problems if the only reason for setting up a QNUPS is to avoid UK IHT. There is a danger that, where the member is in ill health and sets up the QNUPS with the sole objective of avoiding IHT, HMRC could seek to attack the arrangement. They would do this by trying to claim the pension was essentially a sham and was no different to a normal trust. This could lead to the member suffering a lifetime IHT charge on the transfer into the QNUPS, and a further charge on his death if he were to die within seven years. But there are so many other well-documented advantages in setting up a QNUPS that these additional motives should be easy to point to in order to rebut the suggestion of IHT avoidance should it ever be made.

The UK Government has shown that it is not beyond raiding UK pensions when it needs money to prop up its own finances. At the moment it needs money arguably more than at any time since the Second World War. This is not unique to the UK Government – most of the EU governments are in the same boat. Anything which puts assets into a friendlier tax climate, allowing more flexibility in their administration and drawing down, while also carrying substantial IHT tax advantages, would seem to be a very attractive proposition which should be grabbed with both hands.

A QNUPS can hold most assets subject to the Trustees consent; UK residential property (but not your main residence), fine wine, fine art and antiques may all be acceptable. Assets which will depreciate, such as cars and yachts, are generally excluded. Your investment decisions should be based on your specific circumstances and objectives. You should always seek advice and consult with a tax and wealth management specialist on how QNUPS can help you in your individual circumstances.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Other News

Expats with regular savings encouraged by new buy-to-let offerings

Terraced HousesGood news for UK expats with regular savings; lenders are introducing more buy-to-let mortgages specially designed to provide for the needs and circumstances of British expats. Until now there has been a shortage of viable deals, despite the fact that demand has been, and continues to be, strong.

Surprisingly, it is not expats from traditional destinations such as France and Spain who are likely to be the main customers of the buy-to-let deals. The United Arab Emirates and Dubai are reported to be the major markets for UK expat buy-to-let mortgages.

However, the mortgages will not be available to all expats. For example, expats resident in Australia, South Africa, Kenya and 89 other countries will be ineligible to borrow from the main provider, Skipton, and as such will have to look elsewhere before using their expat regular savings to make a buy-to-let investment.

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UK Managing Director, Ritchie Salkeld, Celebrates 50 Years in Financial Services

This month sees our UK Managing Director, Ritchie Salkeld, celebrate his 50th anniversary in financial services. Also approaching his 12 year anniversary at Blacktower, Ritchie has been a pivotal part in the development of the firm and has been responsible for overseeing the UK side of the business, running operations in the picturesque surroundings of […]

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