What is a Qualifying Recognised Overseas Pension Scheme (QROPS)?
A QROPS is a pension transfer scheme that is based in a jurisdiction other than the UK but is recognised by HMRC and follows the same standards or equivalent as a UK pension. Most expat UK pensions can easily be transferred into a QROPS, as long as the overseas scheme is registered with HMRC and is fully compliant with the standards of the jurisdiction it is domiciled in. QROPS’s profile was increased after HMRC introduced a series of new pension rules on 6th April 2006.
A QROPS plan will give you the potential to do the following:
- Reduce income tax on drawdown
- Remove the requirement to purchase an annuity
- Give you the ability to pass on remaining pension funds to beneficiaries on death, potentially without taxes
- Access up to 30% of the fund as a Pension Commencement Lump Sum (PCLS)
- Plan your drawdowns in line with your income needs
- Invest your funds with enhanced freedom and choice
What is a Qualifying Non-UK Pension Scheme (QNUPS)?
In essence, a Qualifying Non-UK Pension Scheme is nothing more than a definition.
This definition was introduced by Her Majesty’s Revenue and Customs (HMRC) within “The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010” to rectify a previous omission in the Finance Act 2004 (which had effect from 6 April 2006). This omission restricted protection from UK Inheritance Tax to UK registered pension schemes and section 615(3) schemes only.
What are the prescribed requirements for a Qualifying Non-UK Pension Scheme?
In essence only a scheme that is broadly equivalent to a UK registered pension scheme would meet the requirements to be defined as a QNUPS. The requirements are similar to the prescribed requirements for a pension scheme to be a Qualifying Recognised Overseas Pension Scheme (QROPS).
Key Benefits of QNUPS (include)
- Investment diversity – including residential BTL properties
- No restrictions based on earned income or UK lifetime/annual allowances
- No maximum age limit for investment
- Facilitates international pension consolidation
- No obligation to draw income until age 75
- Up to 30% tax free lump sum
- Tax efficient
Who is QNUPS suitable for
- Individuals wanting to save for their retirement.
- High net worth individuals who wish to top up their pensions tax efficiently.
- Anyone concerned about restrictions on UK Lifetime or Annual allowances.
- Individuals who would like to place residential “Buy to Lets” in their retirement plan.
- Foreign nationals with a potential UK IHT exposure.
- Expats who retain their UK domicile status with potential UK IHT exposure.