What are QNUPS?
Qualified Non-UK Pension Schemes (QNPS) are a relatively new HMRC introduction that have gained in popularity since 2010, and can provide prosperous retirement opportunities for UK residents and British nationals enjoying later life abroad. A QNUP is the regulatory standard that must be met by overseas pension providers to afford exemption from UK inheritance tax, and they often have no limit on the amount of funds the member might wish to invest.
QROPS vs. QNUPS
QROPS and QNUPS can be easily confused, but it is important to remember that QNUPS are not specific products or pension schemes, but the name given to schemes which comply with the International Organisation in the UK International Organisations Act 1968 Section 1(a).
QNUPS pension providers must be based outside of the UK, and therefore recognised in their country of origin for tax purposes under local legislation. Qualifying Recognised Overseas Pension Schemes (QROPS) again meet HMRC criteria, and are for those with existing UK-based pensions choosing to retire abroad, as they cater to transfers from UK schemes. Consequently, they have stricter reporting measures, and can’t accept non-occupational investments, such as shares or commodities.
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Who is a QNUPS pension for?
QNUPS are often marketed to high net worth individuals, as in most cases there is no maximum limit to the amount that can be deposited at any one time. However, they are suitable for any UK or non-UK resident who wishes to hold a recognised international pension scheme. You can start to make contributions at any age, and unlike QROPS the scheme grants ex-pats relief on their estate’s inheritance tax, without having to change their domicile address. QNUPS suit those who permanently live outside of the UK and those who travel frequently from country to country.
Benefits of QNUPS
One of the main attractions of QNUPS is the ability to grow and provide for loved ones with a comfortable living, as it is possible to transfer assets, including capital gains, from a QNUP to beneficiaries upon death, with little or none of the associated inheritance tax which often hinders families of large estates. Assets, which can be invested in the arts and antiques, can be started in any currency, proving advantageous for travellers. Income can be received after members reach the age of 55, but a QNUP can be taken out much later in life, and is therefore beneficial for individuals who have made a commitment to a retirement lifestyle after finishing their chosen career, and have income from multiple sources. QNUPS are also relatively low cost to set up, with nominal one-off fees.
Limitations of QNUPS
Due to the obvious allure of inheritance tax mitigation, QNUPS can often be misunderstood and must be treated with caution. Always seek instruction from a qualified financial advisor before investing with a regulated QNUPS provider. It is worth looking into the finer details of the scheme when it comes to splitting assets upon divorce, and it is key to note that QNUPS do not absolve the holder of tax on the investments made within the scheme itself.
QNUPS minimum values
The beauty of QNUPS is that there is no conditional minimum value, although check with the provider in question before assuming anything, as some policies may specify a certain amount. Depending on where in the world the QNUP scheme is based, it must pass the pensions benefit test, which stipulates that the chosen plan must return a minimum 70 per cent of the value of the fund as an income for life. It is important to be aware that the individual may face UK tax fees if they surmount the UK Lifetime Allowance limit, which this year stands at £1,073,100 (2020-2021).
How to set up a QNUPS
The first step towards obtaining a QNUPS, is to assess qualities of a number of potential providers via thorough research of the global market. This is where it is beneficial to enlist the services of our team of team independent financial advisors, as QNUPS litigation can be complex. With foreign policy in flux, it is prudent to make sure the product you choose is right for you. It generally takes around 1-2 weeks to set up a QNUPS plan, and unlike other overseas pension schemes, you are thereafter able to fortify funds for as long as you desire.
QNUPS advice from Blacktower
Leaving work and moving abroad can be a daunting choice for anyone, and getting clear advice from our team of experts can help to put your mind at ease when considering a QNUP for your retirement plan. Once we have discussed the options available to you, we can assist with taking the next step to transfer your assets to a regulated HMRC QNUPS provider. Alternatively, find out how we can advise you on defined benefit pension schemes, defined contribution plans, QROPS and SIPPs.