Investing in QNUPS provides several advantages to the investor. The main advantage is avoiding inheritance tax. The sole disadvantage of the scheme is that it does not provide any tax relief on the investment made.
The QNUPS scheme that was introduced by the HMRC in February 2010 is advantageous to UK citizens for several reasons. The most obvious feature is that by transferring their assets to these offshore funds, an individual can save his family from bearing the burden of inheritance tax.
There are also several other advantages to investing in QNUPS:
– These pension schemes are also a great investment option for people who are planning to retire overseas as they allow funds to be invested in almost every country in the world, even those with which the UK Government does not have double taxation agreements.
– Another advantage is that there is no restriction on the type of asset invested. In addition to cash and residential property, certain other items of an exotic nature such as antiques can be transferred to these schemes to avoid paying IHT.
– There is no maximum limit for the amount of funds or assets that can be transferred to this scheme. This allows the investor to move all his funds to an offshore scheme in case he retires to another country where he can access his funds at any time without paying tax.
– There is no restriction on the type of income invested in QNUPS. Unlike traditional schemes where only income from employment could be invested, income from any source can be invested in this scheme to avoid inheritance tax.
– There is also no restriction on the period for which investments can be made. With earlier pension schemes, an individual had to make every investment before his retirement as it was considered his main source of income after he retired. However, with this new scheme, a person can make investments or transfer assets even after he retires. This is especially useful in today’s world where due to increased life expectancy there are more than two generations of a family past the retirement age. In such a case, if the older person transfers his assets to a QNUPS, he will save his retired child from having to pay huge amounts under IHT.
– Finally, the funds invested under this scheme can be withdrawn or paid out in a currency of the investor’s choice, reducing the risks associated with currency conversions as a result.
The only disadvantage that QNUPS has is that it does not provide any tax relief to the investor on investments made, as is the case with conventional pensions. However, the benefits offered by this scheme far outweigh this disadvantage.