If you’re looking to make the most out of your retirement fund, but are nervous about the limitations of your current UK corporate, private and Government pension schemes, then a Qualifying Non-UK Pension Scheme (QNUPS) may well be the way forward for you. The current tax liabilities on investments, property and UK pension funds are substantial, and a QNUPS will not only allow the transfer of pension funds; you can also transfer other assets into it. If you’re looking for the benefits of QNUPS explained in simple terms, then this handy QNUPS guide will help.
Introduction to QNUPS
A QNUPS is a trust that’s set up and managed overseas, and which for UK tax purposes qualifies as a pension. There is no annual or lifetime limit on how much you can contribute before you start to pay tax on it, unlike UK pension schemes, and the income you contribute doesn’t have to come from employment. There’s no capital gains tax on a QNUPS, and if your income into the fund doesn’t come from UK sources, then there’s no UK income tax either. Investing in a QNUPS is recommended for expatriates who are considering moving back to the UK, UK residents with a high net worth who have reached the limit on tax relievable pension income and those with an International Pension Plan (IPP) or a Qualifying Recognised Overseas Pension Scheme (QROPS).
Are QNUPS the Secret to faster & greater wealth creation?
As well as income tax and capital gains tax benefits, QNUPS also differ from UK pension schemes when it comes to UK succession laws and inheritance tax. UK inheritance tax is based not on your country of residence, but on your domicile, so if you currently live abroad but may return to the UK in the future, any investment assets you hold are likely to be affected by inheritance tax and Capital Gains Tax when you sell them. Unless, that is, you have a QNUPS. The regulations that make QNUPS proceeds on Death exempt from inheritance tax were only passed by HMRC in 2010, but have quickly made QNUPS a viable option for many people wishing to create greater wealth outside of the UK tax umbrella. As long as your QNUPS is set up in a country other than the UK, and that country both recognises it in terms of tax and regulates it as a pension, it is a valid scheme that isn’t reportable to HMRC.
QNUPS Benefits on Death
Aside from the benefits of a QNUPS to UK residents contributing over the annual limit for tax relief to UK pension schemes, the QNUPS benefits on death are clear. It may not be a subject that’s easy to think about, but what will happen to your assets, including money left over from your retirement fund, after your death? If you want to leave your family the maximum possible that you yourself have built up for your retirement but not fully used up, without it being affected by UK inheritance tax, then consider whether a QNUPS will be suitable for you.
Hopefully this guide to QNUPS has given you more to think about when it comes to your retirement, and what you’ll leave behind. For a more detailed discussion about QNUPS, and whether they’re right for you, you should talk to a qualified Financial Advisor who will be able to go through the information and discuss with you how it relates to your situation.