QNUPS is the latest acronym coming from the foreign pensions world created by HMRC. Qualifying Non UK Pension Schemes came into force on 15 February 2010 with the Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010.
QNUPS offer opportunities for inheritance tax planning as they are exempt from UK inheritance tax. By choosing a favourable jurisdiction, QNUPS can also be arranged so that the investor’s estate does not pay any inheritance or succession tax in the country where the scheme is based.
As you might expect, the rules that govern them are complicated, and as you might also expect, HMRC will be quick to swoop on anyone who falls foul of them. But the new QNUPS rules could be useful to Brits who are planning to live abroad, and those who are already resident overseas.
Is a QNUPS the same as a QROPS?
All QROPS must meet the QNUPS rules, so will therefore fall in both categories. However, a QNUPS does not necessarily have to be a QROPS as their regulations are tighter and more restrictive. So all QROPS are all QNUPS, but some QNUPS are not QROPS.
What are the differences between the schemes?
Much is being made in the media about QNUPS offering a more confidential method of investing pension assets. This is because QNUPS countries do not have to have double taxation agreements with the UK, and do not have to make the same reports to HMRC about the scheme’s activities in the first five years as QROPS. However, the reality is that desirable QNUPS destinations are likely to have double taxation agreements (DTAs), or at least tax information exchange agreements (TIEAs) with the UK, so if the taxman really does want to know what your money has been up to, he will be able to find out.
Guernsey, New Zealand and Hong Kong have already declared themselves as QNUPS jurisdictions, with Malta, Gibraltar and the Isle of Man likely to follow suit.
QNUPS can allow members to access benefits at the age of 55 or later, but the regulations suggest that members must take an income or buy an income bearing product at the age of 75. Accordingly you might have more flexibility about when you can access your money with a QROPS, although of course professional advice is essential on this point, as all schemes are different.
Perhaps the most welcome news about QNUPS is that they offer a wider range of asset classes compared to QROPS. Do you fancy having some art, wine or residential property in your retirement fund? Some QNUPS permit these investments.
Being only a few months old, QNUPS are very new and it remains to be seen how well the scheme is received by expats.
