With a complex subject like pensions, there are bound to be a few acronyms to get your head around. Pensions in the United Kingdom are complicated enough, but when you think about taking your pension abroad, there are more terms to get to grips with.
Once you have conquered QROPS (Qualified Recognised Overseas Pension Schemes), you may come into contact with the term “QNUPS”. What does this stand for, and do you want one?
A QNUPS is a Qualifying Non-UK Pension Scheme. Compared to QROPS which were introduced in 2006, QNUPS are the new kids on the block. Accordingly, advice, or rather good quality professional advice on getting one is essential. If HMRC spots any loopholes that they have left in the legislation, you can rest assured that they will swoop down and close them as soon as possible.
So what is the difference between them? At the risk of appearing to be contrary, the easiest starting point is to look at how they are the same. Like a QROPS, a QNUPS has to meet certain criteria set out by HMRC. A QROPS is always a QNUPS. However, a QNUPS is not necessarily a QROPS, because QROPS have a higher regulatory burden to meet.
So why get a QNUPS? QNUPS benefit from inheritance tax exemptions on the assets it holds, pension funds transferred from UK tax relieved scheme and contributions from current and previous UK residents.
QNUPS do not have to be situated in countries that have a double taxation treaty with the United Kingdom. To a certain extent this makes them confidential, as there are limited reporting requirements. It also technically makes them available in more countries than those in which QROPS are found.
QNUPS do not have strict restrictions on what they can hold, so you may find yourself able to invest in fine wines in your foreign pension fund!
However, QNUPS are very new, and as yet untested regarding HMRC. Not known for their generous interpretation of tax avoidance mechanisms, they are to be approached only by those who have investigated the schemes thoroughly with their tax and investment advisers.
