What You Need To Know About QNUPS

A Qualifying Non-UK Pension Scheme is an offshore pension scheme in which assets and cash that are not eligible for UK tax relief can be contributed.

The scheme was introduced on 15th February 2010 by the HM Revenue & Customs. Current QNUPS legislation provides significant savings and investment opportunities for British retirees.

A QNUPS offers a great opportunity to top up the overall amount of capital and assets that need to be saved for use during retirement as many people don’t have enough savings within their pension schemes to provide the amount of income they need in retirement.

If you are planning to transfer your pension to a Qualifying Non-UK Pension Scheme, an actuary will help you understand your retirement benefits to sustain your living standards in retirement.

A financial adviser can help you determine a sensible level of funding of contribution to a QNUPS. Click To Tweet

There are many benefits of Qualifying Non-UK Pension Scheme, including the extraction of pension in a tax efficient way, which, in most cases is the most challenging issue to resolve.

QNUPS Key Points To Be Aware Of

  • You can contribute to a Qualifying Non-UK Pension Scheme after retirement
  • The pension fund can be accessed for the rest of your life and any balance will be passed on to your loved ones
  • You don’t need to have been employer to make a contribution
  • There is no maximum contribution you can make to a Qualifying Non-UK Pension Scheme

QNUPS Pension

Who Can Benefit From A QNUPS?

Both UK residents and foreign nationals who still maintain UK Inheritance Tax (IHT) exposure can take advantage or benefit from a Qualifying Non-UK Pension Scheme .

UK retirement records are at a near-record low and many people with fully funded UK pensions in line with the current Lifetime Allowance limit can find that they don’t have enough money to sustain them in their retirement years.

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If you frequently travel from one country to another and work and live in different locations for a long period then you can benefit from a Qualifying Non-UK Pension Scheme.

You don’t have to sign up with a pension plan that can only be funded in one country.

A QNUPS is an international retirement plan. Click To Tweet

that accessed and contributed to no matter your country of residence.

While both expats and UK residents signing up with a Qualifying Non-UK Pension Scheme do so for retirement provisions, any funds remain in a QNUPS after your demise do not attract a UK IHT and can be passed on to your family rather than being distributed according to the will.

Are you wondering what does a QROPS Brexit mean For UK Expats in South Africa?

The Details You Need To Know About QNUPS

A Qualifying Non-UK Pension Scheme is a retirement planning scheme that offers flexibility and potential of growth so as to provide for your future as well as that of your loved ones.

The fact that QNUPS is not an approved non-UK pension scheme doesn’t mean that it is not recognized by Her Majesty’s Revenue and Customs (HMRC). As a matter of fact, they are defined by UK legislation and a taxation treatment for QNUPS has been set out by UK law.

Unapproved means that the taxation benefits associated with approved pension schemed don’t apply.

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For example, contributions made to an approved UK pension scheme are subject to tax relief whereas contributions to a QNUPS are not.

The good thing to being unapproved is the fact that there are limits regarding the contributions you can make and there are also not limitations on the investment the QNUPS can make.

A QNUPS can invest in commercial and residential properties in the UK and abroad, shares in personal and unquoted companies or any asset the trustee believes to be an investment potential.

As an investor, QNUPS allows to contribute to the growth of your own pension fund. The fact that a QNUPS can invest funds in a private trading company, it could accumulate shares, which means that any growth in the value of the company and dividend payments relating to the shares would be of benefit to the pension fund.

QNUPS vs QROPS

Transfers of shares to a Qualifying Non-UK Pension Scheme ought to allow the payment of post-corporation tax profits to the QNUPS without any addition tax, allowing you to use the profit to boost your retirement fund.

BONUS: CLICK HERE to get extra insights about the benefits of transferring a UK Pension to a QROPS.

QNUPS Has Fewer Restrictions

Considering the fact that Qualifying Non-UK Pension Scheme is an offshore scheme, the retirement fund is exempted from UK taxation.

UK captain gains tax should not be paid upon increase in value of trust funds. All other payments should be UK tax-free.

In fact, the trustees can make bearing loans of 25% of trust funds to the beneficiaries.

The freedom from taxations and restriction should enable a QNUPS to make wise investment decisions to produce returns beyond what would be expected through other conventional pension schemes.

When you approach your retirement years, the QNUPS goes back into a familiar pension scheme. Click To Tweet

This shows the importance of a QNUPS. Investing your money and claiming it is a more tax efficient compared to a convention pension.

This is more of a investment than a tax decision, and for this reason, it is important that you seek financial advice know whether QNUPS is good for you.

QNUPS Tax Saving

QROPS VS QNUPS – What’s The Difference

By definition all Qualifying Recognized Overseas Pension Schemes (QROPS) are QNUPS-Qualifying non-UK pension scheme. However not all QNUPS are QROPS.

In technical terms, QNUPS is neither a real product nor a pension scheme. Click To Tweet

These are generally rules that give pensions schemes that are overseas the ability to be inheritance tax exempt as long as there is no evidence of deliberate tax avoidance.

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QROPS on the other hand are schemes that are established outside the UK, recognized in the UK and regulated by the UK tax authority.

Where Recognized Overseas Pension Schemes (QROPS) do not meet HM Revenue and customs requirement when applying for UK inheritance tax exemption, they may be subjected to unauthorized payment charges. These charges are not subjected to QNUPS.

BONUS: CLICK HERE to get extra insights about the benefits of transferring a UK Pension to a QROPS.

Regulations Of QROPS and QNUPS

A-Day regulation of 2006 made it possible for anybody in the UK could opt for their pension scheme to be transferred into QROPS as long as the pension was not a life time annuity.

While these regulations attempted to simplify UK pension legislations, they omitted protection of some non-UK pension schemes from inheritance tax.

This omission meant that UK pensions being transferred to QROPS will be subjected to the UK inheritance tax.

This problem was solved in 2010 with the introduction of The Inheritance Tax Regulation (2010) which created QNUPS.

Other than introduction of QNUPS, the UK pension scheme has undergone numerous changes which include but not limited to; reduction of annual allowance, removal of annuity at age 75, anti-foresting, reducing lifetime allowance, among others.

QNUPS and QROPS do not have the same level of regulations.

Here are some of the main differences.

QNUPS Facts

Reporting Requirements For QROPS And QNUPS

QROPS are subjected to the reporting requirements for any payments and transfers for members who:

  • UK resident when the payment was made
  • Non-UK residents present in the UK during the tax year the payment was made or was in the UK in any of the 5 tax year preceding the said tax year

Reporting of income, payments, transfers or death benefits is done to the HMRC for five complete years before you become a non-UK resident.

Name and address are among the reports you give to HMRC.

No reporting is required for QNUP thus no details need to be provided to HMRC. Click To Tweet

Contributions Are Different For QROPS Vs QNUPS

You are allowed to make further contributions to QROPS as long as the reporting requirements of any payments are made in line with the above reporting conditions.

However, the level and taxation of income, investments and benefits such as death benefits could be restrictive.

Contributions made to QNUPS do not have QROPS restrictions. The investor will not need to have any relevant income since contributions do not attract any UK tax relief.

In the same regard, some QNUPS may require contributors may look at individual overall wealth to determine what is necessary to provide them with an appropriate level of retirement.

QNUPS

QNUPS Pension Transfers

Transfers from a UK pension scheme to QROPS is possible and allowed while QNUPS cannot receive any transfers from a registered UK pension scheme as this is considered as unauthorized payment by HMRC.

This is one of the major differences between QNUPS and QROPS.

QNUPS Investment Options

Investment in QROPS can be more restrictive than in QNUPS. QNUPS have a wider investment choice which includes investing in residential property and proving loans to members. SIPPS are another alternative to QROPS that should be considered.

BONUS: CLICK HERE to get extra insights about the benefits of transferring a UK Pension to a QROPS.