Qualifying Non-UK Pension Schemes (or QNUPS) may only have been introduced by HMRC in February 2010, but are already proving to be an excellent pension opportunity for UK residents as well as UK expatriates, particularly as the current UK Government pension support is looking so bleak. Whereas once UK taxpayers could rely on the stability and support of their Government pension fund, now if you’re looking forward to retirement, you’re likely to be filled with uncertainty at how you’ll manage financially. If you’re confused about your eligibility, or want to know more about the QNUPS benefits, then this handy guide to QNUPS will help to answer your questions.
What are QNUPS?
With the launch of QNUPS, those with UK-situs investment assets are now able to transfer their investments into a QNUPS without being liable for UK inheritance tax charges or Capital Gains Tax (CGT) on the growth within the Trust. The same criteria as for QROPS apply when setting up a QNUPS – the QNUPS must be set up outside of the UK, and the country in which it’s established must both recognise it for tax purposes and regulate it as a pension scheme. So, now that the facts and figures are out of the way and QNUPS are explained, how can you benefit from this financial opportunity?
What are the Benefits of a QNUPS?
There’s no maximum age limit providing you are still working, so you can continue to contribute, even if you’ve past your retirement date.
The income & assets that you put into QNUPS can come from any source; it doesn’t have to come directly from employment.
The limit on how much money you invest into your QNUPS is significantly above the reduced amounts the Government now permit in UK pensions.
You can withdraw up to 30% of the balance as a lump sum before you draw retirement income from it.
QNUPS are exempt from succession and UK inheritance tax laws, which means that you can maximise the residue of your QNUPS inheritance you leave behind.
There are more tax benefits that just inheritance tax, as there’s no annual or lifetime tax relief limit on a QNUPS, unlike UK personal pensions where the total tax free amounts are reducing to £ 40,000 per year, or £1.25m over a lifetime.
Funds in a QNUPS roll-up Gross; in other words they compound outside of the Tax umbrella to a far greater extent, with tax only payable when they are eventually remitted back into the UK e.g. sell an investment property & there is no CGT on the sale profit. Same with Equity portfolios.
QNUPS are effectively seen by the HMRC as a Pension trust; thus like a UK pension, they are outside bankruptcy proceedings & are non-splittable in a divorce.
Am I Eligible to Take Out a QNUPS?
Whether you’re a UK resident or an expatriate living abroad, you may be able to take advantage of a QNUPS. The following list illustrates the criteria that you must meet:
You must be at least eighteen years old; there is no maximum age limit
All UK residents, or those domiciled in the UK (domicile is determined by your birth) are entitled to take out a QNUPS.
Non-UK residents who currently have UK-situs assets are also entitled.
There are many cases where a QNUPS can be highly beneficial, and not just for UK expatriates with UK pensions. If you already hold UK assets and wish to create a greater tax-exempt platform in a far quicker time and wish to reap the benefits of a scheme with effectively tax free limits, then a QNUPS might just be the most effective way of protecting your retirement fund.