Monday, 11 October 2010

QNUPS – Qualifying Non-UK Pension Schemes

  • Get appropriate professional advice

  • Remember that QNUPS is a Pension Scheme

  • Ideal for ‘In-Specie’ Transfers

I have recently read an article by a leading International Financial Adviser (that’s their description not mine) which contains inaccurate information. So very much like QROPS, with QNUPS you need advice from the right source. I can provide you access to a professional adviser, if you email me.

 I think the technical description is necessary. The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 [S1 2010/0511] have introduced this acronym ‘QNUPS’. Weblink gets you to the precise Statutory Instrument (SI).

In short, earlier this year HMRC confirmed that contributions to a Qualifying Non-UK Pension Scheme, would be exempt from UK IHT. What this means is that as long as the QNUPS walks and talks like a pension, then the assets held in it will be protected from UK IHT.

This is not meant to be an exhaustive list, but I believe there are four categories of individuals who will most benefit from or should consider a QNUPS;

    1. Any UK resident who from 6th April 2010 will be restricted on their UK pension contributions to basic rate tax relief.
    2. UK domiciled persons (that includes many UK citizens who have become Spanish residents), and UK residents who want to make pension contributions beyond the UK maximum limits.
    3. UK non-residents, including Spanish residents who already have a QROPS but want to add to their pension funds. A classic transfer would be UK savings receiving very little interest, including PEPs and ISA’s. Email me for more information or to speak to an adviser
    4. Any UK resident or domiciled individual who wishes to build up a pension fund in excess of the current lifetime limit

QNUPS provides an excellent opportunity for in-specie transfers. Investments you have built up, properties you own and other revenue producing assets that can just as easily be a pension contribution. The investment does not have to be cash but cash is not excluded. Remember that the QNUPS has to be a Pension Scheme but it is also a plan to defend assets from Inheritance Tax (IHT).

If any adviser suggests selling your assets and buying another financial structure beware. In-Specie Transfers offer a much more cost effective route, normally, and also selling assets can lead to a tax charge (eg Capital Gains Tax). To avoid this pitfall please speak to a recommended adviser. Please email me for details.

In this respect the points I have previously made about QROPS are equally applicable to QNUPS. What I said in QROPS – Questions and Answers was

I’m happy with the investment in my SIPP, why can’t I transfer it to QROPS?
If an adviser indicates that you cannot transfer your existing pension investment to QROPS they are wrong. This type of transfer is known as an ‘In-Specie transfer’. It is acceptable in QROPS because to meet the rules in the UK the investment has to be approved. If the investment is acceptable in the UK then it is perfectly satisfactory.’

If you have assets that you want to transfer to QNUPS without cashing them in, then transfer In-Specie.

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If you have your own question, I’d be delighted to answer it. Those of you who live in Spain or intend to live in Spain should be very careful when choosing an adviser.

You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email