Friday, 15 April 2011

QNUPS – Tax efficient International Pension Planning

Qualifying Non-UK Pension Schemes brings us the acronym QNUPS

Day Five – ‘Tax Planning in Spain’ Week

QNUPS is a very important component to ‘Tax Planning in Spain’ Week. It is important for retirement planning, mitigating Inheritance Tax and especially pertinent is the opportunity for ‘in-specie’ transfers. In fact the IHT planning element was brought about as a result of lobbying over the original QROPS rules.

  • Get authorised and regulated advice

  • Remember that QNUPS is a Pension Scheme

  • Ideal for In-Specie Transfers


Late last year,I read an article by a leading International Financial Adviser (that’s their description not mine) which contained inaccurate information. That reminded me that with QNUPS, as with all investments, 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, just over 12 months ago 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 pension 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 six categories of individuals who will most benefit from or should consider a QNUPS;

  • Any UK resident who from 6th April 2010 became restricted on their UK pension contributions to basic rate tax relief.

  • 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.

  • 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

  • Individuals who want to build an IHT friendly investment, intended as part of retirement planning but not related to their income or employment situation

  • Anyone looking for a way of consolidating their lifetime savings or investments without the restrictive rules of conventional pension planning.

  • 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 can just as easily be a pension contribution. The investment does not have to be cash but cash is not excluded. Indeed the investments that can be held in a QNUPS are much less prescribed by HMRC than traditional pensions. Remember, however, 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 an encashment charge or even a tax bill (eg Capital Gains Tax). To avoid this pitfall please speak to a recommended adviser. Please email me for details. Remember In-Specie Transfers.

Also Remember the Regulators! I will only recommend an adviser who is authorised by one or more of the following;

CMNV
Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products. A CNMV adviser can be recommended, please click here

DGS
Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain. Email me to be referred to an authorised adviser.

FSA
The Financial Services Authority is the UK's financial services regulator. Many British clients prefer a UK adviser and have dealt with FSA regulated advisers in years gone by. For an introduction to recommended adviser, with experience in Spain, please click here .



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