QNUPS, or Qualifying Non-UK Pension Schemes to call them by their full name, are now becoming widely available to savers who want to avoid paying UK inheritance tax if they live abroad.
QNUPS were originally “invented” to put right an omission in the Finance Act 2004 (where the government had overlooked certain foreign pension schemes’ exemption from IHT). Government regulations introduced in February have now corrected this mistake.
How do QROPS differ from QNUPS? Qualifying Recognised Overseas Pension Schemes have been around since 2006, when the government introduced them to make sure that members of UK pension schemes who were moving abroad for more than 5 years did not have to pay UK income tax any more. A QROPS is a type of QNUPS, because thanks to the 2010 regulations QROPS now benefit from IHT free status.
What about other forms of IHT?
The danger with international tax planning is that you may escape the regime of one country, only to fall into the arms of another. Accordingly, to avoid an “out of the frying pan into the fire” scenario, you may to take professional advice to make sure that your QNUPS does not fall into its own country’s IHT net.
What can you put into a QNUPS?
The answer to this question depends on the rules of the individual QNUPS itself. If a QNUPS is also a QROPS, it may be bound by slightly stricter rules and be confined to accept only those assets that have previously been invested in a UK pension. However, general QNUPS may be slightly more flexible, and may accept assets that have never been in a pension.
Is there any limit on the amount you can put into a QNUPS?
The providers themselves may set a minimum limit, because you may consider that the fees involved in making the transfer may not make the scheme worthwhile for a more modest pension fund. Eagle eyed investors and QNUPS advisers must check for Treasury announcements at all times, but there is no current maximum limit.