What is the difference between a QNUPS and a QROPS? It sounds like a trivial pursuit question. So in a room of British expats, how many people would win a cheese?
The answer is that a QROPS is always a QNUPS, but a QNUPS is not always a QROPS. So in a sense, in some cases there is no difference, because a QROPS and a QNUPS may be one and the same.
Qualifying Non UK Pension Schemes are those that have been exempt from IHT by Her Majesty’s Revenue & Customs. Accordingly, if you are looking to move abroad or have already emigrated, you may be thinking about the future and how you can reduce your (or more likely your beneficiaries’) IHT bill. If the alternative to getting a QNUPS is leaving your pension behind in the United Kingdom for the taxman to get his hands on, this does not sound very attractive.
However, hopefully you should have many, many years to enjoy your pension before the issue of inheritance tax becomes a pressing concern. In that case, a QROPS or another kind of QNUPS may be worth a look.
QROPS are subject to “reporting” requirements, which means that for the first five years following the transfer of the pension, the QROPS administrators have to tell HMRC all about what is going on in your scheme. If a QROPS investor moves back to the United Kingdom within that first five years, their pension assets become taxable again. However, after that first five years, what you do or don’t do with your QROPS is no business of HMRC.
QNUPS on the other hand are not subject to the reporting requirements that QROPS are, as they do not have to be in countries that have double taxation agreements with the United Kingdom. This means that there may be a wider choice of QNUPS countries to choose from than QROPS countries.