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benefits on death
The QNUPS was created after a 2004 Finance act mistake meant that money put into a QROPS would be subjected to Inheritance tax when the holder died. A QNUPS allows anyone to transfer money into an offshore scheme that will not be taxed in the event of the holder’s death. This allows people to pass down inheritance without paying the 40% tax that is payable upon death normally. In order to set up a QNUPS you must meet the same criteria as a QROPS – This means the QNUPS has to be set up abroad, the foreign country must regulate it as a pension as well as recognizing it in terms of tax.
QNUPS stands for Qualifying Non-UK pension schemes, and they were introduced by HMRC through statutory instrument 51. A QNUPS acts similarly to a UK pension scheme, with the benefit that on the holder’s death, Inheritance tax is not payable. A UK registered pension has certain limits imposed on it which stems from the UK tax relief available, a Life Time Allowance. The QNUPS holds the benefit that it does not legally qualify as a UK tax relived funds, and therefore there are no limits on the pension size. This makes it an ideal supplementary pension for those wanting to pass on 100% of their assets when they pass away.
QNUPS packages can be established by Guernsey residents, UK residents and other residents around the globe. The type of scheme or structure will largely depend on the country used, and it’s important to realize the opportunities and benefits can vary greatly dependant on where the holder and their beneficiaries are a tax resident.
A QNUPS has a wide range of benefits, and some of the most key elements are highlighted below.
- There are no restrictions on the age that you can invest into a QNUPS, and you are able to invest money after your retirement date.
- Contributions to the scheme can be made through a variety of means, not purely through your income.
- There is no top limit of how much you can invest in a QNUPS.
- A QNUPS can be configured so that the holder is not liable for any local wealth or inheritance taxes that may be applicable in their local area.
- A QNUPS bypasses succession and inheritance tax, which allows you to have total control over the inheritance and you have the overall say of where/ who it goes to.
- Trustees of the QNUPS are under no legal obligation to declare any information about the scheme to HMRC, and they do not have to report any of the amounts upon the holder’s death.
- A QNUPS can be held alongside a QROPS, and providing the QNUPS has its own assets, there are no reporting liabilities involved.
Benefits on Death
The main benefit of the QNUPS is the freedom it gives to beneficiaries upon the holder’s death. On death, all assets and finances held by the QNUPS pass directly to all named beneficiaries at once outside of the estate. There is no Inheritance tax to pay, and you do not have to declare anything to HMRC. There are no long waiting games to receive the funds/assets as the process is a lot quicker than if a regular UK based pension scheme was being used. There are multiple benefits to a QNUPS, and they are a lot easier to set up than most people realize. If you’d like to know more about either QNUPs or QROPs (a guide to QROPs Benefits for example) go to www.gressahmstreet.com