QNUPS

. . . USING YOUR SAVINGS TO FUND YOUR RETIREMENT

Young people at the mountain lake

Do you:

  • Have investments and savings that you would like to use to provide an income in retirement

 

  • Have property that you currently take a rental income from, but want to consider alternative ways of producing a more tax efficient income

 

  • Want to consolidate your assets, whether it’s property, shares, investments or savings in order to make things easier for your beneficiaries on your death

 

  • Have a pension (company or private) but it does not provide sufficient income for your retirement

 

  • Not have a pension but would like to make sure you are generating a tax efficient income from your savings and investments

 

  • Live abroad and are worried about the tax payable on your savings and investments on your death

 

  • Live abroad and want to make sure that you are not paying too much tax on your investment income

 

  • Live abroad and want to consolidate your different savings and investments and would like them to be managed by a qualified adviser

 

  • Live abroad and are ready to start drawing benefits from your UK savings and investments but need help to organise this

 

If ANY of the above statements apply to you, read on …

A Qualifying Non-UK Pension Scheme (QNUPS) is not a product, it’s the name of the regulations that apply in order for an overseas pension scheme to be exempt from UK inheritance tax (IHT). Overseas pension schemes that meet the definition of a QNUPS under the Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 [SI 2010/0051] will not be subject to UK IHT (unless there is evidence of deliberate tax avoidance).

 

Why transfer to a QNUPS?

 

QNUPS are established as a personal pension arrangement and the principal reason for having one is to provide retirement benefits in the form of income. A QNUPS is a pension trust and it pays out benefits in a similar manner to a personal pension from age 55, but a QNUPS does not have the same restrictions on contributions and you are able to contribute ANY amounts from your personal wealth to a QNUPS. Contributions can be from any source (apart from UK registered pension schemes or QROPS).  You therefore have more opportunity to increase your retirement income in a tax efficient way.

Some of the many benefits of QNUPS:

  • Any currency can be invested

  • More flexibility than UK pension schemes

  • There is no maximum contribution level, so you can transfer as much of your savings and investments as you like into your QNUPS

  • Much more tax efficient than owning assets personally (special tax breaks apply to Spanish residents resulting in a typical marginal income tax rate of 3% on QNUPS income)

  • You do not need to have any employment earnings in the year in which you make a contribution. You can contribute if you are already retired.

  • There is no requirement to buy an annuity from an insurance company, so you can keep the underlying funds invested, keeping you in control of your finances and retaining the ability to amend your income and beneficiaries as required should your circumstances change.

  • Income and gains roll up tax free within a QNUPS, wherever you live (income is taxable, depending on country of residence).

  • QNUPS set up to provide pension provision are exempt from UK inheritance tax (IHT).

  • There is no need to prove to the UK authorities that you are resident in Spain (or elsewhere) as UK PAYE does not apply – income is paid gross. QNUPS providers have no obligation to submit information to HMRC.

  • All the tax benefits start immediately after setting up your QNUPS - no 7-year qualification period that would normally apply to potentially exempt transfers in respect of UK inheritance tax.

  • Not subject to Pension Sharing Orders on Divorce

  • There is no limit on the size of the funds you can accumulate – no Lifetime Allowance Charge (LTA) to worry about.   (A UK Registered Pension scheme with a value exceeding the LTA suffers tax on the excess of between 25% and 55%).

  • A secondary benefit of QNUPS is that it mitigates your IHT liability without being forced to give your assets away whilst still alive.

  • There is no ‘cliff edge’ at age 75 with a QNUPS in respect of tax paid by beneficiaries on death.  In a UK Registered Pension Scheme beneficiaries are taxed in the event of your death after age 75 – QNUPS benefits are paid tax free to beneficiaries whenever death occurs.

  • The QNUPS is flexible enough to be dissolved and funds re-assigned back to you in the future should it no longer be required.

 

 

SPANISH INHERITANCE TAX

As a Spanish tax resident the QNUPS does not form part of your estate for Spanish Inheritance Tax purposes from inception.

 

 

As you can see, there are a number of reasons why many of our clients choose QNUPS. In the right circumstances a QNUPS offers a highly flexible and tax efficient pension structure. It offers valuable benefits whether you live in the UK or another country.  Contact us today to find out if a QNUPS is right for you.