QNUPS: Qualifying Non-UK Pension Schemes
A QNUPS is an overseas trust that is effectively an international pension scheme. It is often used by high net worth individuals who have already reached their income tax relief and/or lifetime benefit limit on UK registered pensions or by individuals overseas who are no longer able to contribute to their UK registered pension plan. A QNUPS provides tax benefits similar to UK registered pensions.
There are no restrictions on residence – you can live anywhere and establish a QNUPS – however, the tax treatment of the benefits will depend on your country of residence and whether you are still domiciled in the UK.
Presently there are no HMRC reporting requirements, as QNUPS are not permitted to receive transfers from UK tax relieved funds (i.e. pension funds), but they must be recognised for tax purposes in the jurisdiction they are established.
Contributions are generally made out of personal capital and income but can also be made using existing assets. You should ensure you are aware of the potential tax consequences of using assets.
Similar to UK registered pensions, a QNUPS is not chargeable to UK taxes on death, unless the QNUPS participant is believed by HMRC to have purposely reduced the value of their estate prior to death by transferring a significant part of their wealth to the QNUPS.
Benefits can be taken from the age 55. A lump sum of up to 30% of the fund is available and the remaining fund must provide an income. While the lump sum is not taxable under UK legislation/residency, it may be taxed in the overseas jurisdiction you reside at the time. The income element may also be liable to local income tax rules.
Providing all rules are followed, the fund should grow free of (UK) income & capital gains, and provide valuable additional pension benefits that are outside any UK estate.
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