QNUPS (Qualifying Non UK Pension Schemes) - what are they?
QNUPS is not a type of product, or pension, or trust, but a legal definition under which an overseas pension scheme can obtain an Inheritance Tax Exemption.
What does this mean?
The suggestion is that a UK domiciled person could put funds into a QNUPS defined arrangement and obtain IHT exemption immediately.
The QNUPS definition covers some pension schemes that do not follow QROPS rules (such as ROPS - Recognised Overseas Pension Schemes and OPS - Overseas Pension Schemes).
Since ROPS and OPS can take contributions from non UK residents who are not eligible to fund standard UK pensions, a UK domiciled person could put funds into suitably defined scheme and obtain an IHT exemption immediately.
How can QNUPS help me?
Is it possible to use QNUPS rules to move hundreds of thousands of pounds into such a scheme and obtain an immediate IHT saving of 40p in the pound?
It seems unlinkely that this was HMRC's intention, but QNUPS have opened up some interesting tax planning ideas. This situation is extremly complex and requires specialised and specific advice.
To find out more about Overseas Pension Schemes including QNUPS, QROPS, RPS or OPS,
call us on 08456 44 0998
The history of QNUPs is based in the simplification of the UK pension regime on 6th April 2006 (A Day). An ommission from the legislation of an IHT exemption for some overseas pension schemes has left a potential window for some investors to improve their IHT position.
The rules at that times allowed that prior to vesting (drawing benefits) of a UK pension fund, death of the member would mean that the whole fund would be available to the beneficiares free of UK Inheritance Tax. This is set out under section 151 of the Inheritance Tax Act of 1984.
If the pension fund has been transferred to a QROPS (Qualifying Recognised Overseas Pension Scheme) under the new rules, the pension fund would be potentially subject to Inheritance Tax as QROPs were not exempt under the Act.
Later HM Revenue and Customs stated that is was not their intention to exclude QROPs schemes in this way and that QROPs should fall into the category of overseas pension schemes which should be exempt from IHT. This was mentioned in a pre-budget report in 2007 and also in the 2008 Finance Act.
In 2010, HM Revenue and Customs issued new IHT Regulations for QNUPS (Qualifying Non-UK Pension Schemes) defining which types of overseas pension schemes would be IHT exempt. A QNUPS scheme qualifies for the IHT exemption under section 151 of The Inheritance Act 1984.
There has been much talk in the press during 2010 about various ways of using ROPS or OPS under QNUPS rules to avoid death taxes for individuals over 75 who is some cases could have estates paying up to 82p in the pound.
The content of this page is based on an interpretation of the UK law governing QNUPS as at summer 2010. We believe interpretation to be correct, but cannot guarantee it. Whilst every effort has been made to ensure the accuracy of information on this page, financial and or legal advice should be personally taken in regard to QNUPs in all cases. Sipps Now can accept no responsibility for any act or failure to act based on content posted here.