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QNUPS - A Retirement Pension for British Expats

Understanding the tax benefits of QNUPS for British expats requiring a UK Pension abroad

QNUPS (Qualifying Non-UK Pension Schemes) were introduced in 2010 as part of some amendments to UK Inheritance Tax regulations. Whilst a QROPS can satisfy your need to transfer your existing UK pension benefits to an overseas arrangement, a QNUPS pension provides some very powerful and flexible tax planning benefits for you if you have investable wealth outside of an existing pension arrangement.

If you are looking to make additional retirement planning provisions it’s possible to immediately shelter these pension assets from both UK inheritance tax and local succession taxes.

Furthermore, if you were to return to the UK the pension assets held under a QNUPS pension arrangement (subject to certain conditions being met) would remain outside of your UK inheritance tax net. The UK Government has considered removing the tax benefits in previous budgets for new scheme entrants but hasn’t done so yet.

The key benefits of a QNUPS as a Retirement Pension for Expats preparing for retirement:

  • Your offshore pension would be exempt of UK Inheritance Tax and local Succession Taxes immediately.
  • You would be able to return to the UK and your pension assets would still remain outside your UK IHT net.
  • Your pension arrangement would not be subject to lifetime allowance rules.
  • You would have access to the broadest range of investable assets.
  • Many of the additional benefits that a QROPS arrangement offers you.
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Frequently Asked Questions about QNUPS for British Expats

Welcome to our FAQ on QNUPS (Qualifying Non-UK Pension Schemes)! In this guide, we aim to provide you with a clear understanding of QNUPS as a pension abroad and address some of the most commonly asked questions surrounding this type of retirement pension. If you're an individual planning for retirement we've got you covered.

Here are some frequently asked questions about QNUPS to help you make informed decisions about your UK pension abroad:

A QNUPS (Qualifying Non-UK Pension Scheme) is a retirement pension scheme which is based outside of the UK but is still recognized by the UK tax authorities. QNUPS were introduced in 2010 and are designed to offer individuals who are not resident in the UK a tax-efficient way to invest for retirement. It also protects you from UK Inheritance Tax.

QNUPS are typically used by British nationals who are not resident in the UK, but who have significant assets they to protect from UK tax. This can include expats retirees, entrepreneurs, and anyone else who is looking for a tax-efficient way to save for retirement in Spain, Portugal or Gibraltar or elsewhere for that matter.

There are several benefits to setting up a QNUPS including:

 

Tax efficiency: If it is properly structured the rate of tax on pension income is minimal.

Asset protection: Assets held in a QNUPS are generally protected from UK inheritance tax, which can be up to 40% for estates over a certain threshold.

Flexibility: QNUPS offer a high degree of flexibility in terms of investment options, and can be used to hold a wide range of assets.

Estate planning: QNUPS can be an effective tool for estate planning, allowing individuals to pass on assets to their heirs in a tax-efficient manner.

Asset Protection: It can provide additional protection from potential creditors and legal claims. However, it’s important to note that the level of protection provided can vary depending on the specific jurisdiction in which the QNUPS is established and the laws and regulations of that jurisdiction.

To qualify as a QNUPS (Qualifying Non-UK Pension Scheme), a pension scheme must meet certain criteria set out by the UK tax authorities. Here are the key qualifying rules for a QNUPS:

Non-UK Resident Status: To be eligible for QNUPS, an individual must be either a non-UK resident for tax purposes or an individual who intends to leave within 12 months.

Pension Status: The QNUPS must be recognized as a retirement pension scheme in the country where it is established.

Pension Benefits: The QNUPS must provide pension benefits that are comparable to those provided by a UK-registered pension scheme. This means that the QNUPS must provide retirement benefits, such as a regular income or lump sum payment, and must not allow for the payment of benefits before the age of 55.

No Tax Avoidance: The QNUPS must not be established for the purpose of avoiding UK tax. This means that the QNUPS must be established for legitimate retirement planning purposes, rather than simply as a means of avoiding UK Inheritance Tax.

Reporting Requirements: There are no reporting requirements to HMRC.

One of the key benefits of a QNUPS (Qualifying Non-UK Pension Scheme) is its tax-efficient nature. However, it is important to understand the tax implications of a QNUPS before setting one up.

Here are some key tax considerations to keep in mind when it comes to QNUPS:

Income tax: Unlike UK-registered pension schemes, QNUPS are not subject to UK income tax. This means that any income generated within the QNUPS is subject to tax in your country of residence. Its possible to structure pension income very tax efficiently in countries LIKE Spain, Portugal and Gibraltar.

Inheritance tax: QNUPS are also highly advantageous when it comes to inheritance tax (IHT). If structured correctly, QNUPS can be a highly effective way to pass on wealth to future generations without incurring UK IHT or local succession taxes. This is because QNUPS are not considered part of an individual's estate for IHT purposes.

Capital gains tax: QNUPS are also exempt from capital gains tax in your country of residence. This means that any growth within the QNUPS is also tax-free.

One of the benefits of a QNUPS (Qualifying Non-UK Pension Scheme) is that there is no limit on how much an individual can contribute into the retirement pension scheme. This makes it an attractive option for those who have already reached the maximum contribution limits in other pension schemes.

However, it is important to keep in mind that contributions to a QNUPS must be made from funds that have already been subject to UK tax. This means that the funds must come from income that has already been taxed or from assets that have been subject to capital gains tax.

It is also important to note that contributions to a QNUPS must be made with the intention of providing retirement income. If it is determined that contributions have been made for other purposes, such as inheritance tax planning, then the QNUPS may lose its tax-advantaged status.

One of the benefits of a QNUPS (Qualifying Non-UK Pension Scheme) is its flexibility. There is no requirement for an individual to start drawing pension income from their QNUPS at a specific age. However, its highly desirable (and some Pension trustees may even insist) you start drawing income by age 75. It is important to keep in mind that a QNUPS is generally intended to be a long-term retirement planning solution.

A QNUPS (Qualifying Non-UK Pension Scheme) is a retirement savings plan that is not subject to UK tax laws. However, if an individual returns to the UK, the QNUPS will become subject to UK tax laws with regards pension income. It is important to work with a financial advisor who is knowledgeable about QNUPS, UK tax laws and tax laws in your new country of residence to ensure that the best course of action is taken.

Absolutely. If you already have a QNUPS arrangement, we can provide you with retirement planning advice and guidance to ensure that your QNUPS is aligned with your overall financial and retirement planning goals. Our team of experienced financial advisors have a deep understanding of QNUPS regulations, as well as UK tax laws and regulations. We can review your current QNUPS arrangement and provide recommendations on how to optimize your retirement pension for your unique circumstances.

Some of the areas we can advise you on include:

Maximizing Your Contributions: Depending on your income and other factors, you may be able to increase the amount you contribute to your QNUPS to take advantage of its tax benefits.

Investment Strategy: We can provide advice on the investment strategy for your QNUPS to ensure that it is aligned with your overall financial goals and risk tolerance.

Retirement Planning: Our advisors can provide guidance on how your QNUPS fits into your overall retirement plan, including when and how to start taking distributions.

If you're a British expat living abroad, a Qualifying Non-UK Pension Scheme (QNUPS) could be an effective way of saving and preparing for retirement while enjoying the tax benefits. Here are some general tips to keep in mind if you're considering establishing a QNUPS:

Understand The QNUPS Rules: Before setting up a QNUPS, it's important to understand the rules and regulations that apply to the retirement pension scheme. Our team of experienced financial advisors can help you navigate these regulations and ensure that your QNUPS is structured in a way that is compliant with all applicable laws.

Determine Your Contribution Limits: The contribution limits for a QNUPS will depend on your income and other factors. Our advisors can help you determine the maximum amount you can contribute to your QNUPS to take advantage of its tax benefits.

Consider Your Investment Strategy: When setting up a QNUPS, it's important to consider your investment strategy. Our advisors can provide guidance on the investment options available and help you develop a strategy that is aligned with your overall financial goals and risk tolerance.

Preparing For Retirement: When establishing a QNUPS, it's important to consider your long-term retirement planning goals. Our financial advisors can help you develop a comprehensive retirement plan that takes into account your QNUPS as well as other sources of income.

Seek Professional Advice: QNUPS is a complex retirement pension arrangement therefore it's important to seek professional pension advice when setting up a scheme. Our team of experienced financial advisors can provide guidance and support throughout the process to ensure that your QNUPS is structured in a way that is optimal for your unique circumstances.

It is important to note that while QNUPS can be highly tax-efficient, the rules surrounding QNUPS can be complex. It is recommended that you seek professional pension advice before setting up a QNUPS to ensure that you understand the tax implications and that your QNUPS is structured in a way that is tailored to your individual needs.

Summary

If you're a British expat living abroad and are considering preparing for retirement by setting up a QNUPS, contact us today to schedule a consultation with one of our experienced financial advisors. We look forward to helping you achieve your financial and retirement planning goals.

Talk To Us

Speak directly to a retirement pension specialist about your own specific retirement planning needs. If you are preparing for retirement learn more about QNUPS as a retirement savings plan.

For further information please contact us on Tel: +44 207 998 0570 or email connect@fwm.gi