QNUPS Tax Benefits

Written by admin on May 22nd, 2011

It has been often touted that QNUPS is one of the best tax saving overseas pension schemes for systematic investment. But, what are the tax privileges that one gets from it.

The reason for the launch of QNUPS in February 2010 is due to failure of the taxman in the previous legislation, QROPS, which failed to provide guidelines about the UK IHT or Inheritance Tax exemption.  

Initially, when the UK government launched the legislative framework for pension simplification, which came in 2006, they failed to notice that some Offshore Pension Investment schemes were already enjoying UK IHT or Inheritance Tax exemptions. This uncertainty about the Tax structure and its exemption were really confusing until the Offshore Pension Investment scheme called QNUPS came into force. Introduction of QNUPS was a major milestone and it laid the rules and regulation regarding the Tax exemption policies.

In 2010, the treasury or the HMRC made it clear that QNUPS is exempted from UK Inheritance Tax. People opted for QROPS previously to get income tax exemption, but “Qualifying Non UK Pension Schemes” is different and much wider in terms of definition than QROPS and other overseas retirement schemes.

QNUPS unlike QROPS doesn’t need a DTA or “Double Taxation Agreement” to be signed between the destination country and the UK. This implies that the scheme is free from any reporting with the UK HMRC. However, in certain countries there is a TIEAs or “Tax Information Exchange Agreements” which enables the authorities or taxman to share investment information of clients to find out any fraudulent activity. Unlike certain inheritance tax saving retirement schemes, it provides protection of funds from IHT as soon as the cash or asset contribution gets transferred. In the event of any worst case scenario right after the setting up of the scheme, the heirs or nominees of the funds or assets can take it out without doing any death duty. This is a striking difference between this scheme and some other overseas schemes that are in operation in the market because in other schemes the fund is only safe and secure from inheritance tax but that too after seven years from the date of setting up the fund.

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