QNUPS
Tax rules stopping expats with offshore pensions from putting some of the fund in to residential property and other forbidden investments were scrubbed when a set of new regulations came in to force.
The new rules also mean the estate of any investor with a QROPS pension is now exempt from UK inheritance tax.
The tax changes came about with the introduction of a new offshore pension called a QNUPS or qualifying non-UK pension scheme.
The technicalities are complicated, but in simple terms a QNUPS is a new offshore pension for expats or international workers with UK pension rights who now live abroad.
The new rules mean all QROPS are by definition QNUPS, but confusingly, not all QNUPS are QROPS.
The similarity ends with where the pensions are based.
A QROPS must be hosted in a country that has a double taxation agreement with the UK. This means the fund manager has an obligation to report any unauthorised fund payments to the UK taxman during the first five years of the QROPS.
Offshore pensions may now invest in residential property
A QNUPS may be hosted in any country, regardless of double taxation agreement status. The lack of a taxation agreement removes the responsibility for the fund manager to report any unauthorised payments to HMRC.
On paper, this freedom allows the fund managers to allow any investments in a QNUPS - including residential property and other more personal investments, like art, wine, collections and luxuries like boats and aircraft.
According to industry sources, some QROPS have already decided they are also QNUPS.
The QNUPS schemes include Guernsey, New Zealand and some Hong Kong QROPS schemes. Other s that may join them could be the Isle of Man, Gibraltar and Malta.
QNUPS came in to being on February 15, when The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 came in to force.
It would seem too early to say at this stage how these rules will affect QROPS investments, but some advisers and fund managers are already considering a QROPS as a first hop in the long-haul of retirement planning that allows funds to shift in to an even more tax effective QNUPS wrapper.
To find out more about QROPS and QNUPS, contact one of our financial advisers, who can bring you up to speed on the latest tax strategy for your retirement.
