guide to investing in qnups

Guide To Investing In QNUPS

Introduction

An increasing number of professionals of all nationalities have been moving and working abroad in the last decade. Whether you are a young executive or a high net worth individual with a diversified portfolio of global assets, you will have specific financial requirements and objectives. Offshore financial products and services can help you achieve financial security and provide you with the quality of life you require as an expatriate or international investor.

Investing in international accounts is no longer the premise of the rich and famous; all expatriates living abroad may now enjoy flexibility, among other benefits, by investing their money overseas. The offshore financial industry has become more popular and financial institutions from around the world have entered the offshore market as a result of the high demand. There are now many providers that offer a broad range of services ranging from saving schemes to pension and retirement plans and wealth management accounts to lump sum investment products.

Over the years, deVere has developed strong partnerships with some of the world’s leading investment houses and insurance companies, all of which offer some of the most competitive products in the marketplace and a high level of protection for the investor.

In this guide, we provide you with essential information on Qualifying Non-UK Pension Schemes(QNUPS). QNUPS is the latest tax efficient pension scheme for expatriates which was introducedon the 15 February 2010. We will explain what they are, what benefits they have to you as an expat and why they are essential in planning for your beneficiaries upon your death.

What are QNUPS?

Pension schemes and effective retirement planning are essential for those who choose to relocate orretire abroad as financial independence is of paramount importance. Pension solutions for UK expatriates have been available through QROPS for the past few years and now the introduction of QNUPS promises another potential tax efficient way to enjoy an income in your retirement.

Qualifying Non-UK Pension Schemes (QNUPS) were brought into force on 15 February 2010 by HMRC, creating further opportunities for British expatriates to plan for retirement and potentially be more tax efficient within local taxes and UK inheritance tax (IHT).

QNUPS allow individuals to set up a pension which functions in much the same way as a QROPS, the difference being that you can transfer any assets into a QNUPS but not UK pension. The rules governing a QNUPS are also more flexible. It allows individuals to keep investing their money into the scheme even after retirement and after they have taken their lump sum, for as long as



they wish to. Indeed, an individual can receive an income from the QNUPS whilst still investing money into it. There is no maximum age to which you can invest into a QNUPS.

Upon being placed into a QNUPS, the funds and assets you have invested within a QNUPS become free of UK inheritance tax, meaning that upon your death, your beneficiaries receive the money or possessions you wished them to receive, without a portion of your assets going to the UK taxman.

A QNUPS is essentially a pension plan and therefore similar rules as to QROPS apply. Up to 30% can be taken as a tax-free cash lump sum upon reaching retirement age, with the remainder being left to generate an income in retirement. The individual must take an income at age 75 and the regulations governing the level of income allowed are as per a QROPS.

What are the advantages of QNUPS for expats?

QNUPS hold great advantages to those who invest within them, including that the fund is immediately free of UK inheritance tax. They also mitigate local succession taxes in many countries, while in some countries the income can be paid to the individual in such a way as to greatly reduce the local tax charge.

Other advantages of QNUPS include:• There is no maximum age to which you can invest within the scheme.• You do not need to receive income from employment to make a contribution — you can contribute many assets into a QNUPS. • There is no maximum limit to how much you can invest into the scheme but this must be realistic to your income.• It is potentially very tax efficient and you may be able to avoid local wealth taxes.• QNUPS may help avoid local succession laws, meaning you are able to choose who inherits your money. • Assets will grow free from tax depending on the jurisdiction in which the QNUPS is based. • A QNUPS offers considerable investment flexibility and choice. Furthermore, your assets can be invested, and any benefits taken, in a currency of your choice, giving you the opportunity to remove currency risk.• The trustees of a QNUPS have no reporting obligations to HMRC. You can have both a QROPS and a QNUPS.

Essentially, QNUPS allows British expatriates to put their investable wealth into a pension structure and significantly improve their personal tax position and as a result, that of their heirs.

Benefits at a glance:• UK IHT benefits — contributions are not considered as a gift and are immediately outside of the estate for UK IHT.• No HMRC reporting.• Flexible investment options. • No contribution limits.• UK residents can contribute if they have reached their Lifetime Allowance limit or paid full tax relieved contributions.• Anyone can contribute.

Am I Eligible for a QNUPS?QNUPS are open to any expatriate and even UK residents. Indeed, they hold the greatest benefit to UK domiciled individuals.


A person’s domicile is difficult to determine and one should seek assistance from a professional in regard.

The scheme is set up as a genuine pension and therefore an income must be taken at the age of 75. It is important that the intention in setting up the QNUPS is to generate an income in retirement, otherwise the QNUPS could be subject to heavy tax penalties by HMRC.

QNUPS and Inheritance Tax (IHT)

Inheritance Tax is a tax due by the estate of a deceased individual upon that person’s death. It takes into account certain gifts above a certain threshold made during that person’s lifetime, certain settlements into Trust and other factors. It must be paid before any assets are actually passed on to the intended beneficiaries, usually paid on somebody’s estate when they die. It will also include the gifts and trusts made during that person’s lifetime. Typically, it is the executor or personal representative’s responsibility to pay inheritance tax using funds from the deceased’s estate.

There is a Nil Rate Band under which IHT is not payable by the estate. The threshold is £325,000 for aUK domiciled single person and £650,000 for UK domiciled married couples or those in civil partnerships, although many factors come into play in determining the Nil Rate Band for married couples. The estate includes houses, possessions of significant value, money and investments. The rate of IHT for a UK domiciled individual is 40%.

An individual living abroad will also potentially have to pay death taxes in his country of residence, depending on the laws of that country. Where a double tax agreement exists, the total tax bill payable on death will be affected by the agreement so that death taxes are not paid twice.

However, if you were to invest within a QNUPS, the assets put into the QNUPS become immediately free of UK inheritance tax if you are living overseas, and may become free of other death duties which may be applicable in the country you live in. This will make the heartache of losing a loved one easier for your family as they will not have to face potentially heavy taxes.

Importantly, the assets within a QNUPS continue to be outside a person’s estate for UK IHT purposes, even if they do eventually return to the UK. Assets within the QNUPS will continue to be outside the client’s estate until their death. This is assuming that the rules governing the QNUPS are observed and an income is taken in retirement.

Pension and retirement solution with a QNUPS

QNUPS could potentially hold a valuable solution for your retirement problems when moving abroad. It is important that you remain financially independent and are able to pass on your wealth as you wish. A QNUPS scheme allows you to do just this.

At the deVere Group, our consultants work with some of the leading investment houses and insurance providers. All our employees have been trained to provide the best advice and are familiar with the local knowledge and requirements of the region you live in/may relocate to. We can advise on the different options that may help you maximise your wealth in order for you to look forward to a more secure financial future.


About the deVere Group

The deVere Group is the world’s leading independent financial consultancy group. We work with international investors and expatriates to find financial services products that best suit their medium to long-term requirements for investments, savings and pensions.

With in excess of US $10 billion of funds under advice and administration, deVere has more than 80,000 clients in over 100 countries. Our independence and ability to offer financial products that are tailor-made to fit an individual’s needs are behind our success.

You can find us in Abu Dhabi, Dubai, New York, Tokyo, Zurich, Johannesburg and more.

If you would like to speak to a financial consultant about QNUPS, please contact us at [email protected].

The advice we provide is free and without obligation.

All opinions expressed in this Guide constitute the author’s own judgment as of the date of the Guide. Please note that as we have only indicated the general position, and whilst every effort has been made to ensure the accuracy of the information, we can accept no responsibility for any act or failure to act based upon its content. The views expressed herein are purely those of deVere employees and are not to be construed as advice.

[email protected]

Copyright deVere Group 2009 - 2014 © All rights reserved

For a full list of the regulatory status of the deVere Group companies, please go to www.devere-group.com/footer/disclaimer.aspx

This material is for information purposes only and does not contain (and should not be construed as containing) investment advice or an investment recommendation, or, an offer of or solicitation for, a transaction in any financial instrument. Always seek independent financial advice before investing in any product. The information provided and contained in this brochure are believed to reliable, but are subject to change without notice and deVere makes no representation as to the completeness or accuracy of the information or of any opinions expressed.

guide to investing in qnups

Documents