Tuesday, 30 March 2010


• A QNUPS is a Qualifying Non UK Pension Scheme
• Not to be confused with Qualifying Recognised Overseas Pension Schemes (QROPS).
• Came into force on 15th February 2010 by HMRC.
• Generating opportunities for British expatriates concerning tax efficiency of local taxes and inheritance tax (IHT).

Who would consider a QNUPS?
• UK Expatriates or soon to be Expatriated
• UK Expatriates with existing QROPS schemes.
• Expats who my wish to return to the UK in the future.
• The high net worth UK resident or domiciled individuals with maximised income tax relievable pension contributions.

Benefits of QNUPS?

Retired British Expats Can Benefit From;

• UK inheritance tax and local succession taxes will not be payable from the QNUPS fund upon death.
• QNUPS will avoids local succession law, enabling you control who inherits what and how much. Thus removing the need for PETS (Potentially Exempt Transfers) as part of Inheritance Tax Planning.
• Income can be taken from age 55 (after 6th April 2010)
• Income can be deferred until age 75.
• No need to have any employment income to make contributions.
• Ability to continue investing even after age 80 even though you have been retired for many years giving rise to substantial tax advantages.
• Ability to take a lump sum as you would with any other pension scheme.
• There are no limits on contributions to the fund, nor fund size.
• Income is taken from the fund as drawn, leaving the remaining assets invested with an opportunity to grow in value tax free.
• Investment flexibility, with investments in stocks, bonds, alternative investments, deposits, real estate, private equity, options and life policies. Due to the non reporting freedom the fund manager in essence has the ability to invest in an even wider range of assets in comparison to QROPS, including; art, wine, boats aircraft and even residential property.
• Take income and benefits in currency of your choice reducing currency risk
• Trustee has no reporting requirements or obligations to HMRC on all assets transferred in outside of authorised UK pension Schemes

Disadvantages Of QNUPS
• You don’t receive any tax relief on the amount you invest.

What Opportunities Does QNUPS Offer to High Earners as UK Residents or Domiciles?

The introduction of the highest rate of income tax of fifty percent has meant that Higher Earners (UK Resident or Domiciled) will be experiencing restrictions on the levels of tax relief they can gain via pension contributions. As UK Residents or Domiciled individuals they will have the ability to contribute to a QNUPS and capitalise on all its benefits.

What’s the difference between QNUPS and QROPS?

• A QNUPS has no Double Taxation Agreement between the UK and the country where the QNUPS is therefore it has no reporting requirements or obligations to HMRC.
• A QNUPS is a Qualifying Non UK Pension Scheme
• A QROPS as per of the Double Taxation Agreements in place are required to report to HMRC for the first 5 years.
• Existing QROPS can be transferred into a QNUPS as an more tax effective wrapper.

In essence A QROPS can be definition as a QNUPS and a QNUPS can be (but need not be) a QROPS

HMRC are looking very closely at non-UK domiciles (recent case of Gaines-Cooper http://talkqrops.blogspot.com/2010/02/qrops-advice-qrops-newsgaines-cooper.html ) and you could be resident overseas but still deemed to be domiciled in the UK and liable to pay IHT, if HMRC can establish that Britain was the country which you still regarded as home at the time of your death. QNUPS helps with this issue as it makes your assets exempt from IHT UK domiciled or not even if you have returned to the UK.

QNUPS Jurisdictions
• Guernsey
• New Zealand
• Hong Kong
Others likely to join
• Isle of Man
• Gibraltar
• Malta

Where can I get QNUPS Advice?

Email your enquiry to qrops@aifsg.com or call 0044 1664 444625. For further information go to www.qnupsadvice.com. QNUPS Advice is provided by Argent International Financial Services Group. International is a highly respected financial services group of companies, specializes in comprehensive and independent financial advisory, wealth management, company and trust administration services to private, corporate and institutional investors. For over 22 years we have assisted investors to enhance their financial position and make the most of the opportunities available in the global financial market. For details of all our services including QROPS and QNUPS go to http://www.aifsg.com

QROPS Advice: Which Jurisdiction ticks all the boxes.

With a number of jurisdictions now offering QROPS, David Piesing from Praxis Fiduciaries and Stephen Ward of Premier Pension Solutions assess the relative benefits and which one comes out on top.

It seems like an eternity since QROPS became available back in April 2006. Four years on prospective client now have plenty of schemes and jurisdictions from which to choose.

The choice for most people is from schemes operating in jurisdictions which are open to both residents and non-residents.

The main markets for QROPS transfers are:

Isle of Man
New Zealand
Malta will soon come on stream as well. We have not included Hong Kong as there are only 10 active schemes on the HMRC list and those are mainly occupational ones.

Here we assess these main jurisdictions and consider:

benefit flexibility for members who have been non-UK resident for at least five complete tax years;
investment flexibility;
ease of transfer in and out.
Benefits for life
The key advantage of a QROPS when compared with a UK scheme is not having to buy an annuity by age 75. The jurisdictions on our list allow the fund on death to pass to nominated beneficiaries with no UK inheritance tax (IHT) liability.

Maximising benefit flexibility may require an onward transfer to a non-QROPS mirror scheme. This is possible without tax implications if the QROPS is non-investment regulated.

Most Guernsey QROPS have confirmed non-investment regulated status. Gibraltar, the Isle of Man and New Zealand QROPS, as well as those from Malta, generally meet this condition. Guernsey QROPS may allow access before age 50 (55 from 6 April, 2010) as a loan of up to 25% of the fund. Trustees can allow flexibility through a temporary annuity. Full commutation remains possible where the fund is small.

New Zealand schemes are not subject to the 70% income for life rule because of how they navigate the HMRC QROPS conditions. This allows capital payments from the fund. The lump sum from Isle of Man schemes is up to 30% of the fund. Guernsey (currently restricted to 25%) is expected to match this figure soon. Maltese schemes restrict lump sums to 25%, as do Gibraltar's.

Investment path

All jurisdictions offer investment flexibility. Member directed investment is generally avoided as schemes might otherwise be considered investment regulated with indefinite reporting to HMRC. Some schemes have allowed investment in residential property yet surprisingly still claim they are not investment regulated with no tax charge arising.

For the majority, traditional forms of investment are sufficient. More exotic choices are best delivered in a non-QROPS, such as a Qualifying Non-UK Pension Scheme (QNUPS), having received a transfer value from a QROPS without triggering an unauthorised payments charge after completion of the five-year non-residency period by the scheme member.

Taxation issues
The fund accumulates free of tax (except tax deducted at source on some dividend income) in all countries on our list except New Zealand. Fund taxation rules in New Zealand are complex, and are made on a comparative-value basis or assuming a 5% pa 'fair return', with the calculation of asset valuations required in NZ$. But the government is expected to announce it is exempting pension funds.

Isle of Man schemes deduct local tax on pension income, typically at 18%. This creates issues unless the Isle of Man has a double taxation treaty with the country where the member is resident. For example, a Spanish resident can neither offset nor reclaim Isle of Man tax deducted. On death, it applies a 7.5% IHT charge with a £100,000 cap.

The cost of QROPS

There is great variation between schemes and jurisdictions, and between providers within jurisdictions. However, there are two main models:

A packaged QROPS product with a menu of preapproved investment funds and management houses.
These are available in Guernsey, Isle of Man and New Zealand. Some claim to be fee-free. This is achieved through retrocession commissions which are at best only partially disclosed. In a new era of transparency and commission disclosure, it is hard to see how these schemes will be able to be marketed as such in their current form.

A transparent one-off setup fee and an annual fee, sometimes accompanied by a service-driven fee menu. This is found in all jurisdictions except New Zealand.
Some Isle of Man schemes can appear to be slightly cheaper than Guernsey ones, but the menu approach requires careful comparison. Some Gibraltar schemes seem comparatively expensive but volumes are currently small. Maltese schemes are expected to be priced at Guernsey levels. In New Zealand, where the fund remains in place for the longer term, scheme pricing can involve an annual charge of around 1.65% but no setup charge.

Ease of transfer

A look at both directions of transfer is important because personal circumstances can change. UK schemes give members the right to transfer, while overseas schemes do not. The transfer experience can vary from simple to horrific, although whether that is down to the jurisdiction or the provider is arguable. UK schemes can be freely transferred to any overseas scheme which is registered with HMRC as a QROPS.

QROPS providers in all countries generally deal well with the transfer process, which takes anything from a few weeks to several months. Transfers out of QROPS can be expensive. Some schemes apply seemingly punitive exit fees even though their service may have fallen short.

In addition, some QROPS do not state at outset a freedom to transfer out to QROPS in other jurisdictions, even where such transfers are expressly permitted by local law and by the tax authority of the existing scheme, and the new scheme is able to acceptthe transfer.


So which is the best jurisdiction for QROPS? Gibraltar is regarded as expensive, while the jury on Malta – a brand new entrant to the market – is still out, though it has considerable potential and an excellent double tax treaty network.

New Zealand has the most flexible benefit regime, but distance complicates the transfer process and the fund is taxed in a way which includes exposure to currency risk. The Isle of Man can be relatively low cost, but has an irritating exposure to local taxation which has deterred many potential users.

Guernsey ticks all the right boxes, and has sought HMRC input and guidance to prevent potential abuse by its sizeable community of QROPS providers. Ongoing dialogue with HMRC has benefited its status as arguably the world's leading QROPS jurisdiction.

Expatriate Wealth Services

Qualifying Non-UK Pension Schemes (QNUPS)
New tax planning opportunities for British expatriates

On the 15th February 2010, a new UK HM Revenue & Customs (HMRC) statutory instrument came into force, which creates significant opportunities for British expatriates to save local taxes in the country in which they are tax resident as well as UK inheritance tax (IHT).

The UK legislation created a new type of trust known as Qualifying Non-UK Pension Schemes (QNUPS) - which should not be confused with Qualifying Recognised Overseas Pension Schemes (QROPS).

The tax rules for pension schemes are generally more favourable than other investment structures.

QNUPS allow retired expatriates to continue to put money into a pension scheme -
Firstly, there is no maximum age at which you can invest in a QNUPS.
Secondly, you do not need to have any earned income from an employment in order to make a contribution.
Thirdly, there is no maximum contribution that can be made into a QNUPS.

The rules are sufficiently flexible to allow someone who is 85 years of age and has been retired for 25 years to put large investments into a QNUPS and immediately create significant tax advantages for themselves.

The benefits of QNUPS for retired British expatriates

A QNUPS is a pension scheme trust and as such you are entitled to take a cash lump sum and income during your lifetime, with the remainder of your fund being able to be passed to your spouse or heirs on your death free from all taxes.

The following advantages are available to you through a QNUPS:
As a pension scheme, a QNUPS is very tax efficient in most countries as it can avoid both local wealth taxes during your lifetime and succession taxes on your death.
A QNUPS also avoids local succession law, so that you are free to choose exactly who inherits your money and in what shares.
Income can be taken from age 55 (after 6th April 2010) or it can be deferred as it does not need to be taken until age 75. In certain countries it can be paid in a manner where a significant portion can be paid to you tax free.
When income is taken it is drawn down from the fund, thus leaving your scheme assets invested. Otherwise the assets grow free from tax.
On death the value of the QNUPS will be exempt from UK inheritance tax and local succession taxes.
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 unless the scheme also holds any assets transferred from an authorised UK pension scheme. You can have both a QROPS and a QNUPS.