What is a QNUPS?
A Qualifying Non-UK Pension Scheme (QNUPS) is an offshore pension scheme used for retirement planning. It is used by high-net-worth individuals who have already used their UK pension lifetime allowance and want to make further provisions for retirement. A QNUPS is a non-UK scheme offshore pension scheme that was introduced by HMRC legislation in 2010.
Who can benefit from a QNUPS?
QNUPS legislation is designed to allow UK domiciled individuals to make retirement provisions. There are several examples of how UK-domiciled individuals can benefit from the QNUPS legislation.
- A high net worth expatriate (HNW expat) living overseas who wants to make retirement provision can use a QNUPS. This could be because they have little or no pension benefits for retirement. They may not have access to an international pension plan. e.g. no company pension or no personal pension like a Self-Invested Personal Pension Plan (SIPP) or a Qualifying Recognised Overseas Pension Scheme (QROPS).
Employer Pension Contributions
- An employer wishing to contribute to a pension on behalf of an employee as a form of offshore pension plan.
QNUPS for UK residents
- A UK pension scheme that is close to, or exceeding the lifetime allowance (currently £1,073,100) can use a QNUPS. The lifetime allowance has been frozen at this level until the 2025/26 tax year.
- A client wishing to add to their pension without a 55% lifetime allowance charge.
- The maximum £40,000 annual allowance is used (assuming no allowance restrictions) and the 3 previous tax years' allowances are all used.
- A supplement for a HNW individual who does not have sufficient relevant UK earnings.
QNUPS tax advantages
There are several QNUPS tax advantages as part of retirement and estate planning:
- Unlimited pension contributions
- No 20% chargeable lifetime transfer tax (CLT) on contributions
- No 10 yearly tax charge up to 6%.
- No lifetime allowance limit
- Tax-free investment growth on the fund
- Up to 25% tax-free pension commencement lump
- Inheritance Tax Exemption (IHT)
- No HMRC reporting requirements
- 100% of a QNUPS can be passed to beneficiaries IHT-free
A QNUPS should be set up to provide retirement income and not to avoid paying UK IHT. Contributions should match retirement income needs and be evidenced when setting up a QNUPS scheme.
Read more below with our QNUPS Frequently Asked Questions (FAQs)