Pensions are a prime concern not only for British Expatriates working overseas but also for UK Resident/Domiciled individuals who may have already utilised their maximum income tax exempt pension contributions. The pensions industry is full of jargon and abbreviations and as a Professor, I naturally want to explain them as simply as possible. Qualifying Non-UK Pension Scheme (QNUPS) are an offshore pension scheme for new funds or assets that are separate from your current pension scheme. A QNUPS does not require approval or reporting to Her Majesty's Revenue & Customs, unless assets are transferred to it from an existing UK authorised pension scheme. The main advantage of a QNUPS is that any funds invested immediately sit outside of Inheritance Tax (IHT), without needing to wait seven years and will grow tax free. There is no age restriction on when you have to stop investing, Income can be taken from age 55 or it can be deferred until age 75. Upon death, the funds and assets you have left within a QNUPS are free of IHT, allowing your beneficiaries to receive the proceeds tax free.
Qualifying Recognised Overseas Pension Schemes (QROPS) on the other hand has to be approved by Her Majesty’s Revenue & Customs to accept pension transfers from an authorised UK pension scheme. A QROPS offers enormous financial benefits for people of any nationality, who have accumulated a UK pension fund and are now living or planning to live out their retirement outside the UK.
An offshore bond on the other hand is essentially a life insurance policy specifically structured as an accumulation vehicle that upon death, passes on the proceeds of the policy plus an additional percentage amount to beneficiaries. An offshore bond is normally used in conjunction with a Discretionary Trust for IHT planning.
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