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.
QNUPS for offshore UK expats
- A high net worth individual (HNWI) living overseas who wants to make retirement provision. 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).
- 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 with growth, could exceed the lifetime allowance (currently £1,073,100). The lifetime allowance has been frozen at this level until the 2025/26 tax year.
- A client wishing to add to their pension provision without a lifetime allowance charge of 55% upon taking their UK pension scheme.
- The maximum £40,000 annual allowance is used (assuming no allowance restrictions) and the 3 previous tax years annual allowances are all used.
- A supplement to a pension fund for a HNW individual who does not have sufficient relevant UK earnings.
QNUPS tax advantages
There are several tax advantages of using a QNUPS as part of your retirement and estate planning.
- Unlimited pension contributions
- No 20% chargeable lifetime transfer tax (CLT) on contributions
- No 10 yearly tax charge of up to 6%.
- No lifetime allowance pension limit
- Tax-free investment growth on the fund
- Up to 25% tax-free pension commencement lump
- Inheritance Tax Exemption (IHT) exemption
- No HM Revenue and Customs reporting requirements
- 100% of a QNUPS can be passed to beneficiaries free of UK inheritance tax
A QNUPS should be set up for the purpose of providing an income in retirement and not to avoid paying UK inheritance tax. Contributions to the pension plan should be in proportion to an individual’s retirement income needs, and this should be evidenced when setting up a QNUPS scheme.
Read more below with our QNUPS Frequently Asked Questions (FAQs)