Wealth management and pension planning may not always go hand in hand, often based on the logic that pension benefits are out of kilter with the long-term financial aspirations of the wealthy.
Indeed, UK rules ensure that you can’t save more than £40,000 ($49,485, €46,227) a year into a registered pension and (even lower for those earnings above £150,000) and over the course of your lifetime you are restricted to a total tax-relieved pension pot of £1m.
You can’t hold residential property through a registered scheme and commercial property values generally don’t sit well with the lifetime allowance, so investment choices for the tax-favoured version in the UK are limited too.
Little wonder, then, that pensions are hardly the hot topic of conversation among private client advisers.
Many advisers are still unaware of what qualifying non-UK pension schemes (Qnups) are, let alone the benefits they offer.
Qnups are not actually all that new, having been introduced by The Inheritance Tax (qualifying non-UK pension schemes) Regulations 2010.
The original purpose of the regulations was to tidy up the IHT treatment of schemes that had been transferred overseas, mostly by UK expatriates retiring abroad and set out the criteria in order for a non-UK scheme to qualify as a Qnups.
Although not particularly complex, these regulations are specific in nature, so it is always worthwhile verifying that the characteristics of a non-UK scheme are such that it can properly offer all advantages a Qnups has to offer.
An independent tax or legal opinion is useful in this regard and a good provider will have this available.
Tax advantages
Contributions to a Qnups do not attract any UK tax relief.
However, unlike UK registered schemes, you can contribute as much as you like without any adverse income tax consequences.
By contributing to a pension scheme you are seeking to ensure that, in return, you receive valuable future pension benefits, with the result that there is no transfer of value for IHT purposes and no danger of the initial charge being in point where Qnups are concerned.
Non-cash contributions – i.e. in specie transfer of assets – are a disposal for CGT purposes and therefore subject to tax where such assets are standing at a gain. In specie transfers of land or property should not attract SDLT.
Once the Qnups is established, it is generally possible to structure gross roll-up of income and gains but one should be cautious of any Qnups arrangement that boasts of gross roll-up as a matter of course.
