QNUPS- Case study 1

Scenario:

Mr and Mrs W are 56 and 53, respectively. They both wish to make significant savings into a retirement income plan to build up a sufficient tax efficient income in retirement. Both have to date maximised their contributions into UK pension schemes. Their current and future income will be derived from dividend and rental income from their investments and their residential investment portfolios. Therefore, they are restricted as to how much they can fund into tax relieved pensions.

They own several plots of land and wish to obtain planning for to build residential properties. The objective is to build the properties and sell for profit but potentially also hold some of these for long term investment. It is the proceeds of these developments that the clients wish to use to fund their retirement income objectives.

Recommended Solution:

The type of assets they intend to develop and hold are not eligible to be held in a UK pension scheme. We recommended that they each set up a Qualifying Non-UK Pension Scheme (QNUPS) to hold these assets. The QNUPS jointly entered into a partnership with a UK development company owned by Mr an Mrs W. The development company will build the properties on behalf of the QNUPS and the profits will be distributed to both QNUPS equally.

Benefits:

Mr and Mrs W were able to benefit as follows from the advice provided:

• Utilise their residential land investments to build tax efficient pension funds.
  
• Tax free accumulation of growth within their respective schemes.
  
• They have the ability to receive loans against the value of investments subject to a maximum of 30% of the value of the assets held within the Plan in future.
  
• Further ability to make in-specie transfers into the schemes as and when required.
  
• The assets in the QNUPS can be passed on to beneficiaries free of Inheritance Tax.
  
• Future contributions are not restricted to the UK Life-Time Allowance limits.

THE ABOVE BENEFITS ARE SPECIFIC TO THE CLIENT IN THE CASE STUDY AND THESE MAY NOT BE RELEVANT TO ALL CLIENTS. THE PENSION SCHEME ADVICE PROVIDED MAY NOT BE APPROPRIATE TO ALL CLIENTS.

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QNUPS Case study 2

Scenario:

Mr D is 72 and recently widowed. He has three financially independent children and 8 grandchildren. His wife was the sole owner of a company which bought a number greenfield plots of land. The company obtained planning to build sizeable residential mobile parks on the land and which generate circa £1,000,000 income per annum.

Mr D inherited the company shares 6 months ago and has continued to run the company. Mr D has no pension provision and wished to generate a tax-efficient income going forward and on death ensure the succession of the company and its assets remained in place for his grandchildren to continue his wife’s wishes for the business to carry on for the benefit of future generations.

Mr D was also concerned that in the event of his death there would be a significant Inheritance Tax bill and that the company would need to be sold to pay this, against his wife’s wishes. During his lifetime he wished to continue to benefit from the profits of the company to provide a retirement income. This precluded gifting the shares either directly or into trust as this would be deemed a failed transfer for Inheritance Tax purposes. He was also concerned that future Governments may alter or abolish Business Relief now.

Recommended Solution:

We recommended that Mr D transfer the shares into a Qualifying Non-UK Pension Scheme (QNUPS). The QNUPS entered into a service agreement with him to continue to run the business until retirement at which point his grandchildren would take over the running of the business.

Benefits:

Mr D was able to benefit as follows from the advice provided:

• Build a tax efficient fund for retirement income.
  
• A tax-free cash sum of 25% of his Lifetime Allowance.
  
• No Capital Gains Tax on the transfer of shares.
  
• No SDLT on transfer of shares.
  
• Tax free accumulation of growth for the fund.
  
• The assets can be passed on to beneficiaries free of Inheritance Tax.
  
• No Life-Time Allowance limits on the fund.

THE ABOVE BENEFITS ARE SPECIFIC TO THE CLIENT IN THE CASE STUDY AND THESE MAY NOT BE RELEVANT TO ALL CLIENTS. THE PENSION SCHEME ADVICE PROVIDED MAY NOT BE APPROPRIATE TO ALL CLIENTS.