What is a Guernsey QNUPS?
In simple terms a QNUPS (Qualifying Non UK Pension Scheme) is a qualifying non UK pension scheme that is UK tax recognised. They are established primarily to secure additional pension income for a individual upon retirement.
The UK Property Marketplace
After a fairly tumultuous period there is still great interest in the UK property market. With sterling comparatively weak (yet underpinned by a relatively stable economy and favourable tax environment), non UK residents have and continue to see UK property as an attractive and stable investment. Of course, it’s now relatively cheaper in foreign exchange markets too. And to this the amount of UK property already held in non resident hands and the significant tax changes over the last few years, it’s clear that there is a lot of scope for individuals to continue to invest in property within the UK. It may be an opportune time therefore, to consider using a Guernsey QNUPS.
Investing into UK Property via a Guernsey QNUPS
A QNUPS is able to invest directly into UK Property (including Residential property). You can purchase directly the assets. This is not appropriate however for your main residence. This planning opportunity provides you with an additional pension to meet any expected income shortfall in retirement whilst holding property in a tax efficient environment.
What are the key tax advantages of investing into property in this way?
Various taxes are in point when considering an investment into UK property. The following is an explanation of taxes and their interaction with the QNUPS:
- Stamp Duty Land Tax (SDLT) – No SDLT on a property contributed to a QNUPS ( if its is debt free). SDLT will be due on the debt element and also on new properties purchased by the QNUPS. It is possible to realign any debt on contribution.
- Capital Gains Tax (CGT) – CGT will be due on property contributed to a QNUPS but the QNUPS itself is then exempt from CGT thereby protecting all future growth completely from the charge to CGT. If the property contributed is currently held offshore then CGT is due but only from the property value as of April 2015 meaning it is likely to be negligible.
- Annual tax on Enveloped Dwellings (ATED) – Let property within QNUPS are not liable to ATED.
- Inheritance Tax (IHT) – QNUPS are specifically exempt from IHT with no 2 or 7 year waiting period.
- Income Tax – A QNUP will be a non resident landlord so subject to tax on profits from rental income (after expenses including interest) at a maximum tax of 20%. Additional planning is available for large property portfolios or property with high income yield.
For further advice on Guernsey QNUPS please contact Harrison Brook today!