Pension scheme minimises tax liabilities for wealthy clients

Keith Boniface, marketing director for Brooklands, said Qnups are exempt from inheritance tax and always will be. However, he said the addition of the offshore bond to the Qnups gives clients added assurance that growth on their income will remain tax-free.

He said: “This gives investors even greater protection against any personal tax liability on the money. A Qnups is IHT-exempt, no question. But some tax accountants take the view that HMRC might at some point attempt to tax the income or growth in a Qnups, although it has not done so to date. We believe we have removed this uncertainty by using an international insurance bond.

“The income and capital gains tax benefits of international bonds are well established so advisers and their clients have peace of mind that their assets are securely protected.”

Mr Boniface said any amount of money can be contributed to a Qnups and investors can take out a 30 per cent tax-free lump-sum. Any further withdrawals are subject to income tax at the rate of the country of residency.

However, Mr Boniface said the product was only suitable for high net-worth sophisticated financial investors.

He said: “This is very much for specialist clients and advisers who have high net-worth clients. It’s not for someone who is moderately well-off and doesn’t like the idea of paying IHT.

“We wouldn’t encourage tax dodging or cause HMRC to be irate about it, but we can use the Qnups as a tax advantage for people. The legislation is very clear. We only sell through advisers and are looking to reassure them that this is totally tax protected.”

Mr Boniface added that the company’s tax accountant was available to give advice to IFAs and their clients on large cases.

He said: “The IFA has a duty of care to clients and we have a duty of care to advisers to make this as safe and simple as possible.”

The Qnups is available for UK residents and expats with a minimum investment of £500,000. Benefits may be taken from age 55 or before 55 as a tax-free loan.

However, David Trenner, technical director for Intelligent Pensions, warned that Qnups can be dangerous for clients because many are sold offshore by unregulated advisers.

He said: “Companies such as Brooklands are competent experts, but the message for UK expats is that they have to understand that if they don’t use a UK adviser then they are running into all sorts of dangers.”