What is a QNUPS scheme?
A QNUPS is a Qualifying Non UK Pension scheme. QNUPS were introduced in February 2010 when the UK government announced that certain types of overseas pension scheme were exempt from UK inheritance tax.
Why would I use a QNUP?
You wish to build a pension fund outside of the UK to later enjoy the benefits in retirement, you do not need to have any earned income from employment to make contributions.
You have already maximised your annual contributions to a UK pension and wish to make additional savings.
Your total UK pension savings are near the lifetime allowance and you wish to add to your pension without incurring a charge when you take your benefits.
Death benefits will be paid free from UK inheritance tax, unless there is evidence of deliberate tax avoidance.
Potential Risks to Consider
A QNUPS is an overseas pension scheme which has IHT exemption, not a vehicle to be used to avoid IHT liability.
If HMRC believes you have invested in a QNUPS for the sole purpose of avoiding inheritance tax, they may deem the IHT exemptions do not apply, and your chosen beneficiaries would have to pay IHT after all.
If the payments into your QNUPS have adversely affected your standard of living, this would likely be viewed as making contributions to the scheme purely to avoid IHT.