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QNUPS and Inheritance Tax (IHT)

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British expatriates usually look forward to leave the UK tax system behind when they move abroad. However, inheritance tax (IHT) can follow you wherever in the world you live and is much harder to mitigate than other UK taxes. Usually, it is your country of residence that determines where you pay your taxes but IHT is imposed on your worldwide estate, subject to the provisions of any Double Tax Treaties which the UK has a limited number for IHT.

The assets within your QNUPS will be exempt from IHT, which is currently charged at 40% on anything over £325,000 of assets worldwide. However, if you transfer your assets into a QNUPS, this inheritance tax exemption applies immediately - you do not have to wait seven years as you would if you made a gift under the potentially exempt transfer (PET).

QNUPS are exempt of IHT regardless of your residence status. It does not matter whether you have retained your UK residence, or if you are unsure of your residence status, or even if you are currently non-UK resident but later return to the UK to live.

Besides the IHT advantage, depending on your country of residence and the local tax rules, QNUPS can also help to avoid local succession taxes, local wealth taxes and also local succession law – thus allowing you to leave your estate to whomever you want on death without leaving them a hefty bill for inheritance tax.

If you would like more information on the IHT benefits of a QNUPS scheme, please contact us.

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