QNUPS And Inheritance tax

QNUPS And Inheritance tax

QNUPS And Inheritance tax

Earlier, the only option available to people of UK Domicile who wanted to avoid Inheritance Tax was to either change their domicile status or to transfer their assets seven years before death. QNUPS has now made life much simpler for such people.

Until QNUPS came into being, Inheritance tax was one of the most debated and controversial subjects in the UK. This was mainly due to two reasons. The first was that while it was introduced with the intention of levying taxes on the wealthier section of people, with the rise in property value over the years, more and more middle class families were falling into the net. The second argument against IHT was that it was a means of double taxation as the assets in question had already been taxed during the lifetime of the deceased.

With tax rates being as much as 40% for assets valued over 3,25,000 in case of a single holder or 6,50,000 for a couple, the amount payable in taxes works out to quite a large sum. This is the reason why QNUPS has become a popular option. By investing in these offshore pension funds, a person can pass on his inheritance to his heirs without them having to be taxed. At the same time, he has access to the investment after his retirement.

Since Inheritance tax is applicable on any person domiciled in the UK, even residing abroad did not save a person from the purview of this form of taxation, since a distinction was made between residence and domicile in the Act. The only options earlier available to UK domiciled persons were to either change their domicile status or transfer their assets to the heirs seven years before their death. There were however issues with these options. If a person chose to change his domicile, then he had to make an application along with sufficient proof that he would settle permanently in the chosen country and this included selling off any property held by in the UK. With the second, there was no way a person could plan how long he would live after transferring his assets and in case of death before the seven year period, the persons inheriting would still be levied the 40% IHT. QNUPS has now made planning for retirement much easier for UK domiciled individuals.

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