QNUPS and QROPS: International Pension Solutions

At Fairfield Wealth, we provide independent advisory services for members and Scheme Administrators looking to navigate the complexities of international pension planning. Whether you are a UK expat, a high-net-worth individual, or looking to diversify your retirement assets, understanding the distinction between QNUPS and QROPS is vital.

Important Regulatory Update (Post-Autumn Budget 2024): > The UK Government has announced fundamental changes to the taxation of offshore pensions. From 6 April 2027, most unused pension funds and death benefits—including those held in QNUPS—will be brought into the scope of UK Inheritance Tax (IHT). Additionally, from April 2025, the UK has moved to a residency-based tax system, this means that if you have recently moved to Guernsey from the UK, your worldwide estate may still be subject to IHT. We recommend all current and prospective scheme members seek a professional review of their estate planning strategy.

QNUPS (Qualifying Non-UK Pension Scheme)

A QNUPS is a form of international pension that shares similarities with a QROPS but offers distinct advantages regarding funding and asset classes. It is often employed by individuals who have already maximised their UK tax-relieved pension contributions and wish to provide additional, flexible retirement income.

Key Considerations for QNUPS:

• Residency Flexibility: There are no restrictions on where you live. However, the tax treatment of the scheme is determined by your country of tax residence. Under the new UK "10-year residency rule" (effective April 2025), long-term UK residents may find their worldwide assets, including QNUPS, falling within the UK IHT net.

• Asset Diversity: Unlike standard UK registered pensions, QNUPS can technically hold a wide array of alternative investments, including:

  • Residential and Commercial Property

  • Unquoted Shares

  • Fine Wine, Art, and Antiques (subject to Trustee approval)

  Assets may not have to be liquidated before transferring them to a QNUPS, this is more an advantage than a restriction. Though there may be taxation issues, such as Capital Gains Tax if you live in the UK, which is why it is always pertinent to obtain financial advice. Subsuming UK property may present other tax challenges. Most Trustees prefer that the asset has some form of identifiable title.

• Funding & Commerciality: Funding must be "commercially reasonable" and intended for the bona fide purpose of retirement. As a general rule of thumb, contributions should not exceed 20% of annual income. Fairfield specialises in ensuring your scheme is structured as a legitimate pension to mitigate the risk of HMRC challenges.

• Income & Drawdown: Income can typically be taken from age 55. For non-Guernsey residents, 100% of income drawn from a QNUPS is subject to local income taxation. While a 30% tax-free lump sum is often available at age 55+, its relevance depends entirely on your country of residence at the time of drawdown. For Guernsey residents, income is taxed in line with local requirements, though there are also limits on the amount of income you are permitted to take. 

QROPS (Qualifying Recognised Overseas Pension Scheme)

A QROPS is specifically designed to receive transfers from UK-registered pension schemes. This is a common route for expats who have left the UK and wish to consolidate their pension assets into a single, internationally portable vehicle. Unlike a QNUPS, you must be tax resident in the same country as your QROPS.

• Reporting Requirements: Unlike QNUPS, QROPS are subject to strict HMRC reporting requirements for at least 10 years following the transfer.

• The Overseas Transfer Charge (OTC): Transfers may be subject to a 25% tax charge unless specific residency requirements are met. Professional advice is essential before initiating any transfer.

• Consolidation: QROPS allow for the management of pension assets in a currency and jurisdiction that matches your lifestyle, providing protection against currency fluctuations and local tax variations.

For Guernsey Residents: Local Tax & Income Rules

If you are a Guernsey tax resident, your QNUPS or QROPS is viewed by the Guernsey Revenue Service (GRS) as an Approved Pension (similar to a local RATS). This introduces specific local restrictions:

Feature	Guernsey Resident Rule (2026)
Income Tax	100% of income drawn is taxed at the Guernsey standard rate of 20%, deducted at source.
Withdrawal Limits	Income is subject to GAD (Government Actuary’s Department) limits to ensure the fund provides a sustainable lifetime income.
Tax-Free Lump Sum	Up to 30% of the fund can be taken tax-free, subject to the Guernsey lifetime limit of £203,000.
High-Earner Taper	Pension income counts toward the £85,000 threshold. Above this, your personal allowances are withdrawn at £1 for every £5 of income.
Age Limit	Benefits must typically commence between age 50 and 75.

Why Choose Fairfield Wealth?

Despite the IHT changes, these schemes remain essential for Investment Control and Spousal Protection (which remains IHT-free at the first death). We can provide you with independent Plan Review to ensure it is still for your needs ahead of the 2027 changes as well as helping you navigate the "taper trap" and maximising the Overseas Transfer Allowance. 

Regulatory Disclaimer:

Fairfield Wealth is regulated by the Guernsey Financial Services Commission (GFSC). We are independent financial advisers, not tax consultants. The information on this page is based on our understanding of current and draft legislation as of January 2026. We strongly recommend that all clients seek specialized, independent tax advice regarding their specific UK Inheritance Tax (IHT) liabilities and Guernsey Revenue Service reporting requirements.