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CHANGES TO UK INHERITANCE TAX in the recent Budget. Are QNUPS dead? | Blacktower
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Nov 6, 2024
Christina Brady was in Kal immediately after Rachel Reeves had announced the new UK Budget. There was a few points of interest for those living in Spain, notably for anyone holding their pension in a QNUPS. This could now be liable to Inheritance Tax at up to 40% under the new rules, where your unspent pension is seen as part of your estate. However, there are options available... Hear Christina Brady from @blacktowerfinancialmanagem7049 every other Thursday with with Kal at 16:00 CET For any enquiries contact info@blacktowerfm FAO Christina or get in touch through the website: www.blacktowerfm.com Be sure to Like and Subscribe to our YouTube channel for more insights from BayRadio Spain, and follow us on Social Media: Website: http://www.bayradio.fm/ Facebook: https://www.facebook.com/BayRadioInSpain Instagram: https://www.instagram.com/bayradiospain/
View Video Transcript
0:00
carrying on with a look at the budget uh
0:03
in the UK and how that might affect
0:06
people abroad expats and as expected the
0:10
uh Rising capital gains tax very much
0:12
baked in with the budget we'll get to
0:14
that shortly we're still talking about
0:16
how the pensions were affected with
0:18
Christina BR we're talking about
0:19
inheritance tax now so what we going to
0:21
go there okay I thought we'd finish
0:23
that's do with pensions okay I see what
0:25
you say right before the budget if you
0:27
had a pension and it was unused before
0:29
you were 75 you could leave it to your
0:32
beneficiaries taxfree so when you died
0:34
it didn't form part of your estate as
0:37
suspected they've changed that rule so
0:40
from the 6th of April
0:43
2027 any unspent pensions will form part
0:46
of your estate when you
0:48
die as we know she did not raise the
0:51
inheritance tax allowances and she's not
0:53
going to so it means if you are a single
0:57
person you get 325 if you're married you
0:59
get 6 50 before your estate has to pay
1:02
inheritance tax unless you use the 1
1:05
million allowance on your property and
1:07
then obviously that's the way you can do
1:09
it but for normal people 650 so if you
1:12
have a large pension and you died before
1:15
75 before you could leave it to your
1:18
beneficiaries and it would didn't form
1:20
part of your estate so now that forms
1:22
part of your estate so that means if you
1:25
go over the threshold it everything is
1:28
taxed at 40% wow
1:30
so it what people did to avoid
1:35
inheritance tax in the UK is they used a
1:37
vehicle called a
1:39
cups which was basically a pension so
1:42
it's a qualified non-uk pension scheme
1:45
and they put their assets within this to
1:48
avoid UK inheritance tax now that is
1:51
subject to UK inheritance tax so all
1:55
that estate planning has gone to waste
1:59
but don't hastily don't start to panic
2:01
there are ways around it um and I have
2:04
got one that's come through and it just
2:06
sort of I'll read this through cuz it
2:07
just sort of explains to people how it's
2:09
going to work okay so if you had a
2:11
50-year old man okay and had a million
2:14
pension pot and he died this is after
2:17
2027 okay and he dued up his personal
2:20
allowance and other things so he had a
2:22
house so he didn't have he would that
2:24
the tax on that million would be it'd
2:26
only leave 600,000 left cuz it' be taxed
2:28
at 40 40%
2:30
okay so that's if he's got it in the
2:32
cups so if he's got in cups okay and
2:36
he's used up his nil band tax rate
2:38
anything above that will now be taxed at
2:41
40% so for high net worth not even high
2:44
net worth for individuals that would use
2:46
this to reduce or stop inheritance tax
2:50
by putting because you could put
2:51
properties in a q Nots various other
2:53
things it now has completely mitigated
2:56
that however you can take out um a
3:00
what's called an index universal life
3:03
policy along a c alongside a cups and
3:06
what that does is it
3:08
will it gives you a payout on death if
3:12
you put a million in the payout on death
3:14
would be about 3 million okay so you
3:17
take off your inheritance tax that
3:19
you've lost through your cups and it
3:21
still leaves you with about 2 million
3:23
left to inherit instead of losing
3:25
600,000 so there are all way so if
3:28
you've got a standard cups
3:30
okay you would lose you'd only get
3:32
600,000 if you took out an enhanced cups
3:34
which is that was what they're calling
3:36
this you could get 1.9 million so there
3:38
are ways this is going forward people
3:40
who had already done this are still okay
3:42
yeah no no no no no because they've now
3:44
got a pension their cups is a pension
3:46
all pensions are now subject from 2027
3:50
so unless you're planning to die before
3:52
the 6th of April 2027 that qaps is now
3:56
subject to UK inheritance tax and what
3:59
have to remember is we may live in Spain
4:02
but we are if you're domiciled in the UK
4:05
you are still subject to UK inheritance
4:07
tax as well as Spanish succession tax
4:11
you have to it doesn't matter where you
4:12
resident residency is completely
4:14
different to dool dool is usually your
4:16
country of birth or country of origin
4:20
which is assumed where your father was
4:22
born born country of dependency or you
4:25
can choose to where it is so but if
4:27
you've got any links to the you
4:30
UK you are usually considered doile and
4:35
it's very very difficult to leave
4:37
docility I just put some notes down on
4:39
it uh because it's a very difficult
4:41
thing people say oh but I'm not I'm not
4:43
resident in the UK I don't have to pay
4:44
inheritance tax in the UK yes your
4:47
estate does on your worldwide assets so
4:50
non UK residents tax residents which I
4:54
am okay we are liable for UK inheritance
4:57
tax on our worldwide estate I don't
5:00
understand how the UK is gon to find out
5:01
what you've got elsewhere in the world
5:02
unless you tell them I've tried to look
5:04
that up on the website how does hmrc
5:06
find out but I couldn't find any answer
5:08
that and in the UK there is no time
5:10
limit on inheritance tax like in Spain
5:13
you've got the 5year limit so in Spain
5:15
haven't got you but after that you're
5:17
okay in Spain the Spanish don't tell
5:18
anyone they someone's died for 5 years
5:20
after 5 years they can't come back to
5:22
you for the inheritance tax in the UK
5:25
that only applies to gifts so you have
5:26
to live seven years uh but in the UK
5:29
they can go back there's no time limit
5:31
and they usually go back 20 years
5:33
minimum so who is it they're trying to
5:35
get here it's not your average Joe Schmo
5:37
is it um who who why why are they going
5:40
down that route what what they what
5:42
they're trying to well it's always been
5:44
this way with the uh with the domicile
5:47
you have to pay but with the inheritance
5:49
tax they they're going after everybody
5:50
on inheritance tax because if you think
5:52
most people in the UK now their property
5:54
is worth over
5:56
300,000 most of them worth over 500,000
5:59
so if you choose to take your property
6:01
tax free it gives you no allowance so
6:04
therefore if you've got a pension say of
6:06
250,000 in the port that's going to be
6:09
taxed at 40% you can't do anything about
6:11
it and they the people avoid it by
6:13
putting the cups they're getting at so
6:15
really the Chancellor's going to make
6:16
something like what two 2.5 billion to4
6:20
billion pounds on this is that what
6:21
that's what they're saying but I don't
6:22
know if it's going to come to fruition
6:24
but but to lose your docility you have
6:27
to prove that you've really you can't
6:29
have been president in the UK for 15 of
6:31
the last 20 years or had a permanent
6:33
house in the UK in the last 3 years um
6:36
even stating in your will that you want
6:38
to be buried in the UK can mean that
6:41
you're still demil there and also this
6:43
is one I didn't understand in Spain when
6:46
you do a will if you want to make sure
6:49
that you can nominate who your
6:50
beneficiaries are you have to State you
6:52
want UK law of succession CU why you get
6:55
forced Airship if you state UK law of
6:57
succession hmrc if they're picky can say
7:00
that means you're domiciled in the
7:02
UK so and you've got the case with
7:04
Richard Burton he'd moved every asset
7:07
outside of the UK and died in I think it
7:09
was in Switzerland but said he wanted to
7:11
be his ashes ought to be buried in Wales
7:14
therefore hmrc said he was still UK
7:16
doile and went after the tax so you have
7:19
to be very careful between docility and
7:22
uh residency so if you are resident in
7:25
Spain but still domicide in the UK you
7:27
should be be cing UK and inheritance tax
7:30
and we need them to state that if you
7:32
are outside of the UK does your pension
7:37
like if you've got a cure Ops does it
7:39
still fall if you're not a UK resident
7:43
as part of your estate so I think it
7:46
will I think that's going to be they're
7:48
not going to say no are they not if it
7:50
gives them more money
7:53
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