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The legislation drafters forgot to fully explain [link widoczny dla zalogowanych] inheritance tax (IHT) exemptions for some overseas pension schemes.

The intention was to exempt a pension fund from IHT on the [link widoczny dla zalogowanych] the death of the pension member if no lump sum or other payment was drawn down from the pension fund (Section 151 IHT Act 1984).

Unfortunately, the law did not exactly say this in clear [link widoczny dla zalogowanych] and unambiguous language for QROPS pensions (qualifying recognised overseas pension schemes).

[link widoczny dla zalogowanych] HM Revenue and Customs confirmed this was an error and legislation was updated in the Finance Act 2008 , followed by the The Inheritance Tax (Qualifying Non-UK Pension [link widoczny dla zalogowanych] Schemes) Regulations 2010.

These rules explained exactly which pensions are exempt from IHT - and introduced [link widoczny dla zalogowanych] QNUPS (qualifying non-UK pension schemes).

[link widoczny dla zalogowanych] QNUPS is the catch-all term for any overseas pension scheme exempt from IHT under the 2010 regulations.

The key point is the truism all QROPS [link widoczny dla zalogowanych] are QNUPS but not all QNUPS are QROPS, as other overseas pension schemes can meet the definition as well.

Because QNUPS are not QROPS, they do not have to [link widoczny dla zalogowanych] meet QROPS standards, so they may be based in countries that do not have double taxation or tax information exchange [link widoczny dla zalogowanych] treaties with the UK.

Because QNUPS are [link widoczny dla zalogowanych] not registered pension schemes [link widoczny dla zalogowanych] like QROPS, [link widoczny dla zalogowanych] different rules may apply to the investments held within the fund and the terms relating to lump sum drawdowns and benefit payments.

As QNUPS are not a specific product, no rules say the fund must do this or that... the terms are specific to each provider and sometimes to individuals.

Residence and domicile are crucial issues for QNUPS and Qrops

IHT follows domicile, so if you [link widoczny dla zalogowanych] are a UK domiciled individual [link widoczny dla zalogowanych] regardless of your country of residence, your estate is probably liable to IHT in the UK.

Taxpayers can change their country of residence, but few can change their country of domicile as it depends more on where they were born and the father's nationality.