Q&As

How might the UK tax a lump sum payment from a non-UK pension scheme to a UK resident where some of the pension monies within the non-UK scheme originated within a UK pension scheme? How does section 130A of the Taxation (International and Other Provisions) Act 2010 affect the position?

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Published on LexisPSL on 20/04/2020

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • How might the UK tax a lump sum payment from a non-UK pension scheme to a UK resident where some of the pension monies within the non-UK scheme originated within a UK pension scheme? How does section 130A of the Taxation (International and Other Provisions) Act 2010 affect the position?

How might the UK tax a lump sum payment from a non-UK pension scheme to a UK resident where some of the pension monies within the non-UK scheme originated within a UK pension scheme? How does section 130A of the Taxation (International and Other Provisions) Act 2010 affect the position?

We have assumed that:

  1. the UK pension scheme from which funds were transferred to the Swiss scheme was a registered pension scheme within the meaning of Finance Act 2004 (FA 2004)

  2. the Swiss scheme was a qualifying recognised overseas pension scheme (QROPS) at the time of the transfer

The taxation of cross-border pension benefits is extremely complicated and we would suggest that you seek specialist advice. In the meantime, the following information may be useful.

We note that P moved to Switzerland in 2006. Significant changes were made to the way in which UK pensions were taxed from 6 April 2006 (also known as ‘A-day’ within the pensions industry). A key feature of the post-2006 regime is the distinction between pension schemes which are registered pension schemes under the FA 2004, and those that are not; a non-UK scheme will never be a registered pension scheme. It is possible to transfer pension funds from UK registered schemes to non-UK schemes, provided that the recipient scheme satisfies the definition of a QROPS at the time of the transfer.

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