Non-UK pension schemes ― overview

By Tolley
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The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Non-UK pension schemes ― overview
  • Introduction
  • Living overseas and retaining membership of or joining a registered pension scheme
  • Member contributions
  • Employer contributions in respect of non-UK resident employees
  • Migrant member relief
  • Transitional provisions: members previously subject to corresponding relief
  • Transferring UK pension rights overseas

Introduction

This guidance note examines the tax regime associated with overseas pensions and considers how it applies to those who relocate to work or retire overseas.

Those who decide to emigrate from the UK may continue to be, or decide to become, members of UK-registered pension schemes subject to certain conditions.

Living overseas and retaining membership of or joining a registered pension scheme

Since 6 April 2006, membership of a UK-registered pension scheme has been open to anyone regardless of where they are resident. Neither is there any restriction on the amount that can be contributed by an overseas resident individual, or by an employer in respect of overseas resident individuals. However, relief from UK income tax may not be available or may be restricted on contributions made by the scheme member and / or their employer where applicable.

Member contributions

Relief from UK income tax on contributions by an individual to a registered pension scheme is dependent on their being a ‘relevant UK individual’ during a tax year.

There is an annual limit for UK tax-relieved pension contributions, which is the greater of 100% of the individual’s UK relevant earnings that are chargeable to income tax in the UK and £3,600. The annual allowance (set out in FA 2004, s 228), now £40,000 since 6 April 2014, applies in the same way as it applies to UK resident pension scheme members. For the definition of relevant UK earnings, see the Member pension contributions to registered pension schemes guidance note.

FA 2004, s 190

The term ‘relevant UK individual’ means an individual who has earnings chargeable to income tax in the UK for the relevant tax year and who was tax resident in the UK at some stage during the tax year for which tax relief is claimed.

The

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