Treatment of pension contributions to non-UK pension schemes

By Tolley

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

  • Treatment of pension contributions to non-UK pension schemes
  • Introduction
  • Corresponding relief ― to 5 April 2006
  • Migrant member relief
  • Qualifying Overseas Pension Scheme
  • Obtaining migrant member relief
  • Tax relief on employer contributions
  • Definition of relevant migrant member
  • Transitional provisions: members previously subject to corresponding relief
  • Contributions to other overseas pension schemes


This guidance note sets out thepart of thetax regime associated with overseas pensions. It looks at how those rules operate in relation to those individuals who decide to live in theUK and continue to make pension contributions to theoverseas pension scheme of which they were a member before their arrival in theUK.

The current treatment of such contributions evolved from theprovisions that applied in theperiod to 5 April 2006. This guidance note summarises theearlier provisions before looking at thecurrent rules in more detail.

Corresponding relief ― to 5 April 2006

Before 6 April 2006, a non-UK domiciled employee who was in receipt of earnings from overseas whilst working in theUK for a non-UK employer could remain as a member of an overseas pension scheme.

This was allowed so long as HMRC accepted that theoverseas scheme ‘corresponded’ to what was then known as a UK ‘approved’ scheme. In such circumstances, tax relief in theform of ‘corresponding relief’ was available in respect of contributions made to that scheme.

In broad terms, an overseas scheme ‘corresponded’ with theUK regime if it:

  • was established in thecountry where theemployee either resided or worked immediately before coming to theUK, or was an international pension scheme for all expatriate employees
  • was recognised by therelevant authorities in that country as a pension scheme
  • provided a reasonable amount of benefits (generally considered to be a maximum pension of 70% of final salary)
  • had as its primary purpose theprovision of pension benefits
  • provided for reasonable employee and employer contributions to thescheme in relation to thebenefits to be paid

From 6 April

More on Pensions schemes — international aspects: