EIM15082 - Employer-financed retirement benefits schemes: Extra-Statutory Concession A10: aim

[Notice: the guidance on this page should be read with the notice at the top of EIM15015]

The basic aim of the concession is to give exemption or relief from tax similar to that for foreign service in relation to Section 401 ITEPA 2003 (see EIM13680 and subsequent guidance).

The concession applies to lump sum relevant benefits (defined at EIM15021). This includes both lump sums received under the rules of an overseas employer-financed retirement benefits scheme and lump sums received in commutation of pension rights under such a scheme. (The tax treatment of pension commutation payments is dealt with at EIM15150).

Note: the concession does not apply to benefits in the form of a pension or annuity; these remain chargeable as pension income.

See EIM15083 for the full text of the concession.

An announcement was made on 31 March 2011 regarding how this concession would work following the introduction of new rules on employment income provided through third parties. The announcement is available on the HMRC website at: www.hmrc.gov.uk/budget-updates/march2011/pensions-esc-a10a11.pdf 

The announcement explains how the new rules make just and reasonable apportionments and when the older A10 rules will continue to be applied. It also explains that regulations will be made, following which this guidance will be further revised.