EIM15326 - Employer-financed retirement benefits schemes: example: overseas schemes: Extra-Statutory Concession A10: partial exemption

Extra-Statutory Concession A10

For guidance on ESCA10 see EIM15082 and subsequent guidance

An employee retired from employment with a foreign company after 15 years' service.

The service of the first 6 years counts as foreign service (see the definition at EIM13690) whereas that of the last 9 does not.

On retirement, the scheme pays a lump sum of £90,000.

ESC A10 applies. The foreign service does not meet any of the three tests in EIM15083 but partial exemption is available. Following EIM15083, the charge is reduced by the same proportion as the foreign service bears to the employee's total service in that employment. So the reduction is £36,000 (£90,000 x 6/15 = £36,000), leaving £54,000 (£90,000 less £36,000) chargeable under Section 394 ITEPA 2003.