(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
Up until 1 May 1995 (the date the Finance Act 1995 became
law), we generally required all pensions from an approved scheme to
be paid from a United Kingdom source. Rules dealing with the
purchase of pensions or the exercise of an “open market
option” (see
PSI17.1.12-13) were therefore expected
to include a proviso that no annuity would be purchased from a
branch or agency outside the United Kingdom of any Life Office
(whether incorporated in the United Kingdom or not). The purpose of
this requirement was to ensure that all pensions are taxed under
PAYE. From 1 May 1995 we can no longer require that an approved
scheme purchases pensions only from a United Kingdom source. As
mentioned in
PSI13.4.3 it is now also
acceptable to purchase a pension from an EC company which meets the
requirements of section 659B ICTA1988. Amongst those requirements
is the necessity for the EC company to appoint a person in the
United Kingdom to be responsible for applying PAYE and accounting
for the tax to the Revenue.
