RPSM13100140 - Technical Pages: International: Enhancement: Non-residence factor: Relevant overseas individual

Basic principles: who is a relevant overseas individual?

A relevant overseas individual is defined in section 221(3) as someone who either is not a relevant UK individual (see RPSM13100430) under section 189 or is a relevant UK individual in specified circumstances.

Not a relevant UK individual

Someone who is not a relevant UK individual:

• does not have relevant UK earnings chargeable to UK income tax,
• is not UK tax resident,
• was not UK tax resident both at any time during the previous five tax years and when they became a member of the scheme, and
• does not have general earnings from overseas crown employment subject to UK tax (and neither does their spouse or civil partner).

Relevant UK individual in specified circumstances

Someone who is a relevant UK individual in specified circumstances:

• meets all of the above requirements for not being a relevant UK individual except for the third bullet point, and
• is not employed by a UK tax resident employer.

An individual who falls into this specified category will be eligible for UK tax relief on the basic amount (£3,600 in 2006-2007) for up to five years' overseas service if they are a member of a registered pension scheme that operates relief at source (see RPSM05101310). But if they are working abroad for an overseas tax resident company its contributions will not attract UK tax relief.

It is possible to be a relevant overseas individual during more than one part of an active membership period relating to the same pension arrangement. For example, an individual could work overseas for 5 years, return to the UK for a year and then work overseas for another 5 years. That individual's lifetime allowance will be enhanced by the aggregate of the non- residence factors calculated separately for each of those part-periods under that arrangement.