RPSM13101040 - Technical Pages: International: Migrant member relief: Definition of relevant migrant member

Definition of a relevant migrant member

[Paras 1 & 4, Sch 33 & The Pension Schemes (Relevant Migrant Members) Regulations 2006 - SI 2006/212]

[The Registered Pension Schemes (Extension of Migrant Member Relief) Regulations 2006 - SI 2006/1957]

An individual is a relevant migrant member of a qualifying overseas pension scheme if all of the following conditions are met:

1. the individual was not tax resident in the UK when they became a member of the scheme,
   
   
2. contributions are made to the scheme by, on behalf of, or in respect of the individual during a period of UK tax residence which began when they were a member of the scheme,
   
   
3. the individual was entitled to tax relief on contributions to the scheme in the overseas country in which they were resident immediately before coming to the UK, or has been so entitled in any overseas country where they were then resident in the 10 years before they became UK tax resident, and
   
   
4. the individual has been notified by the scheme manager that information concerning their benefit crystallisation events will be given to HMRC.

Under condition a. an individual must have joined the scheme before arriving in the UK. Generally speaking, they will be treated as tax resident from their date of arrival even if their UK residence status for IR 20 purposes would run from a different date. That is because the UK residence test in condition a. is not a test for residence status for a tax year. It is rather a test of whether the individual, as a question of fact, was actually UK resident at the particular date when they first became a member of the qualifying overseas pension scheme. RPSM13101042 provides an example of this. A similar interpretation of when UK residence begins applies for conditions b. and c..

The condition at b. means that an individual who ceased to be a member of the scheme before coming to the UK and who did not re-join it until after they had become UK tax resident would not qualify as a relevant migrant member.

Condition c. applies irrespective of whether the relief to which an individual is entitled relates to their own contributions or to those made in respect of them by an employer. This condition will be met where the individual has not actually made any contributions to the scheme, but where if they had done so, they would have been entitled to relief. It will also be met where the employer has not made any contributions to the scheme in respect of them but where had the employer done so they would have been entitled to tax relief on those contributions. It is not necessary for the scheme to be established in the overseas country in which the individual was resident and receiving relief. If before coming to the UK someone was working in a country which does not relieve pension contributions or does not have any personal taxation they may still be able to meet condition c. if they were working in that country for less than 10 years. In practice HMRC is not aware that there is any country within the European Economic Area which will not meet the requirements for countries in condition c.

The meaning of “the scheme” for the purposes of conditions a, b, and c is extended in certain circumstances by the Registered Pension Schemes (Extension of Migrant Member Relief) Regulations 2006 –Broadly, where an individual who is entitled to migrant member relief is forced to join a new qualifying overseas pension scheme the old scheme can be treated as “the scheme” in a, b and c. This enables the individual to remain a relevant migrant member if they are UK tax resident when joining the new scheme and prevents them losing their entitlement to migrant member relief. The conditions that must be met are set out at RPSM13101045.

As regards condition d, there are 9 benefit crystallisation events set out in section 216 (see RPSM11102020). Broadly, they occur when:

• a member's pension benefits come into payment (in three different forms),
• a member's pension is increased above a set level,
• a member reaches age 75 without taking their benefit entitlement,
• a member becomes entitled to a lump sum,
• a member dies and a lump sum death benefit is paid,
• a member transfers funds to a qualifying recognised overseas pension scheme, and
• a member reaches age 75 having designated funds for the payment of an unsecured pension.

RPSM11102050 provides guidance on when a member becomes entitled to a benefit.

There are three other conditions an individual must meet to be entitled to migrant member relief on contributions made by them to a qualifying overseas pension scheme. These are set out in RPSM13101050.