The UK has negotiated bilateral double taxation agreements
(DTAs) with many other countries. Some of these DTAs include
provisions, usually in the Pensions article that provides relief
from UK tax on contributions made to a pension scheme that is
tax-recognised in the other country by, or in respect of, a member
who comes to work here.
Although such provisions tend to be broadly similar, the
particular conditions that have to be met to qualify for relief on
pension contributions can vary from agreement to agreement. The
text of each agreement is contained in a Statutory Instrument that
together with section 788 ICTA, gives it the force of law.
Information about the agreements which have entered into force is
available on HMRC’s internet site (at Double Taxation
Agreements or Double Taxation Relief Manual).
Generally, DTAs containing such provisions enable individuals
to receive UK tax relief on contributions made by them, and on
contributions made on their behalf by their employer, as if the
contributions to the overseas pension scheme were made to a UK
registered pension scheme (see
RPSM05100000). DTAs may also provide
for employers to claim a deduction for contributions made to an
overseas pension scheme in respect of eligible employees.
Under Schedule 34 FA 2004 the
lifetime allowance and
annual allowance provisions will apply in respect
of contributions made to overseas pension schemes after 5 April
2006 that have received tax relief under a DTA. Member payment
charges can also apply to certain payments from overseas schemes to
UK tax resident, and recently tax resident, individuals out of
funds relating to contributions made after 5 April 2006 that have
received tax relief under a DTA. This is in line with the treatment
of such payments from a UK registered pension scheme. Those
provisions are explained at
RPSM13102000 onwards.
If contributions made to an overseas pension scheme by an
individual or an employer after 5 April 2006 do not qualify for tax
relief under a DTA they may receive migrant member relief or
transitional corresponding relief instead if the relevant
conditions are met (
RPSM13101010 and
RPSM13101100 refer).
| Glossary ( RPSM20000000) |
