RPSM14103020 - Technical Pages: Transfers: Recognised transfers to registered pension schemes: Transfer from a recognised overseas pension scheme

Transfer from a recognised overseas pension scheme

A transfer to a registered pension scheme from a recognised overseas pension scheme that is not a registered pension scheme is not a recognised transfer. But it is not an unauthorised payment either, because unauthorised payments are payments from registered pension schemes. And the legislation specifically states that an amount received by transfer from another pension scheme is not a contribution, so it does not qualify for tax relief on being received by a registered pension scheme.

Instead, special treatment is given to the lifetime allowance of a member who transfers-in funds from a recognised overseas pension scheme that is not registered, to a pension scheme that is registered (see RPSM13100010).

No UK tax relief has been received, so it would be unfair if the transferred amount were to use up the member's available lifetime allowance. But, broadly, any part of an amount transferred that relates to UK tax relieved contributions made after 5 April 2006 will count against the member's lifetime allowance.

As explained in RPSM11101050, the member's lifetime allowance is increased, or "enhanced", by an appropriate factor, from the date of the transfer. The member must claim this enhancement no later than five years after 31 January following the tax year in which the transfer is made, and register the amount with HMRC. This process enables HMRC to verify the amount claimed in appropriate cases.

For the member's annual allowance, the treatment of the transfer value depends on the type of scheme receiving the transfer. If the receiving scheme is either a defined benefit scheme or a cash balance scheme, subtract the transfer value from the closing value. If the receiving scheme is any other type of money purchase scheme, the transfer is not included, as only contributions are included for the annual allowance.