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)|