RPSM13102310 - Technical Pages: International: Application of charges to non-UK schemes: Annual allowance: General

General

The annual allowance provisions place a tax charge on individuals who have benefited from overall savings growth in all of their registered pension schemes if it exceeds the annual allowance in a tax year. These individuals will be taxed at the rate of 40% on the excess amount. A full explanation of the annual allowance and the annual allowance charge can be found at RPSM06100000. You should read that section before continuing with the following explanation of what schedule 34 does.

Paragraphs 8 to 12 of schedule 34 modify the annual allowance provisions so as to apply the annual allowance charge also to some members of overseas pension schemes that are not registered pension schemes in certain circumstances where UK tax relief has been received after 5 April 2006. The annual allowance charge applies to an individual who is a currently-relieved member of a currently-relieved non-UK pension scheme as if the scheme were a registered pension scheme. This means, broadly, that an individual is charged on all of their UK tax-relieved savings growth - in any currently-relieved non-UK pension schemes as well as in any registered pension schemes - that is in excess of the annual allowance.

Where a currently-relieved non-UK pension scheme has a vesting period the application of the annual allowance provisions will depend on whether benefits actually accrue to the individual in the pre-vesting period. It will not matter that such benefits may be contingent on the member getting to the end of the vesting period - if the benefits are accruing then they will be part of the pension input amount. This will depend on the facts.

This part explains what currently-relieved non-UK pension schemes are, who currently-relieved members are, and how the annual allowance charge provisions apply to them.