RPSM13102350 - Technical Pages: International: Application of charges to non-UK schemes: Annual allowance: Pension input amounts for cash balance and defined benefits arrangements

Pension input amounts for cash balance arrangements and defined benefits arrangements

Paragraph 10 of schedule 34 modifies the annual allowance provisions that relate to cashbalance arrangements and defined benefits arrangements. It provides for Sections 230(1) and 234(1) ( RPSM06101020 refers) to apply to determine the pension input amount for a currently-relieved member of a currently-relieved non-UK pension scheme for a tax year ( RPSM06101020 and RPSM06103000 refer). For example, where an individual has made a claim for the remittance basis the method of calculation ensures that any increase in the value of the individual's rights relating to relevant foreign earnings that are not remitted to the UK are excluded from the member's pension input amount.

This is done by the application of a fraction to what would otherwise be the individual's pension input amount. However, the fraction cannot reduce an employee's pension input amount below the amount of contributions made by or on behalf of them to the scheme that have benefited from UK tax relief.

The pension input amount is calculated as if the increase in the value of their rights under the arrangement during the tax year were the greater of:

• the appropriate fraction (see RPSM13102355) of what it otherwise would be, and
• the amount of any contributions paid under the arrangement during the tax year by or on behalf of the individual (otherwise than by an employer) that are such UK tax- relieved contributions as are mentioned at a in RPSM13102320.

gives an example.