RPSM13102390 - Technical Pages: International: Application of charges to non-UK schemes: Annual allowance: Tax liability

The person liable to an annual allowance charge is the individual whose total pension input amount for the tax year exceeds the annual allowance. That is the case whether or not they or the scheme manager are resident or domiciled in the UK.

All individuals who are either UK resident or who have UK source taxable items are within the scope of the UK's Self Assessment regime. So, wherever resident, individuals who are liable to an annual allowance charge will need to declare that on their Self Assessment return for the tax year in which the annual allowance charge arises. If a member has not been served with a return they are bound by the normal obligation to notify HMRC of their chargeability to UK tax.

The annual allowance charge will not be within the scope of, and will not be exempted or overridden by, any of the UK's double taxation arrangements. That is because it is not a charge on income and so does not come within any of the articles in the treaties.

There are no specific rules dealing with scheme funds and contributions expressed in a foreign currency, but it would be acceptable to calculate the pension input amount for a tax year in the foreign currency and then convert into sterling using the spot rate for the last day of the pension input period.