Part 9Pension income

Chapter 4Foreign pensions: general rules

573Foreign pensions

(1)

This section applies to any pension paid by or on behalf of a person who is outside the United Kingdom to a person who is resident in the United Kingdom.

(2)

But this section does not apply to a pension if any provision of Chapters 5 to 14 of this Part applies to it.

(3)

For pensions paid by or on behalf of a person who is in the United Kingdom, see Chapter 3 of this Part.

574“Pension”: interpretation

F1(1)

For the purposes of this Chapter “pension” includes—

(a)

an annuity under, or purchased with sums or assets held for the purposes of, or representing acquired rights under, a relevant non-UK scheme or an overseas pension scheme,

(b)

an amount paid under a relevant non-UK scheme or an overseas pension scheme which, if the scheme were a registered pension scheme, would be income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to FA 2004), and

(c)

if conditions A and B are met, a pension which is paid voluntarily or is capable of being discontinued.

(2)

Condition A is that the pension is paid to—

(a)

a former employee or a former office-holder,

(b)

the widow or widower F2or surviving civil partner of a former employee or a former office-holder, or

(c)

any child, relative or dependant of a former employee or a former office-holder.

(3)

Condition B is that the pension is paid by or on behalf of—

(a)

the person—

(i)

who employed the former employee, or

(ii)

under whom the former office-holder held the office, or

(b)

the successors of that person.

F3(4)

In this section—

“office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders;

“overseas pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(7) of that Act);

“relevant non-UK scheme” is to be read in accordance with paragraph 1(5) of Schedule 34 to FA 2004.

575Taxable pension income

(1)

If section 573 applies, the taxable pension income for a tax year is F4the full amount of the pension income arising in the tax year, but subject to subsections (2) and (3) F5and section 576A.

F6(2)

The full amount of the pension income arising in the tax year is to be calculated on the basis that the pension is 90% of its actual amount, unless as a result of subsection (3) the pension income is charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

(3)

That pension income is treated as relevant foreign income for the purposes of Chapters 2 and 3 of Part 8 of that Act (relevant foreign income: remittance basis and deductions and reliefs).

F7(4)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)

See also Chapter 4 of that Part (unremittable income).

576Person liable for tax

If section 573 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.

F8576ATemporary non-residents

(1)

If this section applies in relation to a tax year, any relevant non-UK income withdrawal under a relevant non-UK scheme which—

(a)

is paid to a person in respect of a flexible drawdown arrangement relating to the person under the scheme,

(b)

is paid in a year of non-residence, and

(c)

would not, apart from this section, be chargeable to tax under this Part,

is to be treated for the purposes of section 575 as if it arose in that tax year.

(2)

This section applies in relation to a tax year if—

(a)

the person satisfies the residence requirements for the tax year (“the year of return”),

(b)

the person did not satisfy those requirements for one or more tax years immediately before the year of return but did satisfy those requirements for an earlier tax year,

(c)

there are fewer than 5 tax years between—

(i)

the last tax year before the year of return for which the person satisfied those requirements (“the year of departure”), and

(ii)

the year of return, and

(d)

the person satisfied those requirements for at least 4 out of the 7 tax years immediately before the year of departure.

(3)

For the purposes of this section—

(a)

a person satisfies the residence requirements for a tax year if the person—

(i)

is resident in the United Kingdom during that year, and

(ii)

is not Treaty non-resident at any time in that year;

(b)

a person is Treaty non-resident at any time if, at that time, the person falls to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief arrangements having effect at that time.

(4)

If—

(a)

section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the person for the year of return, and

(b)

the person—

(i)

is not domiciled in the United Kingdom in that year, or

(ii)

is not ordinarily resident in the United Kingdom in that year,

any amounts of relevant non-UK income withdrawal falling within subsection (1) which were remitted in a year of non-residence are treated as remitted in the year of return.

(5)

This section does not apply to any relevant non-UK income withdrawal paid to or in respect of a relieved member of a relevant non-UK scheme unless the payment is referable to the member's UK tax-relieved fund under the scheme.

(6)

This section does not apply to any relevant non-UK income withdrawal paid to or in respect of a transfer member of a relevant non-UK scheme unless the payment is referable to the member's relevant transfer fund under the scheme.

(7)

Nothing in any double taxation relief arrangements is to be read as preventing the person from being chargeable to income tax in respect of any relevant non-UK income withdrawal treated by virtue of this section as arising in the year of return (or as preventing a charge to that tax from arising as a result).

(8)

In this section—

“double taxation relief arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010;

“flexible drawdown arrangement” means an arrangement to which section 165(3A) or 167(2A) of FA 2004 applies;

“member's relevant transfer fund” has the same meaning as in Schedule 34 to FA 2004 (see paragraph 4(2) of that Schedule);

“member's UK tax-relieved fund” has the same meaning as in that Schedule (see paragraph 3(2));

“relevant non-UK income withdrawal”, in relation to a relevant non-UK scheme, means an amount paid under the scheme which, if the scheme were a registered pension scheme, would be income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to FA 2004);

“relevant non-UK scheme” is to be read in accordance with paragraph 1(5) of Schedule 34 to FA 2004;

“relieved member” and “transfer member” have the same meaning as in that Schedule (see paragraph 1(7) and (8));

“year of non-residence” means any tax year which falls between the year of departure and the year of return.