C1C2Part 9Pension income
Pt. 9 excluded by 2004 c. 12, Sch. 36 para. 45A(1) (as inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 19)
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.
F152A
This section does not apply to pension within section 574(1)(ba) if—
a
the pension is paid in respect of a deceased member of a pension scheme who had not reached the age of 75 at the date of death, and
b
no pension payments to the person entitled to the pension were made before 6 April 2015 in respect of the deceased member out of any of the following—
i
the fund from which the pension is paid, and
ii
any fund represented (to any extent) by that fund.
2B
This section does not apply to pension within section 574(1)(bb) if the pension is paid in respect of a deceased individual who had not reached the age of 75 at the date of death.
2C
Subsection (2A) is subject to subsection (2D).
2D
This section does apply to pension within section 574(1)(ba) paid in respect of a deceased member of a pension scheme who had not reached the age of 75 at the date of death if the pension is paid in respect of sums or assets held for the purposes of the pension scheme under which the pension is paid (“the paying scheme”) that would, if the paying scheme were a registered pension scheme, be sums or assets—
a
representing unused uncrystallised funds (within the meaning of paragraph 27E(4) and (5) of Schedule 28 to FA 2004) in the deceased member's case, and
b
designated on or after 6 April 2015 as available for the payment of dependants' drawdown pension or nominees' drawdown pension, but
c
not so designated before the end of the period of two years beginning with the earlier of the day on which the scheme manager of the paying scheme first knew of the member's death and the day on which the scheme manager could first reasonably have been expected to have known of it.
F162E
Chapter 17 of this Part provides exemptions for certain annuities (see sections 646D and 646E: certain beneficiaries' annuities purchased out of unused or drawdown funds).
2F
See also paragraph 45A of Schedule 36 to FA 2004 (exemption in certain cases for payments on or after 6 April 2015 to beneficiaries under joint-life or similar annuities purchased before 6 April 2006).
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
F51
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
F12ba
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 dependants' income withdrawal or nominees' income withdrawal (within the meaning of paragraphs 21 and 27D of Schedule 28 to FA 2004),
bb
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 successors' income withdrawal (within the meaning of paragraph 27J 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 F3or 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.
F64
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
F81A
If the person liable for the tax under this Part is an individual and the tax year is a split year as respects that individual, the taxable pension income for the tax year is the full amount of the pension income arising in the UK part of the year, subject to subsections (2) and (3) and section 576A.
F12
The full amount of the pension income arising in the tax year F10or, as the case may be, the UK part of 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).
F44
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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.
C3F11576ATemporary non-residents
1
This section applies if a person is temporarily non-resident.
2
Any relevant withdrawals within subsection (3) are to be treated for the purposes of section 575 as if they arose in the period of return F18, but only if the total amount of—
a
the relevant withdrawals within subsection (3), and
b
the relevant withdrawals (as defined by section 579CA(4)) within section 579CA(3) for the same temporary period of non-residence,
exceeds £100,000.
3
A relevant withdrawal is within this subsection if—
a
it is paid to the person in the temporary period of non-residence, and
b
ignoring this section, it is not chargeable to tax under this Part (or would not be if a DTR claim were made in respect of it).
F174
A “relevant withdrawal” is an amount paid under a relevant non-UK scheme that—
a
is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be income withdrawal (within the meaning of paragraph 7 of Schedule 28 to FA 2004) paid to the person from the person's member's flexi-access drawdown fund in respect of the arrangement,
b
is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be dependants' income withdrawal (within the meaning of paragraph 21 of Schedule 28 to FA 2004) paid to the person from the person's dependant's flexi-access drawdown fund in respect of the arrangement,
c
is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be nominees' income withdrawal (within the meaning of paragraph 27D of Schedule 28 to FA 2004) paid to the person from the person's nominee's flexi-access drawdown fund in respect of the arrangement,
d
is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be successors' income withdrawal (within the meaning of paragraph 27J of Schedule 28 to FA 2004) paid to the person from the person's successor's flexi-access drawdown fund in respect of the arrangement,
e
is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a short-term annuity (within the meaning of paragraph 6 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's member's flexi-access drawdown fund in respect of the arrangement,
f
is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a dependants' short-term annuity (within the meaning of paragraph 20 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's dependant's flexi-access drawdown fund in respect of the arrangement,
g
is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a nominees' short-term annuity (within the meaning of paragraph 27C of Schedule 28 to FA 2004) purchased using sums or assets out of the person's nominee's flexi-access drawdown fund in respect of the arrangement,
h
is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a successors' short-term annuity (within the meaning of paragraph 27H of Schedule 28 to FA 2004) purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of the arrangement,
i
is paid before 6 April 2015 to the person in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 (flexible drawdown arrangements) applied and would, if the scheme had been a registered pension scheme, have been income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to FA 2004),
j
is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme where—
i
the payment would, if the scheme were a registered pension scheme, be of a lifetime annuity or dependants' annuity within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004, and
ii
the terms of the contract under which it is paid are such that there will or could be decreases in the amount of the annuity other than decreases which, if the scheme were a registered pension scheme, would be decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), or
k
is a payment to the person under a money purchase arrangement relating to the person under the scheme that, if the scheme were a registered pension scheme, would be a payment to the person of a scheme pension that the person would for the purposes of Part 4 of FA 2004 be treated as having become entitled to at a time on or after 6 April 2015 when fewer than 11 other individuals were entitled to present payment of a scheme pension under the scheme.
4A
For the purpose of determining whether the figure specified in subsection (2) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid.
5
If section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the person for the year of return, any relevant withdrawal within subsection (3) that was remitted to the United Kingdom in the temporary period of non-residence is to be treated as remitted to the United Kingdom in the period of return.
6
This section does not apply to a relevant withdrawal if—
a
it is paid to or in respect of a relieved member of the scheme and is not referable to the member's UK tax-relieved fund under the scheme, or
b
it is paid to or in respect of a transfer member of the scheme and is not 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 withdrawal treated by virtue of this section as arising in the period of return (or as preventing a charge to that tax from arising as a result).
8
Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains—
a
when a person is to be regarded as “temporarily non-resident”, and
b
what “the temporary period of non-residence” and “the period of return” mean.
9
In this section—
“double taxation relief arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010;
“DTR claim” means a claim for relief under section 6 of that Act;
F19“member's flexi-access drawdown fund” and “dependant's flexi-access drawdown fund” have the same meaning as in Part 4 of FA 2004 (see paragraphs 8A and 22A of Schedule 28 to FA 2004);
“remitted to the United Kingdom” has the same meaning as in Chapter A1 of Part 14 of ITA 2007;
F20“scheme pension” means a scheme pension within the meaning of paragraph 2 of Schedule 28 to FA 2004 or a dependants' scheme pension within the meaning of paragraphs 16 to 16C of that Schedule;
“the year of return” means the tax year that consists of or includes the period of return.
10
The following expressions have the meaning given in Schedule 34 to FA 2004—
“relevant non-UK scheme” (see paragraph 1(5));
“relieved member” (see paragraph 1(7));
“transfer member” (see paragraph 1(8));
“member's UK tax-relieved fund” (see paragraph 3(2));
“member's relevant transfer fund” (see paragraph 4(2)).
Pt. 9: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)