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HMRC internal manual

Employment Income Manual

Employer-financed retirement benefits schemes: overseas schemes

[Notice: the guidance on this page should be read with the notice at the top of EIM15015]

For this purpose, an overseas scheme is one where any of the income and gains of the scheme’s investments are or have been outside the charge to UK tax.

Where a lump sum payment is made under an overseas scheme to, or in respect of, a UK-resident member on or after 6 April 2017, the payment may be a “relevant lump sum” as defined by section 574A ITEPA 2003.  This provision should also be considered where the member has died but they were UK resident immediately before their death, including where the beneficiary is not themselves resident in the UK.  If the payment is a relevant lump sum, it is taxable as foreign pension income under Chapter 4 Part 9 ITEPA 2003 rather than under the employer-financed retirement benefits schemes (EFRBS) provisions.  See EIM74510 for more details on the conditions for a payment to be a relevant lump sum.

Receipts from EFRBS are charged in full (see EIM15010) subject to transitional provisions (see EIM15125 and subsequent guidance).

Under the transitional provisions, the treatment of a lump sum paid after 5 April 2006 from such a scheme which existed as a funded unapproved retirement benefits scheme before 6 April 2006 depends on whether the scheme was both entered into before 1 December 1993 and has not been varied subsequently.

Note that where there is a charge, it may be reduced or eliminated by ‘foreign service’ relief under Extra-Statutory Concession A10 or section 395B ITEPA 2003 (see EIM15082 onwards).