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HMRC internal manual

Employment Income Manual

Other expenses: earnings of non-domiciled employee from a foreign employer: corresponding payments: contributions to overseas pension schemes

Section 355 ITEPA 2003

Contributions to an overseas pension scheme by the employee – 2005 to 2006 and earlier years

You should take the following action if you receive a claim from a non-domiciled employee for a deduction from earnings with a foreign employer in respect of contributions by the employee to an overseas pension scheme:

  • find out the full title of the scheme and the name of any agent
  • find out whether Pension Schemes Services has already examined the scheme to say whether a deduction can be given

Contributions to an overseas pension scheme by the employee – 2006 to 2007 onwards

From the tax year 2006 to 2007 many non-domiciled employees will be entitled to ‘migrant member relief’ in respect of employee contributions to certain overseas pension schemes. However, there’s also a transitional provision to ensure that an individual who received tax relief for employee contributions as corresponding payments under section 355 in the tax year 2005 to 2006 can continue to receive relief under section 355 in the tax year 2006 to 2007 onwards. For more information on migrant member relief and the transitional provisions see PTM111000.

Contributions to an overseas pension scheme by the employer

An employee may be liable to tax on a contribution made to the scheme by the employer. You should not raise this possibility with the employee. However, if you are asked about it, refer for advice.

Contributions to a foreign state scheme

Refer for advice on any claims for contributions to State pension schemes or other statutory superannuation funds of foreign countries.

Contributions to national insurance or social security schemes in other countries are not deductible.

Overseas pension advice

Refer for advice as described at PTM011300.