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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 – 2005-06 and earlieryears

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 and
  • send the details with the claim to SPSS (Nottingham).

If SPSS (Nottingham) have already examined the scheme they will let you know whether a deduction can be given. If the scheme has not been seen they will make necessary enquiries and advise you in due course.

Contributions to an overseas pension scheme by the employee – 2006-07 onwards

From 2006-07 many non-domiciled employees will be entitled to ‘migrant member relief’ in respect of employee contributions to certain overseas pension schemes. However, there is 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 2005-06 can continue to receive relief under section 355 in the tax year 2006-07 onwards. For more information on migrant member relief and the transitional provision see the Registered Pension Schemes Manual at RPSM05101210 and RPSM13101110.

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 the enquiry to SPSS (Nottingham).

Contributions to a foreign state scheme

Refer any claims for contributions to State pension schemes or other statutory superannuation funds of foreign countries to SPSS (Nottingham).

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