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HMRC internal manual

Employment Income Manual

The taxation of pension income: Pensions taken as flexible drawdown: temporary non-residence: meaning of ‘temporary non-residence’

Section 576A and 579CA ITEPA

Sections 576A and 579CA ITEPA 2003 apply to any individual who left the UK to take up residence abroad who later resumes UK residence, and who:

  • was tax resident in the UK for any part of at least four out of the seven tax years immediately preceding the year of departure, and
  • was not resident and not ordinarily resident in the UK for a period of less than five full tax years, and
  • during the period of temporary non-residence, was paid flexible drawdown from a registered pension scheme or from an overseas pension scheme to the extent that the payment is referable to the individual’s tax-relieved fund under the overseas scheme.

Where these conditions are satisfied, the individual will be liable to income tax in respect of the amount paid during the period of non-residence as flexible drawdown as if it were pension income arising or accruing in the year in which the individual returned to the UK. See EIM74055.

Nothing in any double taxation relief arrangements between the UK and the country or territory in which the person taking flexible drawdown was resident at the time is to be read as preventing that person from being chargeable to income tax in respect of any flexible drawdown treated by sections 576A or 579CA as arising or accruing in the year of return (or as preventing a charge to that tax from arising as a result).