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HMRC internal manual

Employment Income Manual

The taxation of pension income: Pensions taken as flexible drawdown: temporary non-residence: practical questions

To decide whether an individual is within the charge under sections 575 or 579B ITEPA, by virtue of sections 576A and 579CA, the four conditions described at EIM74055 can be framed as a series of questions.

  • Has the individual become resident or ordinarily resident in the UK during the tax year?
  • Was the individual previously resident or ordinarily resident in the UK for a tax year at some earlier time before he became not resident and not ordinarily resident?
  • Are there fewer than five complete tax years between the year of departure and the year of return to the UK?
  • Was the individual resident or ordinarily resident in the UK for any part of at least four out of the seven tax years before the year of departure?

If all of the questions can be answered ‘Yes’ then the individual will be chargeable on flexible drawdown paid in the period of non-residence under either section 575 or section 579B depending on whether it was paid, respectively, from UK tax-relieved funds held in an overseas pension scheme or a drawdown pension fund or a dependants’ drawdown pension fund held in a registered pension scheme.

Individuals who went abroad on or before 6 April 2011 and who are paid flexible drawdown on or after that date will be chargeable on the amounts so paid if they later resume tax residence in the United Kingdom and meet the 4 conditions set out at EIM74055.

If the answer to any of the questions is “No” then the individual will not be chargeable on any flexible drawdown paid in the period of non-residence.