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HMRC internal manual

International Manual

UK residents with foreign income or gains: income arising abroad: Colonial service pensions

Under Section 1 Overseas Pensions Act 1973, the responsibility for payment for certain pensions was transferred to the UK government from the governments of certain countries which were former UK colonies. This transfer does not affect the exemption from UK tax of pensioners who retired before 6 April 1973 (or widows or widowers of such pensioners), provided that the double taxation agreements continue to provide for the exemption of governmental pensions. This exemption does not, however, extend to any statutory increases.

The exemption under INTM163180 of a pension in respect of services with the old Federation of Rhodesia and Nyasaland and/or its successor states (Malawi, Zambia and Zimbabwe) is extended in practice to all pensions in respect of colonial service received by the claimant, provided that

  1. the last period of service was in the old Federation or one of its successor states, and
  2. the claimant retired at the end of that period.


A Colonial Service Officer, having served first in Kenya and then in Malawi, retired at the end of his service in the latter country and received two separate pensions, one from the Kenya government and the other from the Malawi government. Under the agreement with the Federation (SI56/619) as extended to Malawi by the agreement SI64/1401, he is exempt from UK tax on the pension paid by Malawi. The agreement with Kenya (SI77/1229) does not exempt him from UK tax on the pension paid by Kenya (Article 20(2) gives Kenya the right to tax the pension but does not take away the UK’s right to tax it), but in practice, however, the Kenya pension is treated as exempt.