Earnings of employees and office holders: retirement benefits schemes from 6th April 2006 - overseas pension schemes: employer's payments that qualify for migrant member relief or transitional corresponding tax relief
Paragraph 3(a) and (b) of Part 6 of Schedule 3 to the Social Security (Contributions)Regulations 2001 (as substituted by regulation 8(3) of the Social Security (Contributions)(Amendment No. 2) Regulations 2006)
Paragraph 2 of Schedule 33 to the Finance Act 2004
Article 15 of the Taxation of Pensions Schemes (Transitional Provisions) Order 2006(SI 2006/572)
NIM02730 explains the meaning of migrant member relief and transitionalcorresponding relief. An employer’s payment to which either:
- paragraph 2 of Schedule 33 (tax relief for employer contributions to a qualifying overseas pension scheme) applies; or
- article 15 of the above Order (employers with pre-commencement entitlement to corresponding relief)
applies, is disregarded in the calculation of earnings for Class 1 NICs purposes:
Paragraph 2 will apply to an employers payment if
- the payment is a relevant migrant member contribution. That is, a payment made to a qualifying overseas pension scheme; and
- the employee is a relevant migrant member of the scheme.
In broad terms, article 15 will apply to an employers payment if:
- their employee was, in the 2005/06 tax year, a member of a “corresponding” overseas pension scheme,
- the employee is still a member of that scheme,
- the scheme manager has undertaken to provide HMRC with information about payments made to the employee, and
- the employer received a deduction in accordance with section 76(6A) and (6C) Finance Act 1989 for payments made in the 2005/06 tax year to that scheme in respect of the employee, and
- the employer’s payment to that scheme is in respect of the employee.
For the meaning of:
- qualifying overseas pension scheme, see RPSM13101060
- relevant migrant member, see RPSM13101040
- “corresponding” overseas pension scheme, see RPSM13101120.
For details of:
- the Class 1A NICs position on a payment to a RPS, see NIM14510
- the Class 1 NICs position on any benefit from the scheme which is referable to an employers payment to which either paragraph 2 or article 15 applies, see NIM02732
- aspects of the tax position on:
- a contribution made by an employer, see RPSM13101030 and RPSM13101120
- benefits from overseas pension schemes, see RPSM13102020.
|Words in bold are defined in the Glossary to the Registered Pension Schemes Manual (RPSM20000000). They have the same meaning for NICs purposes unless otherwise stated.|