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HMRC internal manual

National Insurance Manual

Earnings of employees and office holders: retirement benefits schemes from 6th April 2006 - overseas pension schemes: payments to pension schemes relieved from United Kingdom taxation under a double taxation agreement

Paragraph 7 of Part 6 of Schedule 3 to the Social Security (Contributions) Regulations2001 (as amended by regulation 8(6) of the Social Security (Contributions) (Amendment No.2) Regulations 2006)

An employer will be eligible for UK tax relief on a payment it makes to an overseaspension scheme if the conditions specified in a double taxation agreement(“DTA”) are met. Those conditions will depend on the wording of the DTA, butnormally will include the following:

  • the individual was a member of the scheme before coming to work in the UK,
  • the scheme is tax-recognised in the other country, and
  • the UK accepts that the scheme corresponds to a UK tax-recognised pension scheme.

For Class 1 NICs purposes, a payment by an employer into an overseas pensionscheme which qualifies for tax relief under a DTA with the countries in thefollowing table is disregarded in the calculation of earnings.

Country Date from which payment can be disregarded (ie, the date on which the relevant legislative provision took effect) Other guidance
France 6th April 1999 NIM02161
Republic of Ireland “ NIM02161
Denmark “ NIM02161
United States 6th April 2005 NIM02161
Canada 6th April 2006  
South Africa “  
Chile “  

For the Class 1A NICs position, see NIM14510.

  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.