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HMRC internal manual

Pensions Tax Manual

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HM Revenue & Customs
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International: claims procedure

Glossary PTM000001
   

 

By tax return
Claims after tax return filed
Tax relief given in year
First claims under a DTA

 

By tax return

Members wishing to claim tax relief under a double taxation agreement (DTA), migrant member relief or transitional corresponding relief rules, must do so by completing a tax return. They must complete a tax return even if they have already received tax relief under an in-year claim or under a Modified PAYE arrangement (see Tax relief given in year below).

Members need to complete the main section of the individual’s tax return to show the amount of any member contributions. Member contributions are contributions made either by the member or someone else (other than their employer) on behalf of the member. Details of the scheme should be included in the ‘additional information’ box located at the end of the Tax Return.

Please note that members may also be liable to UK tax charges on payments out of, or into the scheme. If the member is liable to the annual allowance charge, the lifetime allowance charge or any of the member payment charges, this should be recorded on the Additional Information pages on the tax return. Guidance on when a member may be liable to UK tax charges starts at PTM113000.

If the employer contributes to the scheme, the member should include details on the Additional Information pages of the tax return. SA Help Sheet 344 provides guidance on what to enter. Details of the scheme should be included in the ‘additional information’ box of the Additional Information supplementary pages.

If the member is claiming under a DTA, they should put details of the particular treaty and article under which they are claiming relief in the relevant ‘additional information’ box(es) of the tax return. The member should also confirm that:

  • their scheme has been accepted by Pension Schemes Services as corresponding to a UK pension scheme, or
  • in the case of a claim made under the UK/USA DTA, their US scheme is of a type specified in the Exchange of Notes of 24 July 2001 as being a pension scheme under Article 3.1(o) of the UK/USA DTA, or
  • in the case of a claim made under the UK/Ireland agreement, their scheme is tax-approved, or registered for tax approval, in Ireland.

If the member is claiming under the migrant member relief rules they should put the scheme name and the QOPS reference number in the relevant ‘additional information’ box(es).

If the member is claiming under transitional corresponding relief they should put the scheme name and the SF 74 reference number in the relevant ‘additional information’ box(es).

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Claims after tax return filed

If the member has already filed their tax return they can claim relief by amending their Tax Return. There is a deadline for doing this - see the guidance on the gov.uk website at https://www.gov.uk/self-assessment-tax-returns/corrections

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Tax relief given in year

Members can get tax relief before they file their tax return either:

  • under a modified PAYE arrangement, or
  • by making an in-year claim.

Members will still need to file a tax return.

Modified PAYE arrangements for “tax equalised” employees

By prior agreement with HMRC an employer may operate a Modified PAYE arrangement for its “tax equalised” employees (see PAYE81740). Should such an arrangement apply then relief under a DTA for employer and employee contributions can be given in the PAYE calculation.

Under Modified PAYE the employer makes an estimated PAYE tax calculation for its “tax equalised” employees at the beginning of the tax year and, subject to review, pays PAYE tax on that basis during the year. The employer should exclude from the estimated PAYE calculation the contributions it will make on behalf of those employees to overseas pension schemes to which the provisions of a DTA apply. The employer may also exclude an amount for employees’ own contributions. This is on the condition that the employer or advisers engaged by the employer will prepare the relevant tax returns of its “tax equalised” employees in accordance with helpsheet HS212.

In year claims

Employees who are not covered by a Modified PAYE arrangement can get an in-year relief on their personal contributions by writing to HMRC. HMRC can then arrange for relief to be given during that tax year by way of a coding adjustment.

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First claims under a DTA

If it is the first year of making a claim a DTA provision, the employee should state the:

  • DTA and article under which relief is being claimed
  • name of their scheme
  • amount of the contributions that they will make to the scheme in the tax year, and
  • whether or not the claim is for one year only.

The employee should also:

  • provide a copy of a letter from PSS stating that their scheme has been accepted as corresponding, or
  • state the SF74 reference number given to their scheme by Pension Schemes Services (PSS) when accepting it as corresponding to a UK tax-recognised pension scheme.

If the member is claiming relief the UK/USA DTA they should confirm that their scheme is of a type specified in the Exchange of Notes of 24 July 2001 as being a pension scheme under Article 3.1(o) of that DTA, or

If the member is claiming relief under the UK/Ireland DTA they should confirm that their scheme is tax-approved, or registered for tax-approval in Ireland.

If the DTA provides that relief on contributions to a pension scheme that is tax-recognised in the other country is subject to the same conditions as apply to contributions made to a UK tax-recognised pension scheme then relief will be subject to the manager undertaking to provide the same information about the member’s benefit crystallisation events as would be required if the member was receiving migrant member relief - see PTM111800.