Budget Notes


Who is likely to be affected?

1. Internationally mobile workers in the UK who are members of a non-UK pension scheme, their employers and the managers of those non-UK schemes.

General description of the measure

2. The measure will ensure those funds in non-UK pension schemes that have received UK tax relief are appropriately identified for the purposes of UK tax limits and charges on benefits equivalent to those for registered UK pension schemes having effect.

Operative date

3. For non-UK money purchase pension schemes, the measure will have effect for employer contributions paid on or after 12 March 2008.

4. For non-UK defined benefit (i.e. final salary) pension schemes the measure will have effect on and after 6 April 2008.

Current law and proposed revisions

5. Migrant workers in the UK and their employers can obtain tax relief on contributions to non-registered pension schemes based outside the UK. In order to apply appropriate UK tax controls on reliefs equivalent to those for registered pension schemes, it is necessary to work out how much UK tax relief has been received on the individual's pension fund.

6. Under the law, the larger the employer contribution the lower the proportion of an individual's pension fund is treated as having received UK tax relief.

7. This measure will ensure that the amount of the employer's contribution will not affect the calculation of the proportion of the fund that is subject to UK tax rules.

Further advice

8. If you have any questions about this change, please contact Pensions Helpline on 0845 600 2622. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk