Pension whilst overseas.

by **BURROUGH** on Sat Dec 06, 2008 11:07 pm

Whilst overseas you are allowed to make small contributions to your UK pension. If you do that will you get the tax benefit at the Higher rate of 40% if you are no longer a higher rate tax payer ?

Thanks

by **maths** on Sat Dec 06, 2008 11:38 pm

by **TCA** on Thu Oct 13, 2011 7:30 am

Thought I'd use this relevant thread rather than start a new one.

I understand that a UK national, now non-UK resident, who has had earnings chargeable to UK tax in the last 5 years can contribute up to £3,600 gross (£2,880 net) to a UK personal pension and gain basic rate tax relief.

1) If this is correct and the UK departure date is September 2007, so split-year treatment with tax paid on earnings until departure, can tax relief be claimed on a £2k+ contribution every year up to and including the tax year ending 5th April 2013?

2) Is it possible to carry forward any unused "allowances" and obtain relief on a larger contribution in the current tax year for years (within the 5 years), where no contributions where made?

3) I believe a UK national can still make use of the personal allowance as a non-UK resident. Do the answers to any of the above change if interest earned from UK bank accounts is being earned but below the annual personal allowance?

Thanks for any help.

by **TCA** on Tue Oct 18, 2011 9:03 am

Can anybody please advise on the above?

by **Tax Champion** on Wed Oct 19, 2011 8:57 am

To qualify for tax relief on contributions, the payer must be either UK resident at some point in the year, or have earnings chargeable to UK tax. Split year treatement in the year of departure is irrelevant; as long as there was UK residence in that year, relief will be due for that year, and for the first year of non-residence. However if the only UK income after leaving is bank interest, this does not qualify.
There is no carry-forward of the basic amount.

by **TCA** on Wed Oct 19, 2011 11:21 am

Thanks for the reply Tax Champion. I'm still confused however. This below is what I keep finding repeatedly when searching and it implies to me that anyone who was UK resident in the last 5 tax years, even if they have paid no tax, can claim relief up to £3,600 gross. Am I reading this wrongly?:

"Any member of a registered pension scheme may make unlimited contributions to a registered pension scheme. However to qualify for tax relief a contribution must be a relievable pension contribution made by a relevant UK individual.

A relevant UK individual is an individual who:

Has relevant UK earnings chargeable to income tax for that tax year
Is resident in the UK at some time during the tax year
Was resident in the UK at some time during the immediately preceding five tax years and also when joining the pension scheme

The maximum amount of contributions on which a member can claim relief is the greater of:

The basic amount (currently £3,600) or, the amount of the individual's relevant UK earnings for the tax year.

This means that a member who has no relevant UK earnings may still qualify for tax relief on contributions into a registered pension scheme up to the basic amount. The relief in these circumstances can be given only if the contribution is made to a scheme that operates the relief at source (RAS) system. The relief is available even if the individual is a non-taxpayer."

by **etf** on Wed Oct 19, 2011 12:22 pm

Hi TCA,

One of my text books provides an example of an individual who leaves the UK during the 2008/09 tax year for full-time employment overseas for a period expected to last 3 years. He performs no UK employment duties in the UK after his departure and he is already a member of a UK personal pension plan.

It confirms he may continue to be entitled to basic rate income tax relief on up to £3,600 of personal pension plan contributions (gross figure) throughout his assignment. The relief can continue for contributions paid up until 5 April 2014 if he continues to be non-resident during that period i.e. 5 complete tax years after the year of departure (2009/10, 2010/11, 2011/12, 2012/13, 2013/14).

Kind Regards

etf

http://theexpatriatetaxfactory.com

by **TCA** on Thu Oct 20, 2011 2:09 pm

Thanks etf. That's exactly what I understood by the ruling. Can anyone else please confirm or quote an official source? The best I can find is from one of the Q&As from here below but can see nothing on the HMRC website:

http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/contribution-levels-and-tax-relief