UK Tax Treatment of Offshore Employer Schemes

Many UK tax residents have an offshore retirement fund. This may have been created by an overseas employer, both whilst working in the UK or overseas, or be a private scheme established by the individual, such as a QNUPS.

The UK tax treatment of offshore employer schemes will depend on several factors, for example:

• The tax treaty between the UK and the country in which the pension fund is established will determine where payments out of the pension fund will be taxed.
• Funds which have received UK tax relief on contributions to the fund may be treated as for UK registered pension schemes.
• Where the individual was non-UK resident when the benefits under the scheme were accrued, and the employment duties were performed outside the UK, there is an exemption from tax for lump sum payments out of overseas pension schemes. Under these rules, partial qualification may still exempt the entire lump sum.