The Pensioneer Trustee Company (Guernsey) Limited

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Tax on Lump Sum Payments from Foreign Pensions

May 22, 2014

The tax legislation regarding the UK tax treatment of payments of lump sums from overseas pension schemes relating to foreign service changed from 6 April 2011.

Prior to 6 April 2011, although lump sum payments from foreign pensions were taxable, Extra Statutory Concession (ESC) A10 allowed an unapproved foreign pension scheme to pay a lump sum free of UK income tax to an employee who has worked outside the UK, where their non-UK service up to 5 April 2011 is either:

a)      75 per cent or more of the employee’s total service in that employment; or

b)      All of the last ten years of the employee’s service in that employment, where their total service exceeds ten years; or

c)       Not less than 50 per cent of the employee’s total service in that employment, including any ten of the last 20 years, where that total service exceeds 20 years.

Under these rules you could still get 100% tax relief on lump sum payments, even if your non-UK duties were less than 100% of your foreign service. This is no longer the case.

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St Peter Port, Guernsey
Channel Islands GY1 2PE

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The Pensioneer Trustee Company (Guernsey) Limited is licensed by the Guernsey Financial Services Commission under The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 and subject to The Pension Licensees (Conduct of Business) & Domestic and International Pension Scheme and Gratuity Scheme Rules (No.2) 2017.