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Anticipating A-Day: Revenue Relaxes Overseas Secondment Rule
by Ian Neale 22/09/2004 Printer-friendly version of this page
Under the Finance Act 2004, from 6 April 2006 an employee who is temporarily seconded abroad to work for an overseas resident employer can stay in a UK registered pension scheme, irrespective of how long they remain abroad. A 10-year limit has applied up to now, under Inland Revenue discretionary practice.
In its first decision of this kind, IR SPSS has decided to anticipate this aspect of simplification and effectively bring forward implementation to today. Pensions Update No. 148 announces that from 22 September 2004, the 10-year limit has been removed. Paragraph 15.11 (iii) consequently has been deleted from the Practice Notes IR 12 (2001).
The effect of this decision is that those employees who are on secondment overseas and are accruing benefits in a UK approved occupational scheme may continue to retain membership of that scheme even if they have passed the 10 year limit, or will have passed it, before 6 April 2006. IR SPSS is keen to emphasise, however, that the other requirements set out in PN 15.9 - 15.12 must still be met.
Inland Revenue discretionary practice continues to apply to occupational pension schemes up to 6 April 2006, regarding overseas secondment and everything else. Notwithstanding the fact that Pensions Update No. 148 is only the second Update to appear amending Practice Notes guidance since March 2003, there is a 'backlog' of amendments and it seems certain that there will be more to come. Aries expects IR SPSS will reveal further details of their plans for the next 18 months at next week's meeting of the Customer Forum (Minutes will be posted in due course).
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